Critics say the president's tax proposals favor the rich at the expense of ordinary people.
Maybe. Maybe not.
But a recent event reminded us of the perils of taxing the rich to help common folks.
Twelve days ago, the luxury tax on expensive cars expired. It was the last of the luxury taxes that the first President Bush signed in 1990 as part of the budget agreement in which he broke his "read my lips, no new taxes" pledge.
The agreement was brokered Sen. George Mitchell, D-Maine, then majority leader. And the luxury tax was supported by Sen. Ted Kennedy, D-Mass.
The luxury tax applied not just to cars, but to jewelry, furs and private planes, and to expensive boats — yachts.
Not So Lucrative
Congress estimated that in 1991 these luxury taxes would rake in $31 million. But the actual sum was just $16.6 million.
Why? Because, to the surprise of no one except tax-raising politicians the luxury taxes caused people to buy less jewelry and fewer expensive cars, planes, and, especially, yachts.
The tax destroyed jobs — an estimated 25,000 of them in the boat-building industry, much of which is in New England — in Sen. Mitchell's Maine and Sen. Kennedy's Massachusetts.
Job losses cost the government more than $24 million in unemployment benefits and lost income tax revenue. So the luxury tax actually cost the government money.
New England's boat-building industry was still so devastated by 1999 that another Kennedy — Ted's son Patrick, a Rhode island congressman — actually proposed a federal subsidy to help rich people buy yachts. He called it, "exactly the opposite of a luxury tax."
Remember this costly farce when you hear talk about helping the common folks by taxing the rich.