Reagan and Taxing "the Rich"

President Reagan's Personal Tax Stragegy

Reagan used to tell the story about how when he was a movie actor he'd make 2 pictures a year, which would take maybe 8-9 months, then lay on the beach for the rest of the year. The reason was by the end of the second picture he was in the 90% tax bracket, and it wasn't worth all that effort to get another 10 cents on the dollar.

It didn't hurt him, he said, as he made plenty of money anyway. But what it meant is that the cameramen, set designers, sound people, etc had to go out and look for part time work the rest of the year.

This experience was a primary factor in leading him to advocate lower marginal rates for top income earners. It helped average income earners too.

The Corner has a collection of emails from high earners that gives lots of detail about what many of them will do (with reference to Obama's tax policies). One example:

My wife and I are both Pediatricians. We own our own practice together. We have one PA and 7 other employees. We each gross about $200 K a year. We have 3 young children at home, 2 of which are not in school. We also employ an in home Nanny. My wife has been torn for years about not being at home for these children, which are our biggest investment in the future. We operate parallel S corperations as PC's, with a 50/50 ownership of the LLC that is our business. We file taxes jointly. After crunching some numbers concerning the President's tax hike proposals, I have come to the following conclusions. If the President's plan is inacted, we will do the following:

1. My wife will become a stay at home mother.
2. At least 3 of my 7 employees will be released.
3. The practice will downsize to a smaller office space, i.e. less rent.
4. The number of patients cared for on a daily basis will drop by 40%.
5. My wife will come out of the forced ER call schedule for good.
6. I will gross $249,999.00 a year, exactly.
7. The net income of our personal home will decrease by less than $10 K a year from where it would have been if we changed nothing.
LINKS: The Corner | Dissect Left

Hey, Mr. President: Who You Calling Rich?