Can taxing the rich pay for the deficit?

[Hannah Bell]

Columbia Journalism Review first notes that New Republic eviscerated a WSJ column that claimed the rich didn't have enough money to close the deficit, even if taxed at 100% -- then runs their own numbers:


That alone would cut the CBO’s projected deficits... by about a third over the next ten years and Obama’s by roughly a quarter.

Raising taxes on the top 1 percent back to pre-Reagan levels would drop the baseline and Obama budget deficits by roughly 1.2 to 1.3 percentage points of GDP per year (and presumably more, as income at the top has tended to rise far faster than the economy as a whole), putting both well below Reagan-era levels through 2020.

After that, Medicare costs have to be reined in or the deficits explode. Nobody I’ve seen questions that. The dispute is over how to do it.

The bottom line: contrary to what the Journal says, raising taxes significantly on the top 1 percent would indeed make a significant dent in future deficits.... There’s always a problem involved in wasting one’s time examining very bad arguments. But organs like the Journal editorial page — which just won a Pulitzer Prize! — are influential and prestigious. I think very few people realize that these people are just pure clowns. They’re not messing up complex economic theories here. They’re messing up basic arithmetic.

http://www.cjr.org/the_audit/wsj_editorial_board_and_taxes.php?page=2

[dkf]

1. Isn't the gap in the budget deficit around 10% of GDP?

Raising the taxes significantly on the wealthy only reduces it by a little over 1%?

Isn't this article proving the very thing it claims to disprove?

[Hannah Bell]

2. no. no. & no.

[dkf]

3. These are the numbers I am looking at...

http://www.hfma.org/templates/blogpost.aspx?id=25039

The federal budget deficit will rise to nearly $1.5 trillion, or 9.8 percent of GDP, in 2011, according to the Congressional Budget Office’s Budget and Economic Outlook: Fiscal Years 2011 through 2021. The deficit’s share of GDP is nearly 1 percent higher than last year, and almost the same as it was in 2009, which was the highest share of GDP in nearly 65 years. CBO expects budget deficits to be much lower over the next few years, representing 7 percent of GDP in 2012, 4.3 percent in 2013, and 3.1 percent in 2014. This assumes, however, that current laws governing taxes and spending won’t change and that the large cut in Medicare rates for physicians occurs as scheduled at the end of 2011, for example, and that the extensions of lower tax rates sunset at the end of 2012. In addition, revenues as a share of GDP are expected to rise from 15 percent in 2011 to 21 percent by 2021, making projected deficits much smaller relative to GDP in the future.

http://www.cbo.gov/ftpdocs/120xx/doc12039/01-26_FY2011Outlook.pdf

Please note that this assumes sunset of all the Bush/Obama cuts the majority of which were tax cuts for the middle class Where are you getting your numbers from?

[Name removed]

5. Deleted message

Sub-thread removed by moderator. Click here to review the message board rules.

[Hannah Bell]

9. reading comprehension:

The deficit’s share of GDP is nearly 1 percent higher than last year, and almost the same as it was in 2009, which was the highest share of GDP in nearly 65 years.

CBO expects budget deficits to be much lower over the next few years, representing 7 percent of GDP in 2012, 4.3 percent in 2013, and 3.1 percent in 2014.

[hfojvt]

19. "the majority of which were tax cuts for the middle class"

Yeah, right. According to this analysis http://www.ctj.org/pdf/obamabudgetfy2012.pdf

54.6% of the Bush tax cuts goto people in the top 10%.
70.4% of the Bush tax cuts goto people in the top 20%

Even if you look at Obama's plan

59% of the Bush tax cuts that Obama would keep goto people in the top 20%

whereas

only 19.1% of the Bush tax cuts that Obama would keep goto people in the bottom 60%

Even under Obama's plan, the top 20% gets 3 times as much in tax cuts as the bottom 60%


But, of course, Obama, like most Republican politicians defines "middle" class to include people in the 80-95th percentile. Because those people are not "really" rich.

[dkf]

20. Yeah that definition of middle class tax cut makes me laugh too.

But they refuse to recapture that and only want to bring back the taxes on the tippy top of the food chain which simply doesn't do much.

[aquart]

7. If the wealthy have 98% of the wealth, they're the only ones we can tax.

NOBODY ELSE HAS ANY MONEY. If we do not take the money back from the trust fund morons who inherited and the CEO class that raped the American working class for their obscene bonuses, we have no future.

And I am completely against asking the unpatriotic greedy class to pay a "little bit" more. I want them to pay a LOT more. 90% of gross income over $7 million until we no longer have any military action to pay for.

[hfojvt]

18. we generally tax income, not wealth

and the wealthy don't have/get all of the income, especially not if you define wealthy the same way Obama does - to exempt all of the upper middle class.

[aquart]

21. Gross yearly income from all sources.

And I do not use Obama's exemptions. I simply start my 90% bracket at $7 million.

[truedelphi]

4. Jon Stewart had a chart on one of his recent shows

That showed the deficit.

It showed what would happen if the nation takes up the notion of 1 trillion dollars of cuts to programs we need (such as infrastructure, schools, libraries, etc)

And then he had a chart which showed what would happen if we got rid of the Bush Tax Cut extensions.

Basically we end up with the same situation in terms of the deficit, except one causes huge harms to our society as a whole, and also to regular people (which, let's face it, is most of us) and the other shows no real harm - just the rich having to forego a lil tiny bit of their glorious luxurious lifestyle.

[flor-de-jasmim]

6. Every bit as important as whether taxing will "pay for" (entirely or not) the deficit...

is the fact that every dollar that is added through revenue is money that either brings down the deficit or can be used to pay for things that we otherwise borrow money for: infrastructure comes immediately to mind! If that is combined with a defense budget that is also taken back to Clinton-era times, we will be sitting pretty. People love to compare the corporate tax rate across countries, but what about the personal one? We don't hear about that, because the countries we usually compare ourselves to have higher rates:

http://www.gfmag.com/tools/global-database/economic-data/10442-personal-income-tax-rates.html#axzz1KKiVhs00

The most common reason people cite not wanting to live in a third world country is that they don't want to see so much poverty around them. So to the Republicans and complicit Democrats I say: STOP CREATING IT!

[vi5]

8. Well, it can't hurt.....

And history shows that.

[kentuck]

10. Maybe not .

But cutting the loopholes and deductions could go a long way.

[n2doc]

11. I wrote about this a week or so ago

The WSJ is lying. Big Surprise. Of course, I consider the top 5% "the rich" so there is the rub. I am sure if one reduces the fraction of people being considered to a minuscule fraction, then one can make their point.

see
http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=439&topic_id=853012

[Wilms]

12. Excellent. And I love this snark they offered.

The bold is mine:

The first thing to understand about the Journal edit page is that its primary motivation is to push policies—especially tax ones—that benefit the very rich.

[RandomKoolzip]

13. Maybe not completely, but neither can cutting social programs.

In fact, taxing the rich is a far batter alternative to cutting social programs because it harms far fewer people. Neither solution will COMPLETELY fix the deficit problem, but one solution only harms a few (who can take it), and the other harms a great many (who would be unable to shoulder the sacrifice).

[Motown_Johnny]

14. and if we created additional tax brackets at higher rates for higher incomes

that would pay down the debt even more quickly.


We don't need to tax the rich at 100%, but we do need to tax them more every year for an extended period of time.

[Bigmack]

15. Hell, I believe it...

Taxing the rich now is locking the barn door after the greedy fucking horses are out. They've skated for so long that taxing them now is almost too late.

My two-pronged plan? Tax the rich and cut "defense" spending... oh.. end the three wars, too.

Then let's just see what happens.

[ThomWV]

16. Taxing them may not pay it off, but not taxing them sure as hell won't pay it off.

[Starry Messenger]

17. k&r