Lesson for Warren Buffett: British Millionaires’ Response to Tax Increases

Heritage  "As the fiscal cliff approaches, Congress and President Obama continue to debate tax increases, even though spending is the problem. Investor Warren Buffett recently opined that tax hikes on the wealthy would not curtail investments or hurt the economy. His logic, like President Obama’s, assumes that incentives don’t matter.
"Oh really? News that Great Britain saw its number of millionaires decline by two-thirds due to a steep top tax rate tells a different story.
"The year after former Labour Prime Minister Gordon Brown introduced a 50 percent top income tax rate, the number of people filing as millionaires dropped 63 percent, from 16,000 to 6,000. Tax revenue also declined by nearly £7 billion.
"No single reason explains the drop. Some millionaires probably earned less money due to the slow-growing European economy, or they may have simply worked less. Others may have shifted the timing of their income or moved it to less-taxed forms. Still others might have physically left the country.
"Here’s the bottom line: All these reasons are economically important and show that incentives matter."....

So what should be done, given the fiscal problems? Heritage offers these solution, if only Obama can get over his visceral dislike for business and the rich and his desire to wreak revenge on them: 6 Fixes to America’s Fiscal Crisis
"President Obama made his first offer to congressional Republicans yesterday in negotiations over the “fiscal cliff”—an economic catastrophe of tax hikes just a few weeks away.
"The White House’s proposal? $1.6 trillion in tax increases, $50 billion in new stimulus spending, and a change that would make it easier to raise the debt limit—so that all this spending could continue.
"Senate Minority Leader Mitch McConnell (R-KY) couldn’t contain his laughter at these suggestions.
"One congressional aide said the offer “amounts to little more than reiterating the President’s budget request—which failed to get a single vote in the House or Senate.” "
Read the list here:...

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