Wednesday, November 14, 2012

Obama's Tax Increase Only Cuts Deficit by 7.5%

One ridiculous demand of President Obama and his fellow Democrats in Congress is that no matter what, the tax rates on the richest need to go up, out of some BS notion of 'fairness'. There is a huge problem with this demand in that it does next to nothing to deal with the Trillion dollar plus yearly deficit.
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.

That's only $82 billion a year in extra revenue when the federal deficit in fiscal 2012 was $1.1 trillion. So even if Mr. Obama gets his way, his tax increase would only cut the deficit by about 7.5%. And that assumes the tax increase would have no impact on economic growth. If growth slows below its already paltry pace, tax revenue would rise by less than expected despite the higher rates. - WSJ
So all this time the President is raving on about less than 8% of the solution. Of course he knows this as do the Democrats in Congress. For proof of this you need look no further than the last budget signed by the President. This is one reason why budget bills die in Harry Reid's Senate.

Four years is a long time to keep this charade going. However, you can be that it is President Obama's plan to keep the budget musical chairs going for as long as he is in office.It will be interesting to see at what point they run out of ways to borrow and print money.

No comments:

Post a Comment