Tax the rich! Wait, didn't congress try that in 1990?

Walter Williams is a professor of economics at George Mason University. He noticed that Obama's idea of raising taxes just on the rich was tried before in the U.S.

Well then, how'd that work out? Below is an edited version of Williams' findings:

Barack Obama has called for a luxury tax on corporate jets as a means of raising revenue. He figured this should be a slam-dunk because his base envies the rich.

Back in 1990 Congress tried imposing a 10 percent luxury tax on yachts, private airplanes and expensive cars and costly jewelry purchased in the United States. Sen. Ted Kennedy and senate majority leader George Mitchell crowed publicly about how the rich would finally be paying their fair share of taxes. What actually happened was quite different.

Within eight months after the law took effect, Viking Yachts--the largest U.S. yacht maker--laid off 1,140 of its 1,400 employees and closed one of its two manufacturing plants. Before it was over Viking Yachts was down to 68 employees.

In the first year, one-third of U.S. yacht-building companies stopped production, and the industry lost 7,600 jobs. By the time the tax was repealed, 25,000 workers had lost their jobs building yachts, and 75,000 more jobs were lost in companies that supplied yacht parts and material. Ocean Yachts trimmed its workforce from 350 to 50. Egg Harbor Yachts went from 200 employees to five and later filed for bankruptcy.

The U.S., which had been a net exporter of yachts, became a net importer as U.S. builders closed their doors. Companies in Europe, Taiwan and the Bahamas immediately saw their sales rise--which added zero to U.S. tax revenue.

Congress had gleefully predicted the luxury tax on boats, aircraft, expensive cars and jewelry would raise $31 million a year in revenue. Instead it destroyed thousands of jobs in the aircraft and yacht-building industries, costing the government millions in unemployment benefits and lost income tax revenues.

The Joint Economic Committee concluded that the value of jobs lost in just the first six months of the luxury tax was $160 million.

Finally, after three years, congress repealed the tax.

Why did dreams of greater revenue not materialize? Kennedy, Mitchell and their congressional colleagues simply assumed that the rich would buy the same things after the tax was enacted as they did before. Like most politicians then and now, they believed that people don't respond to price changes.

People always respond to price changes. The only debatable issue is how much and over what period.

Now Obama wants to repeat this disastrous experiment. Is it likely that in the two decades since 1990, American nature has changed? If Congress imposes a luxury tax on corporate jets and other luxury items, will Americans behave differently this time? In other words, are federal tax revenues likely to rise if Obama's tax proposal is enacted?

I don't believe Obama is dumb enough to believe that a tax on corporate jets would be a revenue generator. Instead, I believe his goal is to inspire envy and resentment against wealthy Americans as a tool in pursuit of his higher-tax agenda.

The way this Williams guy criticized Obama's proposal, he must be a raaacist.

Oh, wait: Walter Williams is black. And a very keen student of both economics and history.