Friday, July 30, 2004

Kerry for President? I really don't think so.

I'll have more on the vacuous speech by John Kerry later on if I feel like it. But, hey, did you know? Apparently he was in Vietnam. Who'd have known? In the meantime, here's one for all the whining, Bush-bashing liberals who babble on and on about how we "can't afford the tax cuts", while ignoring (or refusing to acknowledge) the current unprecedented growth in the economy.

NEWS FLASH: Lowering the tax RATE is not the same thing as lowering the tax REVENUES. If I may have the floor:

Say you're the governor of a small state with 10 factories whose tax revenues (at, say 10% tax RATE) bring in a million dollars annually each, your tax REVENUES for the year, generated by that industry, are currently $10M. If the math is getting too hard, let me know.

Now, let's say the people in your state listen to the doom and gloom of the national media and the Michael Moore's of the world and decide to swallow all this "Hope is on the way" horseshit being spewed out by all the Clinton/Kerry/Kennedy wanna-bes and actually elect one of them to take your place (God forbid).

This new leader sees that $10M as free money for the state to be spent as he or she sees fit, so by applying the math skills and logical reasoning of a six-year-old child, he decides that the tax rate should increase by half to 15%, because obviously monies generated x tax rate = tax revenue, and this seems like a sure fire way to increase revenues by 50%. What better way to generate money for the "common good". It's so easy! Right?

Wrong. Let's say 2 out of these 10 companies, now faced with a tax burden considerably higher than the previous years, look elsewhere to set up shop, as to remain here would force them out of business. They find a neighboring state with a lower tax rate. The output of the eight factories that remain goes down 25% as they were forced to lay off some employees, and forego pay raises just to stay in business.

So the $1M/yr each factory made before is now $750K/yr. Only eight factories remain, making a total of $6M that year, taxed at the higher rate of 15%. Your tax REVENUES for the year are now $900,000 - a DECREASE of 10% from the previous year. How can that be?

What other benefits did your little "tax the rich" plan bring about?

Well, let's say each factory employed 60 workers. The year before, you had 600 people employed in your factories. Two factories skipped town rather than pay your higher taxes. There go 120 jobs. The remaining eight factories had to downsize by laying off 25% of their workforce. There go another 120 jobs. You just eliminated 40% of your workforce in that industry. What a proud Marxist liberal you must be, sticking it to the "rich". Why is this like rocket science for some people to understand?

Yeah, John Kerry for president...I don't think so.

And yes, I realize this is a hypothetical situation, and you can manipulate the numbers in such an example any way you want in order to make a point (something the loony left is quite fond of) but I challenge anyone to come up with a scenario based on this model where the tax increase results in a stronger economic climate for the state without requiring everyone to become devout socialists and without imprisoning people who try to leave your state to live and work elsewhere.