Free Markets, Free People


What Would It Take In Taxes To Erase The Deficit?

If you were wondering what it would take in terms of tax rates, to “erase the deficit”, the Tax Foundation [pdf] provides a couple of handy, dandy charts for you:

taxes1

taxes2

Note – this only “erases the deficit” – it does not even make a small dent in the debt which stands somewhere in the 11 trillion dollar area.

So when you hear that all this new spending, which will indeed raise the deficit, won’t raise your taxes by a single “dime”, you can believe it if you wish. But that doesn’t mean it is true.  And it certainly doesn’t mean Democrats can keep that promise.  Because if they do, they’re simply kicking the same can down the road that Republicans have for years (and no, I’m not advocating massive tax increases, I’m just providing a little reality check to counter the nonsense the politicians continue to spout).   The alternative to the tax rates above is to cut spending – drastically.  If you see that on the horizon you’re the only one because Congress just raised the debt ceiling – again.

[HT: Tax Prof]

~McQ

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13 Responses to What Would It Take In Taxes To Erase The Deficit?

  • McQ, please don’t post an analysis like this without some explanatory disclaimers.  The leftists probably believe the numbers and don’t havy any problem with them at all.  I assume those numbers are based on “static scoring” and predicated on the belief that everyone will keeping working the same and make no changes in behavior based on a 95.2% tax rate.

    I have no idea where we actually are on the Laffer Curve right now, but I guarantee those numbers put us on the slope where less tax revenue will flow into the federal government.  I know many leftists who think we should implement healthcare reform, cap & trade, etc. because there are still rich people we can further tax to pay for it all.

    If we raise taxes to these levels, the U.S. economy will shrink drastically.  At every opportunity libertarians need to dispel the notion that we can continue to raise taxes without harming the fragile economy.

  • Excellent metric. This is how blogs will defeat the MSM – this little metric says so much so quickly.

  • I guess this is what lefties mean when they talk about people “paying their fair share”.

    McQNote – this only “erases the deficit” – it does not even make a small dent in the debt which stands somewhere in the 11 trillion dollar area.

    In reality, it wouldn’t even erase the deficit.  Assuming tax rates like these didn’t cause tax revenues to plummet as all those nasty ol’ rich people took steps to avoid paying them (Rod is right about the Laffer Curve), the Congress, confronted with a huge new pile of taxpayer revenue to spend invest, would simply spend that much and more.

  • And let’s not forget the interest payments on the debt, $383 Billion in 2009. The magic of compounding in concert with trillion dollar deficits should increase that just a bit. That doesn’t include Social Security, etc. Whee! We do live in exciting times.

  • The argument goes that you can maintain a defecit with low tax rates if you have stable economic growth, so that more wealth will be generated and taxed at a lower rate to pay back your old debts while you take out new ones.  However, in our economy, economic growth is mostly consumer spending, which is often financed with debt anyway, so the distortions which add to deficits may continue to be toxic, if we don’t improve the productive aspects of our economy.

  • Why not pay off the entire national debt all at once.  Two ways to do this:
    1. Repudiate it!  Probably not a good idea.
    2. Sell federal land.
          How much for the Presideo (1500 acres in downtown San Francisco)?
          I understand that Disney wanted to buy Yosemite Park, Make me an offer!
          Willamette Industries would be glad to buy some Oregon National Forest.
          So would Boise Cascade.
    ETC… What is the value of all the UNUSED federal land?

  • Spending is taxing, whether openly or hidden we pay for the spending.

    Deficits must be covered by taxes, public borrowing, or printing money.

    Printing money is inflation, which is a tax on savings and investment.

    Public borrowing drives up intest rates, so is a tax on private borrowing.

    New slogan: “It’s the spending, stupid!”

  • The national debt actually passed $12T already, if you treat it as growing continuously, rather than in bursts.

    http://zfacts.com/p/461.html

    The granular view puts us at $11.9T.

    http://www.treasurydirect.gov/NP/BPDLogin?application=np

    We’ll blow through the $12.1T debt ceiling in the next couple weeks.

  • Crashing the dollar, whether intentional or forced upon us, is likely the only way out.