Twitter has been abuzz with the latest headline out of the far left. Alexandra Ocasio-Cortez wants a tax rate of 70 percent. While most of the outcry is somewhat misleading, I think there is some examination that needs to take place.
Ms. Ocasio-Cortez minored in Economics at Boston University, so I am sure she has a good grasp on economic principles, like that of supply and demand. I am not sure, however, if she understands the Laffer Curve though. The Laffer Curve is the point where an increase in tax will no longer produce more revenue.
The old idea was that this point was around 70%. This was trumpeted for quite some time when socialism was en vogue. Most likely because it agreed with the prevailing ideology. The government can take most of the money and then redistribute as they see fit. It would also make sense that a member of the democratic socialists of America would cling to this idea.
During the Obama administration, however, one of the President’s chief economists and her husband published a paper with new evidence putting the actual curve closer to 33%.
Why would someone be so willing to hold to an old idea even when new evidence arises that would seem to contradict it? Probably the same reason why so many people think communism is still the wave of the future, even as it fails over and over again.
Is it willful blindness, or something worse?
I think it can be traced to a single four-letter word. Hope. This is what the left builds its ideology around. It might seem like a beautiful thing to build a political structure on, but hope does have a dark side. It is what makes someone refuse to examine evidence because it goes against what is hoped for. We all know this. Think about being in a relationship. We have put so much time and effort into it and despite all of the warning signs, we stubbornly cling to the hope that it is not over. I have heard so many people say, I should have seen it coming. Why didn’t they? Hope.
Back to socialism. So many countries out there have imposed such a high tax burden on their people, thinking that they know the best way to redistribute that money. I lived in a country for three years that had fully embraced this ideology. Towards the end of my time there, I would talk to other frustrated expats who wanted out. They were being sucked dry by taxes for government-run health care and other “human rights” that the government had decreed. So many people were, and are not able, to see the warning signs because of that four-letter word, HOPE.