Whovian,
Yours is abit of an over-hyped hypothetical...
“If the rich were taxed at the same rates they were half a century ago, they’d be paying in over $350 billion more this year alone, which translates into trillions over the next decade. That’s enough to accomplish everything the nation needs while also reducing future deficits.”
That means taxing the top earners at 70% which, combined with state and local taxes, means the top earners would be giving up 85% of their income in New York, California and other high-tax states.
Given that Congress even under Democratic control could not accept a top-rate increase from 35% to 39.6%, a 70% rate seems like highly unlikely, if not fantasy, at this point.
An insightful reader post on Megan McArdle’s blog on the Atlantic uses IRS data to figure out how much money the government would raise by taxing certain wealth levels. He says a 45% rate on incomes of more than $1 million would generate $31 billion, while an even more progressive tax, with rates of 50%, 60%, 70% on incomes of $500,000, $5 million, $10 million respectively would generate an added $133 billion.
That is roughly 10% of the current annual budget deficit.
“My point is just that I don’t see how deficits this large can be closed with income taxes on the rich, even at marginal rates far higher than anything we’ve seen in the post-1986 era,” the reader says.
And rich people can always move and shift their income, which would reduce the amount of tax revenue raised.
There have been several posts throughout this forum recently that provide historical evidence that the marginal tax rate on the rich has decreased over the last 55 years, and while not reaching their historic low of 7%, taxes against the rich have neither reached their historic highs of 90-92% either, not since pre-Depression era. So, for the rich to complain about their taxes being raised...I'd say they've had it damned good over the last 55 yrs.
Now, before anyone starts in on me, let me say this:
I'm all for a mixture of spending cuts and tax increases. The reason being pure capitalism doesn't work any better than pure socialism. In the "limited government" format conservative Republicans (and Democrats) envision, big business would provide the means for the poor and disaffected through so-called "charitable organizations and/or donations" that would negate federally mandate entitlement programs. The problem with this theory is Corporate America coupled with its insistence on deregulation would run amuck! Doubt me? Check history...
In every instance where this country has experienced a deep recession or depression, the cause wasn't government intervention. On the contrary. It was the lack of regulatory oversight or no regulations that addressed the given situation at all. In the wake of the Great Depression, the S&L crisis and our current recession, no government oversight and deregulation created the environment for Corporate America to fail to do its part to "provide for the people". Conservative readers see this and go, "WTF?" But if you understand how this public-private partnership between big business and the federal government is suppose to work with all the tax loopholes for charitable deductions and such, you understand why "trickle-down economics" does not work effectively. The underlying cause: GREED!
Still doubt me? Consider the failure of the following corporate entities: ENRON, Worldcom, LemanBrothers and several others.
The Conservative philosophy for limited government would go alittle something like this:
Little to no federal regulations on business (financial sector mostly). Major corporations would receive significant tax breaks in exchange for giving donations to the poor or establishing charities to care for same. Sounds reasonable, right? The problem is that last line from the last linked article above...
And rich people can always move and shift their income, which would reduce the amount of tax revenue raised.
The above applies to major corporations as well which is the reason companies such as Exxon/Mobile and GE had ZERO tax liability, but recieved big tax subsidies from the fed. How is this possible you say? Because it's suppose to be a trade-off between big business and the fed. If businesses provide for the poor via charities, the fed provides the tax write off. A win-win for both until you see that poverty is still ramped, incomes are still flat for the middle-class and the cost of consumer goods continue to rise. The average consumer can't keep up!! Yet Conservatives are insisting that it is labor unions that are a major catalysis for our nation's economic downturn. WRONG!!
Conservatives have been trying to kill labor unions since the 1930's. When they couldn't do it using federal legislation, they partnered with big businessmen to undercut and undermine the collective bargaining rights of employees/union members. And when that didn't prove as effective as they hoped it would (because the fight laid dorment for a few years), they recently shifted their focus to public employees at the state level. The problem with this fight is public employees, just as with employees within the private sector, haven't seen a pay-raise in years. As such, we are struggling financially just like everybody else. But the GOP have tried (and in some cases succeeded) in using public employees as scapegoats for what amounts to poor budget policies and overspending that have nothing to do with the workers themselves. Yet their best resource - PEOPLE - are and always shall be made to face the music for management's blunders.
I'm all for cutting spending. Government does need to eliminate wasteful spending, but if Corporate America isn't going to uphold its part of the deal and create jobs and provide a living wage for their employees, then government has no choice but to provide resources for the people who are suffering. Nonetheless, as I've said before, Corporate America and deregulation caused this mess. Imparting the proper regulatory reforms and changing the tax codes and/or increasing the marginal tax rate on the rich is the proper remedy for resolving it. As my father use to say, "Let the punishment fit the crime!" And in this case where our economic woes are concerned, the punishment should be increase the taxes on the rich and make them pay for the excessive risks they took that cost this country (and in some cases other nations around the world) dearly.
