Have you ever wondered why certain very rich people, like George Soros, the Kennedys and Hollywood moguls, become liberals and progressives? There are two principal reasons. The first is gilt guilt, especially for members of the generation of wealthy who did not make or earn their fortune. While this is plausible, gilt guilt is not subject to the rational analysis of homo economicus and is best left to the psychologists to explain. The second, less mysterious reason is that liberal policies of high taxes and excessive regulation protect the wealth and status of certain members of the economic elite. These liberal policies tend to do the most harm to the emerging entrepreneur class; not the established wealthy class.

High taxes are merely a nuisance for the established rich. They have already protected their wealth and income from high taxes. They have accountants, lawyers and financial advisors on retainer who have legally put their wealth into intergenerational trusts, offshore investments and nontaxable assets. Taxes don’t threaten their dreams of becoming rich, because they already are! On the other hand, emerging entrepreneurs need all their retained earnings to finance their business. High taxes reduce their income available for investment in their undercapitalized businesses. Unlike for established successful businesses, bank financing is not always available for the entrepreneur. Jobs are not provided by wealthy people, but by entrepreneurs striving to become wealthy. Taxes strike at the heart of the entrepreneur’s ambitions for success and his ability to create jobs.

Perhaps the very wealthy liberals are not irrational when they support liberal policies of high taxes and excessive regulation — they are thwarting the up-and-coming entrepreneurs who are competing with them in the competitive market. In this way, the very rich protect their established businesses, wealth and power. Unfortunately in the process, they harm the vast majority of Americans by thwarting new businesses and delaying innovation that will result in more jobs, better and cheaper products and services, and ultimately a better standard of living.


Armstrong Williams is on Sirius/XM Power 169, 7-8 p.m. and 4-5 a.m., Monday through Friday. Become a fan on Facebook, www.facebook.com/arightside, and follow him on Twitter at www.twitter.com/arightside.