President Barack Obama seems to
have forgotten a history lesson, or perhaps he’s inconveniently overlooking the
fact for the sake of political rhetoric.
The president wants Congress to
enact a luxury tax on corporate jets to generate revenue. He is falling into
the same trap that snared President George H. W. Bush 21 years ago.
That was the year the former
president broke his promise about “No new taxes,” and signed a bill that
included 10 new luxury taxes on yachts, private airplanes, and expensive cars
and jewelry. Democrats Ted Kennedy and George Mitchell loved the idea, touting
that the rich would finally be paying their fare share. As with many other
governmental decisions, they were wrong and the unintended consequences hurt a
lot of innocent people.
In less than a year, the
largest yacht manufacturer in the country had to lay off almost 90 percent of
its workforce — 1,140 of 1,400 workers— and closed one of its two plants. The
company was down to only 68 employees before the taxes were repealed in 1993.
Viking Yachts was only one
example of the disastrous policy. The yacht industry as a whole saw more than a
30 percent drop in production and a loss of 100,000 jobs —25,000 yacht builders
and 75,000 people in support business were out of work. The United States went
from an exporter of yachts to an importer of the luxury craft.
The Heartland Institute and
George Mason University economics professor Walter Williams, who supplied the
figures cited above, also noted that supporters of the taxes said they would
generate $31 million in revenue each year, but the job losses in the yacht,
jewelry and aircraft industries, cost the government $24 million in
unemployment benefits per year alone.
“The Joint Economic Committee
concluded that the value of jobs lost in just the first six months of the
luxury tax was $159.6 million,” wrote Williams.
So why would Mr. Obama think a
luxury tax on jets will yield different results? If he really believes that
things will be different this time, he’s either ignorant of history or is
deluded. New luxury taxes will add more losses to an already bad job market;
they will simply repeat the Bush-league mistake of 1990.
So why make the pitch? The
country is only 15 months away from a major election. Democrats are afraid of
losing the White House and maybe even the Senate in 2012. They also hope to
regain the House. Talk of taxing the rich is part of the political rhetoric of
class warfare, using the wealthy as a scapegoat for the government’s failed
economic policies that intervene where they don’t belong. (Republicans play the
same game; they just use different scapegoats.)
It’s not Mr. Obama’s fault that
the economy tanked. The neo-cons and other Republicans who blame him are just
as delusional as the president’s economists are, and just as delusional as
today’s Democrats who lay the bad economy solely at the feet of the eight-year
George W. Bush presidency. Bush II and Bush III, aka Barack Obama, have merely
accelerated the decline.
The bad economy and the left
wing salivation for more taxes on the rich are a result of almost 100 years of
the federal government involving itself in what should be a free market.
Whenever government attempts
regulating a free market in any way other than protecting people from the
initiation of force or fraud, it is destructive to a healthy economy. No tax,
luxury or otherwise, will fix the problems caused by intrusion.
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