The President proposed a plan to reduce the deficit by $1.5, which includes raising taxes on the “wealthy”. Now, a few articles mention that it’s over a 10 year period, but many leave it out, and it’s important. Doing the math, the current yearly deficit is projected to be around $1.2T. Assuming a 10 year plan with no change in income or spending (ha!), that’s a $12T deficit, and $1.5T is a 15% drop, or a $10.5T addition to the already $14T+ debt.
Further, cuts are included as part of this plan, which included a $650B cut in Medicare/Medicaid. The left balked and he’s backed down from that to $320B number and taking Social Security Reform off the table as well (http://www.foxnews.com/politics/2011/09/19/obama-yields-to-liberal-outcry-on-entitlement-reform/), so that’s $1.18T in deficit cutting now…. not even a years worth of Deficit spending, over a 10 year period (simple math says less than 10%). Either way, the maximum revenue, assuming the only cuts were those $320B, would be $850B. That’s a large number… but that’s over 10 years! That’s $85B a year in taxes (averaged of course).
These are not serious answers to the problem. Raising the rate on Americans who employ the rest of us does the opposite of stimulating the economy. For a paltry $85B/year we are going to stagnate job creation, competition, and punish the “wealthy”, who, if I haven’t pointed it out enough already: HIRE THE REST OF US!
Lest you think $85B is a huge number (it should be!), consider these facts:
2011 est Total Revenue: $2.17T ($85B is 4% of that)
2011 est Total Spending: 3.82T ($85B is 2.2% of that)
2011 est Deficit: 1.65T ($85B is 5.1%)
(Source: http://en.wikipedia.org/wiki/2011_United_States_federal_budget)
So, it is true that the amount of money asking to be paid by the “rich” is a small number in comparison to overall revenue and spending, and one might ask “so what’s the big deal then”? I’m of the mind that any less money that anyone has in their hands is less money that gets circulated. Each dollar that is spent is not taxed just once, it’s taxed as it’s spent again and again. But once money is taxed, it’s generally out of the loop. Yes, it might be spent by the government, and taxed again, but by that time it’s already added a level of inefficiency that makes the same process done privately much more beneficial to the economy.
If you tell me I’m going to have 5% less money this year than last, I’m going to make changes that involve me spending less (an anti-stimulative effect when multiplied). What makes you think that the wealthy are going to act any different? Further, what makes you think they won’t just move *more* money into tax-exempt holdings in order to keep their own money over the long haul. Every time taxes have been raised, that’s been the effect (http://www.nationalreview.com/articles/277249/you-can-t-tax-rich-thomas-sowell). That’s what the famed Warren Buffet does. I argue, that if you really want to tax the wealthy at a higher rate than the rest of us, then you want to eliminate some of those loopholes (which has been proposed by both sides, but never without the addition of several other measues).
I, for one, have never understood the attack on the job creators of this country. We cannot be a truly free society while we force those who employ the rest of us to pay more than their fair share (and apparently “fair” is a higher percentage of their money than of mine… a ridiculous notion to begin with). If Warren Buffet thinks he needs to pay more, then he should lobby for the removal of the tax breaks that allow him to skirt the IRS. The fact is, however, that he’s an exception to the rule, and that most of the wealthy *do* pay more than the rest of us both in real value and as a percentage (http://www.google.com/hostednews/ap/article/ALeqM5iP3lhS4ZQ-UhyUvFfUgdPCiu-jJA?docId=47a565563a294b2bad96544a7f0ddc1b).
The deficit and debt are surely huge problems that must be addressed, and everyone should agree that both raising revenue and cutting spending are both parts of the equation. Where we surely disagree is how to raise that revenue. I argue that we stop this class envy and get logical about it. Reducing our military presence where it makes sense to worldwide, cutting all programs across the board, closing loopholes that allow some to skirt the existing tax rates, and allowing the economy to grow *privately* are the methods I see as best. By allowing the private sector to grow, the economy grows (and thus tax revenue grows).
Look, the economy will naturally grow, our problem simply is that we grow spending faster than we grow the economy and revenue. If we simply stop adding to spending, eventually it catches up. That’s not sufficient to solve our problem in a timely manner, but it’s a start. All I see from the current administration (and most politicians for that matter), is an insistence on stifling growth. Almost every government policy has a net effect of slowing the economy.
The best thing that could be done right now is to have a true pro-business and growth policy and stop attacking the wealth makers and job creators. Simply giving our businesses some stability by promising a no tax policy increase policy would generate good-will and reduce fear, thus freeing many companies and individuals to start spending and entrepreneurship.
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