Tags: Arthur | Laffer | Billionaires | washington | State

Laffer: Billionaires Should Bail Out Cash-Strapped States

Thursday, 07 Oct 2010 08:09 AM

Economist Arthur Laffer says if Washington state's most famous billionaires are really worried about their state's finances, they'd write personal checks to the government and leave everyone else alone.

Framed on a wall in Laffer’s office is a personal letter from Bill Gates Sr., extolling the virtues of progressive taxation. "I would say our country has prospered from using such a system — even at 70 percent rates to say nothing of 90 percent," Gates wrote.

“It's one thing to believe in bad policy. It's quite another to push it on others,” Laffer writes in The Wall Street journal.

Laffer notes that Gates Sr. has contributed $500,000 to promote proposition I-1098 on Washington state's November ballot, which would impose a brand new 5 percent tax on individuals who earn more than $200,000 and couples who earn more than $400,000 per year.

An additional 4 percent surcharge would be levied on individuals and couples earning more than $500,000 and $1 million, respectively.

“To imagine what such a large soak-the-rich income tax would do to Washington, we need only examine how states with the highest income-tax rates perform relative to their zero-income tax counterparts,” Laffer observes.

“Over the past 50 years, 11 states have introduced state income taxes exactly as Messrs. Gates and their allies are proposing — and the consequences have been devastating.”

“Each and every state that introduced an income tax saw its share of total U.S. output decline,” Laffer notes. “In one fell swoop, Washington would move from being one of the lowest-tax states in the nation to being one of the top nine highest.”

“If Mr. Gates Sr. and his son feel so strongly about taxing the rich, they should simply give the state a chunk of their own money and be done with it. Leave the rest of Washington's taxpayers alone.”

Investors Daily reports that, while the Gates’ family is not alone in supporting I-1098, they are hardly without opponents, even in their own company.

Steve Ballmer, Microsoft's chief executive, opposes it, as do other big names in Washington state business: Jeff Bezos of Amazon, George Bartell of the Bartell Drugs chain and John Nordstrom of the department store chain that bears his family name.

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Economist Arthur Laffer says if Washington state's most famous billionaires are really worried about their state's finances, they'd write personal checks to the government and leave everyone else alone. Framed on a wall in Laffer s office is a personal letter from Bill...
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