Greece riots comming to a town near you , just as Obama wants
Greece riots coming to a town near you , just as Obama wants

Read time 3.6 min.

Whenever you hear talk about raising taxes on the rich or on corporations please keep in mind a very simple truth, capital is more mobile than labor.

What the heck does  that mean? Well, quite simply, it means that capital can hightail it out of town and seek greener pastures with lower taxes and can do that fast.  Maybe it won’t be as drastic as closing factories and offices and moving everything all at once,  but new factories and offices will instead be opened elsewhere. Can labor follow? Well no. First of all, there already is labor to be had wherever capital decides to relocate and second, and most important, labor simply cannot afford to move.  So while all that is required to move capital is a click or two of a button. To move labor is virtually impossible. Mass migration of laborers does occur occasionally when the knife has cut so deep that the choice is move or die, but it doesn’t happen often and it isn’t pretty.  Think about the Oklahoma dust bowl and the migration of farm labor to California. ( Maybe reread the Grapes of Wrath and then use Steinbeck’s great work to beat some sense into whichever imbecile politician touts “taxing the rich”.)

…this might be the first time that an elected and serving liberal politician admitted that raising income tax did not increase revenues . No wonder Obama hates the guy. Things would go from bad to worse to possible “anarchy” – not my words but Paterson’s.

There are many studies and many statistics to show how fast taxes destroy a community’s ability to create wealth and jobs.  Do your own google search and see for yourself. For this post, I’m content to state that because of this chasmic disparity in mobility when you tax capital it, and it’s owners  move away and labor gets left behind. Taxing capital hurts labor more than it hurts capital. Furthermore, as capital skidaddles out of town and there are less wealthy people and less corporations to tax and tax revenues decline, labor finds itself  looking for a place to work. If there is one cosmic justice to this it is that this eventually  also affects the public employees – the very same ones who initially benefited from the high taxes imposed on capital.

We have seen this happen in Europe, in California, and in quite a few states here in the US, but let’s take a look at what I consider the best example . The east coast bastion of liberalism The crossroads  of the known universe. The beloved Empire State.  The great state of  New York.

New York’s Governor Paterson announced that he will need to lay off over 9000  government workers – this comes as a response to a judge’s decision that furloughing the workers is somehow against whatever contracts the unions have in place.

…will we all get together and tell Obama that he has to stop destroying the country and if he doesn’t listen we impeach him

So how did we get here? How did we get to the point where the liberal governor of a very liberal state is forced to lay off almost ten thousand or more of the very voters that make up his base?

Well in one word, “taxes”. To elaborate , the “millionaire tax” and tax on corporations.

Here is the Wall Street Journal’s announcement that New Yorkers  just became the highest taxed people in America.  In “New York, Assembly Speaker (and de facto Governor) Sheldon Silver and other Democrats will impose a two percentage point “millionaire tax” on New Yorkers who earn more than $200,000 a year ($300,000 for couples). This will lift the top state tax rate to 8.97% and the New York City rate to 12.62%. Since capital gains and dividends are taxed as ordinary income, New York will impose the nation’s highest taxes on investment income — at a time when Wall Street is in jeopardy of losing its status as the world’s financial capital.” ( Source)

Of course you noticed that the so called millionaires are working couples  making  $150K each – some millionaires. This was in April of 2009.  Here is WCBS.com  reporter Marcia Kramer waxing approvingly about how the millionaire tax could fund NYC mass transit. “Assembly Democrats do have a plan to raise money for mass transit: tax the rich.Source

Don’t fault the New York politicians.  After all, experience told them that it would all be just fine. It’s not like the Census bureau reported that New York state lost over 1.7 million residents over the past decade – the most of any state. Oh wait that’s exactly what happened. Sure, the exodus didn’t happen overnight, but you know what,  the drop in revenues sure did!

By October of 2009 NY state tax revenues were off by 36% ! A befuddled Governor Paterson declared on CNN “‘We added personal income tax, which we thought would make the falloff 10 percent to 15 percent,’ Paterson, a Democrat, said on CNBC today, referring to $5.2 billion in new or increased taxes. ‘This is what is so frustrating. It’s still 36 percent, meaning our revenues fell more in 2009 than they did in 2008.‘” (source)   I am pretty sure that this might be the first time that an elected and  serving liberal politician admitted that raising income tax did not increase revenues .  No wonder Obama hates the guy. Things would go from bad to worse to possible “anarchy” – not my words but Paterson’s.

Here is the same WCBS.com  reporter Marcia Kramer quoting  NY State Governor Paterson  on the effects of a state government shut down “‘No one knows the full ramifications of a government shutdown,’ said Paterson. ‘It would create unimaginable chaos around the state and the greater metropolitan areas.'”

In a few short months, New York’s millionaire tax, coupled with the Wall Street slow down, have managed to bring the state to the edge of chaos and anarchy- just like Greece experienced for very similar reasons.

It is a real world hard lesson in the properties, characteristics and relationship between capital, labor and government. Capital will go where it is most welcomed and it will leave once it is abused with excessive taxes. Labor cannot do that, at least not as easily as capital can.  Labor will remain behind, just as it did in NY as the “millionaires” and their capital left and now labor is threatened with becoming unemployed.  Obama will soon propose to do this nationwide through a combination of higher taxes, allowing  the Bush tax cuts to expire, imposing new taxes on corporations etc. etc. Are you ready to move along with the capital or will you stay behind with labor…

Or better yet – will we all get together and tell Obama that he has to stop destroying the country and if he doesn’t listen we impeach him!

{"email":"Email address invalid","url":"Website address invalid","required":"Required field missing"}