When I was up in Iceland, the big topic of discussion was cutting caital gains taxes, which all of the self-proclaimed "Independents" thought was a bad idea, designed to give more money to the wealthy. They felt that "The Wealthy" should get stuck with higher taxes so that there would be more money to spend on much needed programs. They never bothered to take into account that most of "The Wealthy" didn't just fall into their money, they made it and they know how to protect it.
I told them that when capital gains taxes are too high, "The Wealthy" have plenty of options for sheltering their income... like buying up tax-free municipal bonds. Once I explained the concept of munies to the "Independents" they all thought that having "The Wealthy" invest their money into civic projects like building bridges and highways was a great idea! Then I gave them the break down of that that would mean...
1. The municipality issues bonds to do some civic project, and "The Wealthy" snap them up.
2. Work begins on the civic project. Direct employment on the effort goes up, and increased employment in the support sector grows. More people are employed, the tax base increases, and all is well (the "Independents" were estatic!)
3. The work is completed, and the workers (direct and support) are laid off. Unemployment claims start coming in and increased payments go out, while the tax base decreases.
4. "The Wealthy" are paid the principal amount plus the interest charges by the municipality, and they pay zero taxes on either. So, in addition to the municipality losing money due to loss of income taxes, they also lose money on untaxed payouts of the munies. "The Wealthy" make money basically risk free, they just don't make "A lot" of money.
Then I compared the above scenario to cutting capital gains taxes:
1. Capital gains taxes are cut, so moderate-risk and higher ventures, which yield much higher financial gains than munies, become very attractive to "The Wealthy".
2. Business ventures start to grow, and more people (direct and support) become employed.
3. Businesses continue to grow and expand, more people are employed and promoted. The revenue base in taxes increases while unemployment drops.
4. Employees expand out to form their own businesses, increasing their income and making room for other new employees.
5. The percentage of taxes paid per dollar by businesses drops, but the amount dollars being taxed goes up, so there is more money available for spending on civic improvements. And low-return investments like munies become less attractive to "The Wealthy", so there are more investment opportunities for less-well-off folks.
The biggest miscalculation that I see Liberals... I mean "Independents" making is they think that they have the upper hand when dealing with business... that they can "stick it to them" and businesses or "The Wealthy" will just have to take it. They just don't understand that "sticking it to business" is like nailing jello to a wall. There are always options for "The Wealthy" and businesses to protect their resources, and no amount of regulation will ever change that since they always have the ultimate out of moving the business, or their money, overseas or investing in tax-free issuances.
The United States hasn't grown into the World's greatest economy over the past 227 years by screwing business, but over the past twenty or so years there are a lot of people who seem to have forgotten that fact. If a government doesn't look out for business, there isn't going to be a government. That's what's happening out in California right now, because government decided to look out for the common man rather than business.