Home > Uncategorized > Think Taxing The Rich Would Fix Things?

Think Taxing The Rich Would Fix Things?

Of course anyone with even basic understanding of economics should understand that raising taxes on those that do much of the nations investing will have an adverse effect on the economy and result in the loss of jobs. Really that is besides the point, people react to changes in their environment, including the tax environment. Raise taxes too high and people will change their behavior and tax revenues won’t increase uniformly.

Indeed, ANY time that taxes are increased, the resulting revenues are less than you would expect. In other words, if you raise taxes by 5% you will never get a 5% increase in revenues. If you go too high, you will actually start collecting less money.

To get to my point, we have a HUGE budget deficit adding more than a trillion dollars (a thousand billion or a million million) to the debt every year off into the foreseeable future, unless spending is severely reduced. Lets say we raised taxes enough to cover that debt on just the top 10% of wage earners, how much would we need to collect from each?

Some fairly simple math can give you the answer. There are 13,900,000 workers in the top 10% and 1,300,000,000,000 (1.3 trillion) dollars to be made up. That works out to a round $93,525.18 in new taxes for each.

Does anyone really believe that 1.3 trillion dollars can be taxed away and better the economy? A reasonable person would say that’s a bad idea, and I’m not even entirely convinced taxes could be increased enough to get that return without people changing their behavior and screwing the whole idea up.

The federal budget has increased by 900 billion dollars since 2008, when we had a 400 billion deficit, clearly there are budgets to be cut, and I just want to point out that that increase has nothing to do with the Pentagon.

Categories: Uncategorized
  1. 2011/05/20 at 04:27

    The biggest economic growth the world has ever seen happened when the top tax rates were raised on the wealthy and money ($30b) was injected into the economy during the Clinton years.

  2. 2011/05/20 at 06:19

    Not really all that far from a patent lie. Senator Michael.

  3. 2011/05/20 at 10:09

    Reagan’s tax rate on the wealthy was (significantly) more than Obama’s, I’m told.

  4. 2011/05/20 at 13:04

    What part is a lie, Nate?

  5. 2011/05/20 at 16:55

    To start off, 30 billion dollars is a “drop in the budget.” Even in the 90’s, hell, even in the 80’s, that was a pittance. We still have people saying the 900 billion dollar “injection” was too little. On the other hand, tax revenues increased vastly during Reagan’s tenure (with a democratic congress, they get credit too) while real tax rates declined. Which was really the point of my post.

    The amount of money needed to keep up with this spending is vast. I’m afraid there is almost no effective way to actually tax it. People react to external changes, is that not the hallmark of any organism? How do you propose to prevent people from reacting in a way that shields their income from taxation? Any income bracket would do the same thing, its not a rich people thing.

    44%, that is how much the government appears to be short this year. They almost need to increase revenues by 50%, Do either of you have any idea what the government is spending this money on? If it’s effective? What the ultimate goal is? I sure as hell don’t, and I can’t even figure it out. I wanted to mention some things about that very issue, but 3 hours of browsing through the budget, and I haven’t a god damned idea. People sure aren’t better off than they were 2 or 3 years ago, that much is clear.

    Have a good rapture, you two. See you at the after party.

  6. 2011/05/20 at 22:47

    That $30 billion was far more substantial in the 90’s, in part because the budget wasn’t nearly as big. It also cannot be compared to today since there wasn’t a recession of this magnitude going on.

    As for Reagan, he tripled the debt while not coming up with a way to pay for it. It was his policies that put the economy in trouble in the early 90’s, causing Bush to raise taxes (and thus lose his office).

    It remains that when we raised taxes on the rich – and, yes, did not have wild spending, even achieving a surplus – we experienced an unprecedented rate of growth over a large span of time (5 or 6 years).

  7. 2011/05/20 at 22:58

    Define ‘far more substantial’.

    Yes Reagan did, you’re right, I never disputed that. You haven’t disputed the fact that tax revenues increased drastically, in fact the number of people filing in the top bracket increased drastically under Reagan.

    You are still missing the point. The money almost certainly cannot be raised through tax increases on anyone, regardless of what delusions one may have on the effects tax increases or decreases have on economic growth

  8. 2011/05/26 at 07:18

    That $30b represented a bigger portion of what was a significantly smaller budget.

    The number of jobs created during the 80’s numbered around 21 million. (Given the extremely high unemployment rates because of the recession and the oil crisis, this was the only way to go.) However, the number of poor people remained quite steady while the income gap grew. This is especially well represented by the shift from a real job market to a service sector market (i.e., shit jobs with a few wealthy people on top).

    We raised a surplus of money by increasing taxes. Indeed, you have even made posts pointing out that there comes a point where the tax rate gets so high that overall revenue falls. However, that rate is not anything over zero, as one might characterize you as believing (keyword “characterize”).

    The fact is, revenues increased and the economy grew more than ever before under Clinton and his very slightly high tax rates on the wealthy.

  9. 2011/05/26 at 07:34

    The Republican Congress and the Democratic President were able to get a surplus by reducing spending as much as they increased taxes (far more in fact). Do you forget about everything from welfare reform to military cuts?

    Yes yes, it was all taxing the rich. That pesky, what, 4.6% increase? from 35%?

    How much of a persons check do you think the government is entitled too? How much is too much Michael? What is fair in your opinion?

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