Posted by silentpadna on 7/29/2011 11:53:00 AM (view original):
I'm admittedly biased about this, not because I'm rich (I'm not), and not because I want to be rich (I wouldn't mind it but it's not my life's goal).
"We need to raise taxes so the rich will 'pay their fair share'".
"We need to raise taxes so that governmental revenues will increase and 'reduce the deficit'".
"We need a 'balanced approach' to this budget crisis (i.e. raise taxes)".
My questions are these:
1. How much is a "fair share"?
2. What tax rate would you want the rich to pay at the highest level? What would the income level be to qualify for the highest rate? (This assumes a progressive tax structure like we have now, i.e. what is the tax rate on the very next dollar earned above that threshold?)
3. Knowing that if your tax rate = 0% => $0 revenue, and if tax rate = 100% => $0 revenue, it MUST follow that there is a peak somewhere in between where you maximize revenues to the government. Where would that rate be?
4. If spending is above that peak, no amount of tax will ever cover the spending. What should government do? (This is obviously a leading a question).
Have at it.
The "fair share" argument is a silly one. For too many people the only "fair" taxes are on other people.
That said, I'm in favor of keeping a progressive system simply because, in real terms, richer people can take the hit. If you're making $20K a year, you feel every single dollar you have to pay out. When you're making $200K, your basic needs (and even not-so-basic) can be met without any trouble. When you're making $20m basic needs aren't even on your radar as something to worry about.
The peak tax rates argument, by the way, isn't borne out by the numbers. Gross income tax revenue has been ridiculously steady, all things considered, for the last 50 years regardless of what the rates were. Instead of chasing some phantom "ideal iincome tax rates" that may not even exist we should be looking elsewhere for more revenue - namely, in corporate tax revenue, which has been plummeting over that same period to no appreciable gain in the GDP's rate of increase.
Note I'm not saying increase corporate tax rates
, which are already pretty damn high relative to the rest of the first world (although the amount of revenue lost through loopholes, the prevalence of S corporations, etc. makes that a fairly moot point).