A Revenue or a Spending Problem?
We can probably all agree that when the federal government is spending almost one and half times as much as it takes in that we have a significant budgeting problem.
It’s so bad that the $414 billion in interest payments on the accumulated National Debt in 2010 was the 5th largest single expenditure behind Social Security, Defense, Medicare and “other mandatory programs”.
There are only two ways to deal with budget problems:
- raise revenues
- cut spending
The Revenue Side of the Equation
The mantra of liberalism is… ‘We don’t have a spending problem, we have a revenue problem’. You hear it everywhere on every liberal talk radio show and at every rally and gathering of progressives and Democrats there is.
In this mantra liberals express the belief that others (excluding themselves, of course) don’t pay their fair share of taxes so should be made to pay more to address our revenue problem.
Lets examine the revenue side of the equation to see if we have a revenue problem or a spending problem.
In this first article on the subject I’ll just talk about rich people. Corporations will be dealt with in another article.
The Bush-era Tax Cuts for the Rich
One of the main revenue solutions progressive Democrats talk about is ending the “Bush tax cuts for the rich” that, according to them, were wrongly included in last December’s tax cut compromise bill.
The problem is that the total yearly “cost” of ALL the Bush tax cuts has only been around $80-$90 billion in lost revenue and that the “Bush tax cuts for the rich” part makes up only about $42 billion of that.
In other words, ending the “Bush tax cuts for the rich” will only raise about $42 billion plus more in revenues a year. Last year our debt grew by $1.714 trillion. With the “Bush tax cuts for the rich” it would have been reduced to $1.672 trillion.
That is just a piddly little 2.5% reduction in the total deficit. That’s chump change!
It’s barely more than the $38 billion Congress haggled over that almost shut down the government!
Let’s get radical!
For purposes of illustration let’s do more than just end the “Bush tax cuts for the rich”, let’s really get radical and tax the rich at 100% of their adjusted gross income(AGI).
That is, let’s take every stinking penny they earn and give it to the federal government!
Let’s not even leave one red cent out for them to pay state and local taxes. Then they’ll have to sell stock options, summer homes or business assets to buy groceries and make yacht payments!
That’ll teach ’em!
Tax Those Earning $500,000 or More at 100% of AGI!
For the sake of convenience, because of how the IRS groups things in reporting, let’s just tax all the scumbag rip-off artists making $500K or more at 100%. And let’s be tough. We won’t care if they are a couple filing jointly or not.
According to 2008 IRS tax revenue data – the most recent year that data is available – the total AGI of everyone earning $500K or more was $1.47 trillion. That is approximately 10% of GDP!
That was at the highest AGI ever in history for rich people.
Yet that entire 2008 amount still falls $230 billion short in each of the last two years of balancing the $1.7 trillion true deficits we actually had.
Ending the “Bush tax cuts for the rich” won’t even make a dent in yearly federal deficits.
Forget paying state and local taxes… even if we forced rich people to tithe 10% of the entire U.S. GDP it would not be enough to erase the federal government’s budget deficit; let alone reduce the National Debt a single penny.
No matter what, rich people alone do not make enough money to balance the federal budget and pay for all the goods and services the feds provide.
Hmmmm… maybe greedy businesses AND greedy rich people should be taxed more to increase revenues to make up the budget shortfall.
Yeah… that must be it. Ya think?
For the astounding answer, stay tuned right here on “Inform The Pundits” for the next exciting episode of “A Revenue Problem or a Spending Problem?”