American Elephants

Tax the Rich, Tax the Rich, Tax the Rich. by The Elephant's Child

The Progressive People’s Budget  from the Progressive Caucus in Congress—76 of the most partisan Democrats in the House, responds directly to Paul Ryan’s “Path to Prosperity”, in just the way you would expect.  They want to increase taxes.

First they want to raise the Social Security tax to cover nearly all of a taxpayer’s income. At present the tax is imposed on the first $106,000 of earnings. The caucus would tax a full 90% of income, no matter how high it goes. They would raise the Social Security Tax that employers pay as well.  Then they would create three new individual brackets for the highest incomes with the top at 47%.  They would raise the capital gains tax, the estate tax, and the corporate tax.  And of course, repeal all the Bush tax cuts.

Spending savings would come in the form of cuts for national defense. They would end “overseas contingency operations” — Afghanistan and Iraq— beginning in 2013.  Then they would “reduce strategic capabilities, conventional forces, procurement, and research & development programs.”  In other words in an increasingly dangerous world they would gut America’s ability to defend itself not only today, but far into the future.

The “People’s Budget” amounts to — a new stimulus plan.  I told you. If it didn’t work, it’s only because they didn’t invest enough money.  Progressives priorities never change. $1.4 trillion for  job creation, early childhood K-12 and special education, quality child care, energy and broadband infrastructure, housing, and research and development  with some roads and trains thrown in.  That will fix everything, won’t it?

We are $14,500,000,000,000 in debt.

This year’s deficit is $1,700,000,000,000.

Obama has already spent $1,000,000,000,000
to stimulate the economy.

We don’t have a revenue problem,
we have a spending problem.

We have tried high tax rates before. It seems as if when you raise taxes, it should bring in lots more revenue.  It seems as if it would do no harm to the economy. It assumes that interest rates would stay the same. From 1951 to 1963, the lowest tax rate was 20% to 22% and the highest ranged from 91%-92%.  The top capital gains tax rate was 39.6%.  Individual income taxes have been a constant percentage of GDP regardless of how high rates on salaries are.

When the tax on capital gains is high, it brings in less revenue. When the tax is low, it brings in more. When the tax is high, people hold on to their gains. When the tax is low, they are more willing to realize their gains. There are always consequences. When you raise taxes on corporations, many pack up and move overseas. The only reliable way, according to economist Alan Reynolds,  to raise real federal revenues over time is to raise real GDP.


Leave a Comment so far
Leave a comment

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: