Today was supposed to be the last Democratic Presidential primary. We’ve heard primarily from three candidates: Joe Biden, Bernie Sanders, and Elizabeth Warren (though this article says that all of them are essentially just repeating things that Bernie Sanders said in 2016).
All of these Democrats have said that, through the magic of higher tax rates on the rich, the Federal government will be showered in tax revenue, breaking out of Hauser’s Law that found revenue to be limited to about 20 percent of GDP, independent of the headline rates (1945-2015). In the page pandering to Catholic voters, for example, Biden promises to “get rid of the capital gains loophole for multi-millionaires.” So a multi-millionaire would have to pay a 50% ordinary income tax rate, federal plus state, on capital gains but wouldn’t be able to move to Puerto Rico for 183 days/year and pay 4% instead under Act 22 (and that would be to Puerto Rico, so the Federal Government would get 0%).
I wonder if this kind of magical thinking about the possibilities of a high return on an investment of tax rates is partly due to the politicians’ age. They’re all senior citizens and senior citizens can be prone to mistaken estimates. One of the most famous examples of this is an investment group of women in their 70s known as the Beardstown Ladies, They believed that they’d achieved a 23 percent annual return on investment, beating the S&P 500. When younger people analyzed their returns, the conclusion was that the return had been 9 percent annually, underperforming the S&P 500.
[Some more fun stuff… All of the Democrats told us that immigration will make existing residents of the U.S. better off. It doesn’t matter how low the skill level of the immigrant nor how much in the way of government-provided services the immigrant needs. A 75-year-old migrant who does not speak English and who needs $2 million in health care will make every existing American slightly richer. Admitting several million elderly disabled non-English-speaking immigrants would make us crazy rich.
Joe Biden will deny that there is anything special about having been born with a physician-identified biological female sex at birth (“LGBTQ+ Equality”; what about LGBTQIA+?), but the rest of his policy pages refer to “women” as though it were a persistent well-defined category of humans.]
Readers: What do you think? Are the leading Democrats examples of the elderly being bad at arithmetic? Should we all make sure that we have a durable power of attorney set up for the day that we turn 70 and can’t trust ourselves to make a stock trade?Full post, including comments