For 250 years, America has been known throughout the world as the place where anyone could work hard, scrape together a little money, and invest in a great idea.  Then, by working even harder and reinvesting the profits, any individual could become unimaginably rich.  For much of its history, America was a place where low taxes and a lack of governmental interference encouraged this kind of entrepreneurial activity and generated a society that held out the possibility of upward mobility to everyone. 

It was an ideal that was reflected in our culture, in everything from cars to homes to clothing.  With guts and gumption, anyone could go from rags to silk suits, from Chevrolets to Cadillacs, and from shacks to mansions.  It was a deeply held concept that was memorialized in the national literature, in movies, and in the folk tales we told ourselves. 

But a creeping kind of governmental interference has seriously threatened this ideal.  The modern U.S. income tax was launched in 1913 with a top rate of just 7 percent.¹  Government spending was a mere 3 percent of GDP in 1925, but by 2009 it had risen to nearly 25 percent of GDP, which is the most it has been in more than 50 years.²  With the exception of the Reagan years, government has continued to play a progressively bigger role in our lives, with regulations and public programs inhibiting the private sector.

New proposals already raised by President Obama, such as raising the top rate on ordinary income and dividends to 39.5 percent while also eliminating the cap on payroll taxes, would put the highest combined marginal rate at upwards of 52 percent, before counting state and local taxes.  Capital gains would be taxed at 28 percent, and the so-called “death tax” would go back to 55 percent. 

On the spending side, the administration is planning to increase federal spending by over 25 percent, while pushing up the national debt by a factor of three during the next decade.  This promises even higher taxes in the future, when the bill will come due for all that spending.

These programs all rely on the government taking a growing share of private property and redirecting it to solve perceived social problems.  As a result, there will be less private capital to plow...