The U.S. Congress and the current administration obviously believe in this ideological fiction.
When they passed the recent ObamaCare bill they built in several tax increases.
One is to raise the tax on income earned on dividends from 15% to 20%.
A second is to raise the top level of progressive taxation from 35% to 39.6%.
The third is to raise taxes on rental income and interest by 3.8%.
The problem with Lefty polemic is that it is nothing more than polemic. It has no substance.
The ObamaCare tax increase is supposed to raise $1.2 trillion dollars from people earning over $500,000. It will not generate one penny of the $1.2 billion. It will in fact reduce revenue by several billion dollars.
I personally can attest to the tax on dividends. When the tax rate moved from 20% to 15% I moved part of my portfolio into dividend earning stocks. Now I will move them out of dividend earning stock. Most everyone else will do what I do. No revenue gain there.
Several top economists have measured the impact of increased tax rates and their ability to generate income. Start with a fact: people earning over $500,000 provide half the total income tax revenue of the United States.
Add two more facts. The brilliant Bates award winner, Emmanuel Saez, has shown that for most of the bottom half of current tax payers (which itself is only about 20% of people with taxable income), a tax increase of $1.00 will yield $.40. So that the bottom 10% of the tax base will only generate $0.40 of each dollar of expected new revenue on each dollar increase in taxes.
The neutral Treasury economist, Bradley Heim, has shown that the increase of taxes on the $500,000 (supposed to generate $1.2 trillion) earners of $1.00 will reduce tax revenue by $.20.
Put it together and a tax increase at our current tax levels will yield virtually nothing.
Who are these people in Congress and the Administration? Lefty ideologists, for whom data and reality are irrelevant.