The Democrats Still Haven't Learned From Their 1990 Tax-The-Rich Fiasco

In 1990, the Democrats in Congress convinced President, read-my-lips, no-new-taxes, George H.W. Bush to sign into law a luxury tax on expensive boats, furs, aircraft, and automobiles.  You know, all those things that the envious Democrats find to be disgusting toys and symbols of the rich and famous.  Blinded by their ideological zeal to punish the wealthy,  they truly thought this tax would help line the coffers of the federal government and reduce the deficit.  But, the tax backfired.  The revenues from it failed to materialize because the "rich" just stopped buying all those new toys; especially from U.S. manufacturers and suppliers.  Many went overseas or north to Canada and south to Mexico to buy them.  Then, too, they also bought used.  After all, a 10-year old Ferrari is still a Ferrari and still quite the status symbol; maybe even worth more than a new one.

In the boat building industry, alone, more than 16,000 highly paid  craftsman and workers lost their jobs.  Others, too, not directly involved in the actual boat building, like mechanics and sales personnel, lost their jobs.  Decades old, custom boat builders shuttered their doors, and some communities, who were primarily dependent on that industry, saw people move away to greener pastures; leaving it with barely any tax base to survive on.  States lost sales tax and income tax revenues.  And, the federal government lost income tax revenues from all those previously healthy boat builders and from the incomes of their workers.

Just, three years later, the Democrats and Bill Clinton quietly repealed the luxury tax.

So, here we are, again, with the Democrats and Obama wanting to sock it to the rich by extending the Bush tax cuts on everyone but the rich.  Obama says that it will bring in a much-needed $85 billion a year in increased tax revenues to reduce the deficit.  But, the rich are likely to respond, as they did in 1990, by avoiding those taxes.  Further,  that $85 billion is money that the rich won't have to spend; and, just like 1990, you can expect that some of the non-rich will pay, big-time, by losing their jobs.  That will result in higher government spending to pay for the increased unemployment claims.  In addition, the states will lose income tax revenues since state income taxes aren't calculated until after Uncle Sam takes his share; so those revenues are sure to proportionately decline.  That, in turn, will force some states to raise their own taxes to make up for the shortfalls.  And, as always: "He who ignores history is doomed to repeat it!"

On Health Care & Cap and Trade: We Will All Pay. Not Just the Rich!

The wise poet and philosopher, George Santayana, most notably and aptly said: "Those who cannot remember the past are condemned to repeat it."

Once again, the Democrats seem to have forgotten their past. For Cap-and-Trade and Health Care Reform, they have wheeled out their age-old tactic of paying for their outrageous spending habits by taxing the rich. But, as in the past, this will ultimately backfire and it is the middle class and the poor who will suffer the most.

Taxing the "rich" has been tried many times before and it hasn't ever really worked. Usually, the economy suffers and, ultimately, it is you and I who will have to pay for that stupidity in either lost jobs or higher costs for everything we buy. Apparently, the Democrats still haven't learned that the rich are really the "Golden Geese" that we need in order to sustain our standard of living and create new jobs; not the broad evil that they are portrayed to be.

To prove this, we only have to look back to 1990 when the Democrats imposed a 10% luxury tax on boats over $100,000; cars over $30,000; and, furs over $10,000. After all, it is only logical that the rich should pay heavily for their shameful excesses. Forget about the fact that those "excesses" helped to support many, many jobs in each of those "luxury" industries. Instead, the Democrats, once again, thought it was their job to screw the rich and take their money and, theoretically, give it to those who were absolutely less dedicated to improving our society.

In the 3 years that the luxury tax had been imposed, more than 30,000 employees in the boating industry (alone) lost their jobs. Century-old and family boat manufacturing operations, those who each employed dozens and hundreds of skilled workers, went out of business and their workers all lost their good paying jobs. Many little towns in New England suffered high rates of unemployment because high-end, specialty boat manufacturing was all that they did. Many of the large boats that were needed to support jobs in the fishing industry were also targets of that tax, and those people were hardly the "rich" that the Democrats wanted to target. Hundreds of others lost their jobs when marginal furriers and high end auto dealers also went under because of the tax. Worse yet, the luxury tax actually resulted in reduced State sales taxes and produced no significant increases in Federal tax revenues. The rich either stopped buying all those luxury items or they bought used items that weren't subject to the tax. Here's a pertinent article from the New York Times that was written in 1993, on the heals of the repeal of that luxury tax: "Luxury-Tax Repeal Encourages Sellers". The boating industry was literally decimated and many of those old family-owned boat businesses just disappeared forever. Worse yet, the Democrats created the thing they hate the most: Big, dominant corporations. As a result of their actions, the entire boating industry was consolidated under just a few, big, corporate names like Brunswick.

No matter what we are being told by Obama and the Democrats, Cap-and-Trade and Health Care Reform will cost "us" more than the rich. The ideological "tunnel vision" of the Democrats never seems to see the unintended consequences of their actions. Then, years later, in the rubble of their caused destruction, those same Democrats, acting totally blameless, must reverse what they've done. The only problem with what they are doing now is that their actions might not be so easily reversed in the future.

In a similar fashion to the luxury tax, the Welfare System had to be killed off because of its own unintended consequences. It was repealed under Clinton and a Republican Congress in 1996. Welfare was a failed Democratic initiative because it locked people into a lifetime of being on the dole and those in the system were never ever really able to break out of it. It wasn't the safety net that the Democrats thought it would be. Instead, it was a web of entanglement that kept hundreds of thousands of this nation's poor from ever becoming productive citizens.

Right now and in just 6 short months, the Democrats are preparing to repeat the mistakes of that old luxury tax and a failed Welfare system with their new Cap-and-Trade and Health Care Reform and another tax-the-rich scheme. In comparison, that old 10% tax on luxury items was just child's play. What they plan to do, now, could literally destroy the health care system in this country and destroy our economy at the same time with highly punitive charges for Cap-and-trade. It won't just be a few workers in luxury industries who will lose their jobs. I expect entire companies to move off-shore to avoid the hefty penalties associated with Cap-and-Trade. The Health Care system will literally collapse under the weight of being forced to be both ubiquitous and low cost. My guess is that the average lifespan of Americans, which had been rising, will start to fall again. For many, the Democrats proposed changes to our health care system is an early death sentence. And, health care will only get more expensive; not cheaper. Just mark my words.