If you have been following my blog you know that I am a fan of decreasing taxes. By working with clients I know that as tax rates go up they lose the incentive to invest. Here is an example of what I have witnessed during my career.
A few weeks ago I was talking to a client. He told me that he was working really hard (70 to 80 hours per week) all summer to create a new line for his business. If this goes the way he wants in the next year he would have to build or rent a new warehouse and hire another 6 people. As we worked through the numbers, it looked like there was potential for another $40,000 in annual revenue.
Later in our conversation we started talking about the uncertainty of tax rates. He said "You know if tax rates went to 70% (Federal, State and Social Security), I would not have sacrificed my time or the financial sacrifices that I went through this summer." See what I am talking about?
Here is a very good article from the National Review that better summarizes my thoughts along with historical examples.
http://www.nationalreview.com/articles/250954/brass-oldies-thomas-sowell
