Check out this letter from 2002 Nobel Laureate Vernon L. Smith of Chapman University:
I think the answer to Alan Reynolds's excellent question and article ("How's Obama Going to Raise $4.3 Trillion?," op-ed, Oct. 24) is that Barack Obama is not going to raise $4.3 trillion, and he is not going to perform on his rhetoric. He excels as a rhetorician -- common to both the great and the least of past presidents -- but performance cannot run on that fuel...
Of course it is entirely likely that Mr. Obama will succeed in going for higher business, capital gains and income taxes, but it is an economic illusion to think for a minute that this will benefit the poor. All our wars on poverty have been lost by failing to help the poor help themselves. Higher business taxes, which ultimately can only be paid by individuals anyway, will simply export more economic activity to the world economy. Higher capital gains and income taxes will primarily reduce savings and investment at the expense of greater future productivity, which is at the heart of cross-generational reductions in poverty. A dozen countries, including the third largest economy, already have zero taxes on capital gains, and eight of them score high on the Economic Freedom Index and high in gross domestic product per capita.
It is indeed an illusion to think that this will provide a significant benefit to the poor. LBJ's war on poverty and the mountain of transfer payments it spawned didn't 'solve' poverty, and decreasing the competitiveness of American business in the global economy and punishing success at home won't solve it now. Mr. Obama's plan is more likely to mollify poor Americans with its class warfare undercurrent temporarily. But as unemployment rises and GDP growth stagnates the reality of this house of cards will set in across America. Hopefully it won't take the 30 years it took to realize that the Great Society was nothing of the kind for the vast majority of poor Americans. Only economic growth and equality of opportunity have that possibility.