During the Presidential Campaign of 1988, our first President Bush, famously promised no new taxes. In fact, I believe his words were: "Read my lips! No, new taxes!" After the election, the Democratic congress convinced President Bush that there would be dire consequences without tax increases. He relented on his promise, which many believe led him to lose the election to Bill Clinton in 1992.
Like the tax increases being proposed today, the taxes were supposed to only fall on the rich so that the ordinary man (or woman) would not face undue hardship with additional taxes. So in 1990, one of the taxes proposed and passed was on yachts. Congress reasoned that only the rich would be buying yachts and therefore, only the rich would suffer the effects.
What happened instead was the that tax nearly killed the ship building business in New England. The wealthy who had previously bought yachts, simply starting buying them in places like the Bahamas where there was no tax. So not only was it ineffective in producing additional tax revenue, it created tremendous economic problems to an entire industry and put many hard working middle class people out of work.
Presently, in the national debate on taxes, President Obama is repeatly pushing to increase taxes on the rich. Those opposing the measure are being depicted as not caring about the poor and only standing up for the rights of the rich. History suggests otherwise. If you don't believe me, ask the men and women who lost their jobs in the ship building industry in the 1990s.
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