Think the rich don’t provide jobs? Or that they only provide a few jobs through their investment activities? People with a lot of money spend a lot of money on stuff and services that the many of the rest of us provide!
One example...
Once upon a time we had a thriving yacht-building business in the US. Congress decided that a luxury tax on yachts sounded like a great idea! Tax the rich fat cats splurging millions on yachts, what’s a few hundred thou in extra taxes?! 10% extra tax on boats costing $100K or more (this was in 1990 or so).
The end result was devastating. Thousands in the boating industry lost their jobs (as did thousands in other industries penalized with similar luxury taxes). The rich? They just bought their yachts overseas and avoided the taxes. There is virtually no yacht building or sales left in the US as a result of this tax, even after it was repealed–those jobs were killed but good!
“Within eight months after the change in the law took effect, Viking Yachts, the largest U.S. yacht manufacturer, laid off 1,140 of its 1,400 employees and closed one of its two manufacturing plants. Before it was all over, Viking Yachts was down to 68 employees. In the first year, one-third of U.S. yacht-building companies stopped production, and according to a report by the congressional Joint Economic Committee, the industry lost 7,600 jobs. When it was over, 25,000 workers had lost their jobs building yachts, and 75,000 more jobs were lost in companies that supplied yacht parts and material. Ocean Yachts trimmed its workforce from 350 to 50. Egg Harbor Yachts went from 200 employees to five and later filed for bankruptcy. The U.S., which had been a net exporter of yachts, became a net importer as U.S. companies closed. Jobs shifted to companies in Europe and the Bahamas. The U.S. Treasury collected zero revenue from the sales driven overseas.
Back then, Congress told us that the luxury tax on boats, aircraft and jewelry would raise $31 million in revenue a year. Instead, the tax destroyed 330 jobs in jewelry manufacturing and 1,470 in the aircraft industry, in addition to the thousands destroyed in the yacht industry. Those job losses cost the government a total of $24.2 million in unemployment benefits and lost income tax revenues. The net effect of the luxury tax was a loss of $7.6 million in fiscal 1991, which means Congress’ projection was off by $38.6 million. 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.”
Keep this in mind when you realize that Pres. Obama has called for a luxury tax on corporate jets, and remember that a goodly number of corporate jets are built in the United States (Gulfstream, Cessna). How many people will lose their jobs as a result? How much revenue will be generated? We've seen this movie before...the remake won't end differently.
No comments:
Post a Comment