I tell my classes that to have a vibrant economy, people generally need to have the freedom to choose who to buy from and who to sell to. Taxes, subsidies, price controls, and other things of that nature ultimately discourage economic activity because at some point they each take away the freedom for people to contract with whom they please. This idea is behind Daniel Henninger's current column at WSJ.com. An excerpt:
Barack Obama campaigned for a year against "the top 1%" and "the wealthiest." It sounded like more than economics to me. But a nation can't have entrepreneurs and eat them, too. Asia is overflowing with rich entrepreneurs. Google "China's auto industry." They have more new auto manufacturers than you can count. If the U.S. has any hope of competing long term with this rising force, it will have to let some Americans get as rich as nouveau riche Asians. This presidency won't do that.At the jobs summit, Mr. Obama said "I want to hear from CEOs what's holding back our business investment." Really?
How about the world's highest corporate tax rate? How about the 5.4% health-care surtax on top of the expiring Bush tax cuts, which will push the top marginal individual rate, paid at the outset by many entrepreneurs, well over 40%?
Set aside income taxes as the unransomed hostages of progressive dogma. Justify this: The Senate health-reform bill imposes a $4 billion annual excise tax on medical devices and diagnostic equipment. In a slow-innovation economy, which is what we have now, medical and diagnostic miracles sit at the intersection of American science, technology, education and IQ. That stuff defines American entrepreneurship and ingenuity. If the Obama Democrats will tax these people, they'll tax anything that produces income, no matter how innovative or job-creating.