phyzguy said:
A couple of points on this:
(1) As I said, I don't think all of our current deficit problem can be solved by tax increases - spending cuts are needed as well.
Agreed, though the suggestion in your post #2 referencing WWII was there's no hurry, and
there I disagree sharply. War spending ends, entitlements never do.
(2) As you said, the top 10% earns 43% of the income, which amounts to 3.3 trillion, according to the table you linked. On this 3.3 trillion, they pay 610 billion in taxes. Suppose their tax rate were doubled, which would put it closer to historical norms. That would reduce the deficit by more than one third, and still leave the top 10% rich by any reasonable standard. ...
That conclusion is not supported by the data. As was shown by the links in posts in 7 and 35 showing yearly tax revenue, federal revenue collected per unit of GDP via income taxes does not increase substantially with high rates. While I concede one can argue the government
might collect more revenue (10-20%?) from a sluggish economy, it is ahistorical to say you could double revenue by doubling the current income tax rate.
...and still leave the top 10% rich by any reasonable standard.
The income point for the
http://www.taxfoundation.org/news/show/250.html" That's a carpenter and teacher household. Their income after ~20% federal taxes (today's) is then $90K. You would attempt to double the rate (not marginal but total) and leave them with $68K. From that they must still pay state income tax, sales tax, property tax, and so on, leaving them with a take home well under half of AGI. Furthermore, as I and others have posted elsewhere, there is substantial income mobility in the US over time, which includes
declines in the upper incomes. So this carpenter and teacher might well be enjoying some fleeting peak income years to bank for the kids college or retirement.
(3) As unemployment comes down, we can expect the deficit to come down as government tax revenues increase and unemployment benefits drop.
Clearly. So the question there is what is the best way to decrease unemployment? The conversation should be focused on how to allow the private economy to create job opportunity, not how to remove more money from the private economy.
In the meantime the deficit is large, the debt dangerous, taxing the rich can not resolve the problem, only substantial spending cuts can.
(4) If the government takes money from the top 10%, what do you think happens to it, that it just goes away? Part of it will be spent on payments to people with lower incomes, who will promptly spend it. Paying a teacher's salary instead of laying her off is a good thing, both for the teacher and for the economy. The current problem in our economy is a lack of demand, not a lack of investment. Part of it will be spent on much-needed infrastructure improvements, which will help get the moribund construction industry moving again.
So then why not tax all income at 100%, have the government disperse it all? This is the old Keynesian argument. Without getting into the
https://www.physicsforums.com/showpost.php?p=3504713&postcount=57", surely you concede this has been tried recently several times totaling a trillion dollars, and that the results were are at least
questionable, demanding more justification than a hand waiving call for more of the same?
