The Vette Barn

The Vette Barn (https://www.thevettebarn.com/forums/index.php)
-   Politics & Religion (https://www.thevettebarn.com/forums/forumdisplay.php?f=82)
-   -   Reality Check: The Left's "Tax the Rich" Solution to Deficits Simply Won't Work. (https://www.thevettebarn.com/forums/showthread.php?t=29636)

Will 02-11-2012 4:14pm

Reality Check: The Left's "Tax the Rich" Solution to Deficits Simply Won't Work.
 
Reality Check: The Left's "Tax the Rich" Solution to Deficits Simply Won't Work.


Quote:

Without question, the greatest challenges faced by the United States today are the current troubling trends of trillion dollar deficits and exploding national debt. The American left's uniform response to this conundrum has been to blame low tax rates, and accuse some Americans of not paying their "fair share." Unfortunately, they offer only one "solution"—raising taxes. Specifically, on the "rich" or the "wealthiest Americans," however those groups are defined and delineated.

This simply is not a viable solution, nor is it a position backed by research, reason, or reality.

For 2009 (the most recent year of data available from the IRS), if the 15% Capital Gains Tax Rate, 25% Capital Gains Tax Rate, 33% Individual Income Tax Rate, and 35% Individual Income Tax Rate were all raised to 100%, in a static analysis the IRS would have collected an additional $668 Billion in tax revenue, or merely enough to cover 48% of the $1.4 Trillion deficit for 2009.

Raise the 28% Individual Income Tax Rate to 100% as well, and the numbers increase to $857 Billion in additional revenue, enough to cover only 61% of the deficit.

In fact, under a static analysis, only by also increasing the 25% Individual Income Tax Rate to 100% in addition to all of the above could the IRS have collected enough additional revenue to cover the federal budget deficit. Or, in other words, only by limiting every single American to an income of around $35,000 (hardly a reasonable line of demarcation for being considered "rich" or one of the "wealthiest Americans"), and confiscating every cent of income above that amount from every American, could the budget have been balanced. Again, all of this under static analysis, i.e. assuming no economic impact whatsoever from raising these tax rates to 100%.

Of course, a static analysis doesn't accurately portray the real-world effect that would be felt by the IRS. In reality, raising those tax rates to 100% would have an enormous negative impact on the U.S. economy and Gross Domestic Product, and the pool of income subject to collection would drastically shrink under such a punitive tax regime, a fact that not even the most left-leaning of economists would dispute.

Of course, viewing our deficit and debt problems as a function of tax rates and tax revenues is misguided in the first place. The United States' exploding deficits and national debt are entirely a function of spending. Consider the following hypothetical, in which the United States Federal Government maintained FY 2000 Spending levels, adjusted for inflation and population growth, for the decade between 2001 and 2010:

http://hearourvoices.us/image.axd?pi...on+%26+Pop.png


Again, using static analysis, for the decade between 2001 through 2010, the United States Federal Government would have amassed a net budget surplus of nearly $2.2 Trillion, rather than the net budget deficit of nearly $4.7 Trillion we tallied. This with the Bush Tax Cuts in place, as well as a brief period of economic expansion, book-ended by the collapse of the 2000 "Dot-Com Bubble" and the 2008 "Housing Bubble" and the resulting recessions:

http://hearourvoices.us/image.axd?pi...on+%26+Pop.png


Reality Check: Higher taxes simply won't solve our deficit and debt problems, because they weren't and aren't being caused by tax revenue in the first place. They are solely a result of out-of-control spending.

Reality Check: The Left's "Tax the Rich" Solution to Deficits Simply Won't Work.

DAB 02-11-2012 5:27pm

on a more personal note, i looked into starting my own business last year, would be a one man woodworking shop, housed in a building on my property, using my tools, and using my savings for start up costs.

after some legwork, found that i'd have to front several hundred dollars to the county to get a license and get the place inspected. would also have to track and collect county sales tax, as well as FICA, fed taxes, and state income taxes.

adding it up:

FICA - 15.2%
Fed - 25% (have other income sources, so every add'l dollar would be at the next marginal rate)
State - 5%
county sales tax - 8.2%

total: 53.4% tax rate.

i decided, as much as i enjoy designing and making things, i could see no earthly reason to spend over 1/2 my time sweating for various governments. so screw it. i'd like more money, but not at that exchange rate.

i suspect i'm not the only one who has done some math and come to this type of conclusion. and that doesn't even count the hours i would have had to put in back in my office tracking all manner of things, filling out quarterly reports for the feds, state, and county. all unpaid time on my end.

when the taxation rate becomes too high, the incentive to go out and earn an extra dollar falls off quickly.

end result: i have plenty of free time to play in my woodshop as a hobby, and the government gets nothing. lower the burden, and i'll reconsider.

:DAB:

73sbVert 02-11-2012 7:46pm

Has probably been posted before, but can NOT be stressed enough:


and Dr. Friedman


Chris Fowler 02-11-2012 11:02pm

You'll never convince the left that it's not worth trying...

DAB 02-13-2012 6:29pm

the unsaid thing regarding the 'rich', is that they have options. once their basic expenses are covered, they do not have to go out and earn more just so they can give the lion's share to the government.

i recall reading or hearing an interview with Reagan years ago, before he was elected President, and he was asked about tax rates in the 60s and 70s. he replied that he had sat down, figured out how much he needed to earn that year, and once he had met that, he could stop working for the year, as he objected to working the majority of the day to fill the government's coffers. so he downsized his lifestyle.

same idea.

and, if you have enough savings, you don't really need to chase investment earnings (thus producing a tax bill), you can simply withdraw what you need from savings.

mrvette 02-13-2012 6:50pm

Quote:

Originally Posted by DAB (Post 576820)
the unsaid thing regarding the 'rich', is that they have options. once their basic expenses are covered, they do not have to go out and earn more just so they can give the lion's share to the government.

i recall reading or hearing an interview with Reagan years ago, before he was elected President, and he was asked about tax rates in the 60s and 70s. he replied that he had sat down, figured out how much he needed to earn that year, and once he had met that, he could stop working for the year, as he objected to working the majority of the day to fill the government's coffers. so he downsized his lifestyle.

same idea.

and, if you have enough savings, you don't really need to chase investment earnings (thus producing a tax bill), you can simply withdraw what you need from savings.

eheheh....IF I had been better at business and investments, it would have worked out for ME too, and Reagan was rite....trick is these daze, to trust NO ONE on investment advice, and don't be pressured by a ex wife....

:leaving:


All times are GMT -5. The time now is 2:07am.

Powered by vBulletin® Version 3.8.4
Copyright ©2000 - 2024, Jelsoft Enterprises Ltd.
User Alert System provided by Advanced User Tagging (Pro) - vBulletin Mods & Addons Copyright © 2024 DragonByte Technologies Ltd.
Copyright © 2009 - 2024 The Vette Barn