- Whelan points out that by making the taxes higher on luxury items that mostly the rich will be buying, the rich decide to go elsewhere to avoid taxes. They will move someplace where the tax burden is not as high or the rich will just end up not buying the items that they tax. For example, if you tax red sports car then the simple answer is that no one will be buying a red sports car but it doesn't improve the situation in any way. The government end up making no money because people aren't buying red sports cars and now people can't buy a sports car in the color they love.
- Whelan also focuses on how higher taxes affect the poor, instead of encouraging them to work we are giving them incentives to stay at home and collect welfare. If they start working they will only be taxed on their earnings and will end up with less money than if they were staying home on welfare. Another point he makes is that higher taxes are discouraging married women from working because the taxes that a married women would be charged is marginally less than staying home and taking care of the house. A married women ends up almost making only 50 cents of every dollar she earns.
In the end both the rich and poor are less off.
