Newt Gingrich will argue against the motion: Be it resolved tax the rich (more) at the Munk Debates in Toronto on May 30. Watch it live at 7 p.m. ET.
Anti-rich tax schemes don’t work and they are unfair.
The question of raising taxes on the rich is not just a theoretical one. It is a practical policy question that affects everybody; even people whom tax-the-rich schemes are ostensibly designed to benefit.
Experience shows when inequality in taxation is reduced, work and innovation and national wealth expands. The series of Reagan tax cuts in the early 1980s were followed by a boom that shattered the malaise of the Carter years.
In the next decade, Republicans pushed through the largest capital gains tax cut in American history after passing welfare reform, leading to another historic economic boom.
It is a fact that increasing taxes on the rich hurts the economy, kills jobs, and pinches wages. Unnecessary, government-imposed costs discourage people from taking risks and creating new businesses or expanding existing ones.
This means less work, less innovation, and fewer new things that dramatically improve everyone’s quality of life.
We also observe from experience that increasing taxes on the rich feeds corruption, giving more money to sprawling government bureaucracies that in their current form are out of control, with politicians dispensing taxpayer money to political friends. Moreover, it creates incentives for the people who can afford it to lobby government for special treatment or else to hide their money to avoid paying taxes.
But anti-rich tax schemes not only don’t just work, they are unfair.
Of course, a well-functioning society includes some necessary level of taxation. Everyone benefits by maintaining the core framework for freedom, the functions of government that guarantee every person’s equal rights to life, liberty, and the pursuit of happiness.
But the proposition here to raise taxes on the rich goes far beyond these important basic needs. Instead, it asserts that as a general principle we should raise taxes on “the rich.” This is nothing less than a punishment on success.
In the current context, taxing the rich means taking the property justly earned by some people and either redistributing it to others who have not earned it themselves, or feeding the black hole that is most of the rest of the federal government.
The inevitable result of tax-the-rich schemes is significant erosion of the value of work, which is central to the American experience. We live in a society that offers every single person enormous opportunity, strong protections for basic rights, and wide liberties to make their own choices and pursue their own plans. This creates enormous incentives for work, as long as people can be assured of realizing the rewards of their own work.
In America, people make many different choices about their lives and the type of financial rewards they will realize in life. This is as it should be. Individuals determine their future, not governments.
We have seen the desire to tax the rich play out time and time again. Lower, flatter taxes historically have helped everybody.
Raising taxes on the rich for the sake of punishment and class warfare is unwise as well as unjust.
Newt Gingrich is a former speaker of the U.S. House of Representatives, candidate for the Republican nominee for president, and a New York Times best-selling author.