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Lessons Not Well Learned

by John M. White |

While the leaders in Congress levied charges against the auto company execs for using biz jets to come to Washington asking for money, many Americans cheered. Barak Obama, while on the campaign trail and now as President, crows about how "the rich will finally pay their fair share and help middle class Americans recover from the economic crisis".

In the meantime aircraft sales slumped, many aviation related businesses and industries have laid off thousands of workers, and Nancy Pelosi requisitions a government Grumman G V to commute home to California for the weekend.  All very impressive.Click on image to enlarge

The problem is, we have been here before.

Consider the following excerpt from Inside Politics:

"Starting in 1991, Washington levied a 10 percent tax on cars valued above $30,000, boats above $100,000, jewelry and furs above $10,000 and private planes above $250,000. Democrats like Ted Kennedy and then-Senate Majority Leader George Mitchell crowed publicly about how the rich would finally be paying their fair share and privately about convincing President George H.W. Bush to renounce his 'no new taxes' pledge," the newspaper said in an editorial.

"But it wasn't long before even those die-hard class warriors noticed they'd badly missed their mark. The taxes took in $97 million less in their first year than had been projected — for the simple reason that people were buying a lot fewer of these goods. Boat building, a key industry in Messrs. Mitchell and Kennedy's home states of Maine and Massachusetts, was particularly hard hit. Yacht retailers reported a 77 percent drop in sales that year, while boat builders estimated layoffs at 25,000. With bipartisan support, all but the car tax was repealed in 1993, and in 1996 Congress voted to phase that out too. January 1 was disappearance day.

"The end of any federal tax is such a rarity that it's well worth celebrating. And the luxury-tax lesson of economic damage is worth keeping in mind as politicians begin to wail that President Bush's new tax proposals aren't punitive enough on the rich."

It seems Washington has had lessons not well learned.

Until next time keep your wings straight and level Hersch!

JetAviator7

In the space age, man will be able to go around the world in two hours — one hour for flying and one hour to get to the airport.

 

— Neil McElroy, 'Look,' 1958

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