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Politics : American Presidential Politics and foreign affairs -- Ignore unavailable to you. Want to Upgrade?

To: RMF who wrote (41668)	3/5/2010 12:13:22 PM
From: TimF	Read Replies (1) \| Respond to of 71588

I believe the stuff about our TOP 400 was the stuff I saw and was referring to. OK but that's just the top .0003% or so of tax payers. Your not going to balance the budget with increases on their taxes. They are too few in number, and they are more capable of avoiding tax incidence falling on them than the "normal rich" and "near rich" are (which is a major reason why they pay lower effective tax rates than the normal rich, and near rich do now, even if they still pay more than the average person.) Increase tax rates and you might actually get less from them, as they work harder to avoid it. And to the extent they do nominally pay more they may just be passing on the costs to others. So ignoring any moral or philosophical points about what would be reasonable taxation levels (where I think we disagree, and where facts can't be used to settle the issue), as a purely practical matter raising their taxes isn't going to do you much good in terms of achieving your stated objectives. You want to balance the budget, and you want to do it just or primarily with tax increases? Well even using static analysis and assuming no negative effects on the economy, and no increase in tax avoidance (legally getting around taxes), and evasion (doing so illegally), you still have to either raise taxes broadly (down to the middle class), or raises taxes to a huge amount for not just the super-rich, but also the very rich, rich, slightly rich, and probably the near rich as well. And the static analysis assumptions are simply bogus. When you raise tax rates you suppress and distort economic activity, and you encourage avoidance and evasion, so you get less of an increase in revenue than you would have expected. Increase taxes by 10% (a 40% rate would become 44%, not 50%), and you increase revenue by less than 10%. Eventually you don't just increase revenue less than you expected you actually decrease it. That point is uncertain, and also always changing, but the extremes are fairly obvious. For example a 95% general income tax rate will produce less revenue than an 85% rate, and the point would be lower for taxes on investments. In the light of that, and considering how entitlements are set to explode, we simply can't balance the budget for the long term primarily on tax increases.