Yes, it’s true. When the government does more to penalize taxpayers more (make them pay “more” in taxes), the taxpayers alter their behavior to mitigate things. In the case of Americans who are paying most of the income taxes (remember that 1% of taxpayers pay more income tax than 95% of taxpayer in total) they:
- change their investing habits (they harvest losses for tax purposes, and invest less overall),
- change their job-creation activities (they open fewer small businesses because the higher cost and risk associated with being demonized and penalized by the Obama administration)
- find ways to produce less income (which stops our economy from growing and signficiantly hinders any recovery)
So you think raising taxes on the “wealthy” is the answer? It’s not.