LOL!
In a vague process of association, here are some little tidbits showing how people underestimate the effects of tax policy:
In the '80s, one of the loopholes that was attacked was the business lunch, permitting deduction as a business expense. Restaurateurs pleaded that an abrupt elimination of the deduction would devastate their business, particularly in urban centers like Manhattan, but everyone laughed at the idea that all those "rich guys" would economize, and it was eliminated anyway. Lo! there was a big recession in the restaurant business.
Later, during the Bush Administration, there was a big push to slap a ten percent luxury tax on yachts. Again, the yacht builders pleaded, but the reasoning was that rich people wouldn't care about a ten percent increase. The problem was, too many people who were not per se rich, and for whom an additional $20k or more was not trivial, were buying yachts. The yacht building industry was devastated, especially in New England.
The fact is, very few people are so rich that marginal changes in the tax code are unlikely to have an effect on them. Business lunches add up; yachts are luxuries many people can just as easily forgo; and people try, within reason, to maximize their satisfaction in consumption, which means that the less they spend in one place, the more they have to spend elsewhere. |
