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Nealz Nuze

Posted: 8:45 a.m. Wednesday, April 6, 2011

Taxing Our Way Out of This Mess 

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By Neal Boortz

I can understand why this "tax the rich" rhetoric works. Look at the polls. A huge percentage of Americans believe we could balance our budget if we would simply eliminate foreign aid? Sorry … that's less than 1% of the federal budget. But if that many people believe you can balance the budget by simply eliminating foreign aid, then it is easy to understand why they would think that you could balance the budget by just raising taxes on the rich. I'll show you in a second why that just won't work.

This brings up a question: Is self-proclaimed socialist Bernie Sanders from Vermont an idiot or a demagogue? Sanders is out there with the Democrats saying that he doesn't believe the rich are paying enough in taxes, even though the top earning 1% is paying nearly 40% of all individual income taxes collected by the IRS! Bernie Sanders told MSNBC, "… the richest people are getting richer. They have not contributed one nickel to deficit reduction." It's hard to take this guy seriously for a few reasons. Number one, he believes that taxing the rich is a viable solution to solving our deficit problems; secondly, it's hard to believe that anyone in Washington, particularly liberals, are concerned about deficit reduction. Look, just last month (March 2011) our federal government spent 8.3 times more than it took in in revenue. No amount of taxing the rich is going to make up this gap. The problem is clearly spending, NOT revenue and not revenue from the uber productive.

So now for some painful truth that I'm sure will never grace the desk of one Bernie Sanders. But you can arm yourself with this information from the Amerian Thinker when your lib and prog friends claim that all we need to do is "tax the rich, tax the rich!"

The tax year of 2008 was the last to date that the IRS has done this kind of analysis. In 2008 the highest marginal tax rate of 35% applied to all AGI above $357,700.00. In that year the total amount of AGI subject to the highest rate was $622.8 Billion. The government collected in taxes $218.0 Billion (35%).

In 2011 the annual budget deficit will be nearly $1.665 trillion and in 2012: $1.1 trillion. If the Liberal Democrats in league with the Socialists, the Unions and the Communists, succeed in raising the highest marginal rate, how much more would Washington D.C. receive, assuming no change in behavior and a general eagerness to pay more?

If the highest rate of 35% were raised by a factor of 20% to 42%, then the additional tax revenue would be $43.5 Billion, not much of a dent in $1.665 trillion. So, let's raise the rate by a factor of 50% to 52.5%; the additional revenue would be $108.9 Billion. Still nowhere near enough, so let's just tax it at a rate of 100%, bringing in an additional $404.8 Billion. Unfortunately the country is still $1.26 trillion in the hole for the year.

But wealth envy is a lot easier a campaign platform to run on than facts and figures and the painful truth.

 
 

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