Tuesday, September 20, 2011

Let's tax the rich at 100%!

Say, let's raise the tax rate on "the rich" to 100%! That should fix the deficit, right?

...the short answer is: some, but not enough to make a dent in the deficit. If you put a floor at their current marginal tax rate of 35%, the government would obtain $37 billion more dollars. That might sound like a lot, but it amounts to just 2.5% of the 2009 $1.5 trillion deficit (which is the red line shown). If you increase the floor to the pre-Bush-tax-cut marginal rate of 39.6%, the additional revenue grows a bit — to $66 billion, or 4.5% of the year’s deficit.

...So this Buffet Rule is a great populist proposal if the president wants to score some political points, but it has little practical value. It might provide the government a little bit of additional revenue, but unless extremely aggressive, it wouldn’t make a dent in the nation’s deficit problem. To do that, you’ll need to cut entitlements and/or raise taxes much more broadly.

Or you'll need to unleash the private sector and grow the economy.

Hat tip: NRO.


Kurt said...

In other words, this is only "math" for the math-challenged who don't recognize that those of us who can understand actual math will also recognize this as simply more class warfare.

Anonymous said...

It's the spending stupid !!!

There just aren't enough people in America to be taxed to pay for the spending.