Congress’s Joint Tax Committee estimates that raising taxes on income over $250,000 ($200,000 if you’re single) will raise $823 billion over 10 years on a static revenue basis. That includes all revenue from increases in marginal income tax rates, capital gains, dividends, reinstating the phaseouts of deductions for the wealthy and also treating dividends as ordinary income. WSJ
That means if taxes go up as proposed by the President, federal revenue will go up $82.3 billion each year over the next ten years. On the other hand, current spending increases the federal debt by $4 billion a day. This new revenue from a small segment of Americans will cover 20.8 days of spending money we are borrowing so that instead of about $1.1 trillion in additional debt each year we will add ONLY $1.08 trillion. Does that sound like a solid plan or populist nonsense that runs the risk of hurting growth in the economy although probably not to the degree the Republicans claim? Are we trying to solve a problem or leverage divisiveness in Amerca?
We have all swallowed the idea that we must raise taxes without asking the right questions. What happened to the stimulus money? Isn’t stimulus supposed to be a one time shot in the arm like a high caffeine drink to get you going? You don’t drink it every hour (I hope) and yet the stimulus spending has not gone away.
Draconian austerity is not the answer either, but we must avoid additional new spending without accompanying revenue and gradually cut the big drivers of federal spending which include Social Security, Medicare and tax avoidance such as tax free employer contributions for health care, pre-tax premiums, etc. Gradually is the key so that the required changes do not harm the economy and individuals have several years to adjust to the changes. Yes, we also need a comprehensive revamp of the tax code top to bottom.
The real key now is growing the economy. As worker income increases so do tax revenues, that’s just simple math. If we can do that without Congress rationalizing new spending as opposed to using growing revenue to balance the budget and reduce the deficit we will solve the problem.
Now listen carefully to the President and Congressional leaders. Listen for their solid strategy to grow the economy. If you don’t hear that above all the other rhetoric about taxes, budgets and fiscal cliffs, you are being conned again … but you already know that I suspect.
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Gee, did they miss an Aleutian native staging this?
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