Free Markets, Free People

Destroying the “taxing the rich is the solution” myth

If you listen to Democrats, all we need to do to solve the debt and deficit problem is to let the Bush era tax rates expire and raise the tax rate on the rich.  We’ve had Warren Buffet, among others, saying “hey, tax me more, I can afford it”.  And, of course, those standing their ground on principle saying revenue isn’t the problem and tax increases aren’t the solution are roundly condemned for being greedy and protecting the rich.

Well what if we increased the taxes on the rich?  What if we increased them dramatically?  Is our deficit problem likely to be solved?  The answer, of course, is “no”.  And here are the numbers:

“Even taking every last penny from every individual making more than $10 million per year would only reduce the nation’s deficit by 12 percent and the debt by 2 percent,” the non-partisan Tax Foundation’s David Logan writes.

“There’s simply not enough wealth in the community of the rich to erase this country’s problems by waving some magic tax wand,” said Logan.

Rest assured you’d only get one shot at all the money as well.  The  next year the majority of the rich — and that most likely would include Warren Buffet — would find ways to hide their income from such a level of taxation.  Human Nature 101.

So 12% of the deficit and 2% of the debt with 100% taxation.  Sound like a solution to you?  Of course not.   How about raising taxes in general,  good idea right now?

If you said, “no”, you’re in good company:

The majority of economists surveyed by the National Association for Business Economics believe that the federal deficit should be reduced only or primarily through spending cuts.

The survey out Monday found that 56 percent of the NABE members surveyed felt that way, while 37 percent said they favor equal parts spending cuts and tax increases. The remaining 7 percent believe it should be done only or mostly through tax increases.

Whether the president likes to admit it, we’re in danger of a double-dip recession, and one way to guarantee it is to raise taxes during such an unstable time as now.  Obviously if taxes are increased on the rich, it won’t be 100%, so the impact on the debt and deficit are likely to be minimal at best.  And it would be an action counter to what economists believe to be the best approach to avoiding a double-dip.

That most likely means that Democrats will continue to pursue such an increase with a single-minded purpose.  Or, in short, they still don’t get it — it’s the spending, stupid.


Twitter: @McQandO

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23 Responses to Destroying the “taxing the rich is the solution” myth

  • Not to mention that raising taxes is like throwing booze at drunks and hoping they stay sober.  Washington will simply spend any new revenue.

  • been looking for info just like this…
    If only showing this to my “Tax the rich” friends would actually do any good. Sadly, i doubt it.

  • So, the Science is settled and the Consensus is in. Spending cuts only, or you are Tax Fetishist one step away from Holocaust Denial or Creationism. (Not sure which is worse.)

  • No, no, you don’t understand. Spending cuts only is politically infeasible. I decree it. So do my buddies in the faculty lounge. So shut up about how I said that about the debt ceiling negotiations and was wrong. I wasn’t wrong. I’ve retroactivelly edited that memory in my head to make me right. So you dense righties just need to stop arguing about this and give we wise pragmatic moderate leftists more money.

    So stop with the numbers and statistics and charts and graphs. You know I barely passed Math for Social Science Majors. Besides, those rich people just don’t need that money, and the wide gap between rich and poor is just awful and causes me to lose sleep at night.

    That’s why I’m the spiritual type who doesn’t make much money, you know. Not because I’m mediocre and have no skills anyone would pay for. Oh, no. Stop saying that. It’s because I’m spiritual and care about people. That’s why I teach at a nowhere college surrounded by moose for very little money. I am rewarded spiritually. Plus, it leaves me time to come here and educate you sterile, inbred, non-spiritual ex-military basket cases on how the world should be run. Which I do to help you, certainly not to bolster my own self-image by having people to talk down to. Stop saying that.

    You need to stop all those posts on debt under Obama too. I’ve told you many time before – he’s going to cut spending and have less debt than Bush and he will certainly be re-elected. Yes, he will do all that. I decree it. And he will also do something about the epidemic of giant magenta caterpillars with Sarah Palin’s full lips and ample bosom. Which you Goebbel’s like righties don’t seem to care enough to post about, even though they’re just all over the place up here in Maine. Hypocrits.

  • And, let’s remember, that target-class of productive people has taken a hit in the recent and current DEPRESSION.  Not nearly so many as just a few years ago…
    Decline is a choice, and the Collective and Bad Luck Barry have clearly made that choice on behalf of America.

  • To the statists, all that is needed for the economy is enough to pay out largess to the cronys, apartchiks, nomenklatura and their minions.
    The proles…well, let ’em eat cake. (Except that is fattening…).

  • When a hot-air balloon is coming down in the wrong place or too quickly, the pilot jettisons weight. The USA is coming down so it’s time to jettison some weight: Dept of Education, Dept of Energy, Ag, Fannie/Freddie, HUD. It’s really very simple.

  • Off topic, but we just had a pretty decent earthquake here in Maryland.

    • Not nearly as off topic as you’d think!
      Bush’s fault,
      another major disaster that caused Obama bad luck in trying to fix the economy,
      the reason that the market went up,
      or the reason it went down,
      the reason housing starts are low,
      the reason unemployment is high.
      Just another day in the Obama administration, just another available excuse for his incompetence.

  • The problem with myths is that they are not amenable to logic.

    • Especially when driven by class envy/hatred, which is highly acceptable within the Collective.

      • More specifically, I suspect the defense of the “tax the rich” plan would be that ten million dollars is FAR too high a bar to set for “rich”. Just cast a wider net, down to, oh, say, $100K a year. Most of the time the people who use short-hand like “The rich” and so on are really saying “people who make a lot more than I do, a lot being defined as any amount that makes my income seem inadequate when I compare myself to them.”

  • Your numbers, sadly, mean nothing. This is a war about dogma and faith-based belief. This is about ‘stuff’ – who has, it, who wants it, and who ‘deserves’ it more. And the Takers (you can call ’em Taxers, but Takers is just more honest) have no qualms about gaining control of the might of government and seizing things you have earned -at the point of a gun when necessary and with the full backing of many of our neighbors. It’s scary because many of us (Libertarians, Tea Party Members, Conservatives, whatever) are armed , yet would never think of using those arms except fro protecting life, family and property. The Takers, they’ll use the guns when they’re ready, simply to take yours because they’ve ‘deemed’ it so.

  • McQ[W]hat if we increased the taxes on the rich?  What if we increased them dramatically?  Is our deficit problem likely to be solved?  The answer, of course, is “no”.

    The more radical (honest?) of the lefties will admit that it isn’t really about revenue and the deficit: it’s about “fairness”.  I don’t know who they think appointed them the arbiters of “who has too much” or gave them the authority to “eliminate income inequality”, but they obviously think that they have such a mandate.  A coworker of mine is cast from this mould: he rants about the fact that “10% of the people control 90% of the wealth” as if this is some great outrage that must – MUST – be righted.  Personally, I don’t give a damn if somebody has more than I do so long as I’ve got enough for myself or at least the opportunity to earn what I want / need.  Libs don’t see it that way, unfortunately.

    Ragspierre“Bad Luck Barry”

    I am stealing that!

  • Buffet already ‘hides’ most of his earnings from taxation which makes his ‘tax us more’ mantra somewhat…ironic.

    • Not to be too harsh, but declarations like Buffet’s recent one are the cheapest, most worthless ways I can imagine to win a false “feel-good” moral superiority.
      He gets all the praise (including from himself) without spending a dime.
      That is what I call “leveraging”…

      • His biography is interesting.  It clearly paints the picture that he’s an investing genius, a dedicated friend, and essentially a failure at everything else (except bridge).

  • I agree that increasing taxes is not the solution, but to be fair, the majority of the economists in the NABE survey do favor at least some tax increases. From the report: (emphasis mine)
    “While nearly 32 percent of NABE members felt that current elevated deficit levels were primarily a spending problem, <b>the majority of respondents</b> felt that the deficits were the result of too much spending, <b>not enough tax collections</b>, and stalled economic growth. That view translated into a split between those panelists who felt that spending alone could solve the deficit dilemma and those who did not, <b>with most survey respondents suggesting a combination of higher taxes and reduced spending.</b>”

    • If you look at it as a simple math problem, and your objective is to reduce the deficit, then of course lots of economists will say tax increases go into the mix.

      But if you look at it from a public policy viewpoint, and take the view that it’s the size of government that is the root of the problem, then tax increases no longer make any sense. They might work to reduce a deficit in the short term (as they did during Bill Clinton’s term), but a government with out-of-control spending will eventually eat that extra money and begin demanding more.

      At most, then, tax increases are a “kick the can down the road” relatively painless way for those currently in office to cover for the fact that they are presiding over a disaster. They thus let the problem mount up, and make it even harder to attack the spending issues in the future because there are more of them with a larger constituency.

      • I agree. I was simply pointing out that the summary given — both above and in the linked CNBC article — of the NABE survey was a bit misleading.