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.