Skip to comments.There Arenít Enough Millionaires. The rich canít fund our deficits
Posted on 03/14/2011 7:03:39 AM PDT by SeekAndFind
This may sound like a liberal parody of conservative economic thinking, but let me put it out there: Americas problem is that the rich dont have enough money.
There, I said it. Lets rumble.
When it comes to the Scrooge McDuck set, the problem isnt that theyre not rich enough, its that there arent enough rich not enough to do what liberals want to do, anyway, which is to balance the budget by increasing taxes on them. Lets deploy some always-suspect English-major math:
There are lots of liberal definitions of rich. When Pres. Barack Obama talks about the rich, hes talking about people living in households with income of more than $250,000 or more, the rarefied caviar-shoveling stratum occupied by the likes of second-tier public-broadcasting executives, Boston cops, nurses, and the city manager of Lubbock, Texas (assuming somebody in her household earns the last $25,000 to carry her over the line). Club 250K isnt all that exclusive, and most of its members arent the yachts-and-expensive-mistresses types.
Nonetheless, there arent that many of them. In fact, in 2006, the Census Bureau found only 2.2 million households earning more than $250,000. And most of those are closer to the Lubbock city manager than to Carlos Slim, income-wise. To jump from the 50th to the 51st percentile isnt that tough; jumping from the 96th to the 97th takes a lot of schmundo. Its lonely at the top.
But say we wanted to balance the budget by jacking up taxes on Club 250K. Thats a problem: The 2012 deficit is forecast to hit $1.1 trillion under Obamas budget. (Thanks, Mr. President!) Spread that deficit over all the households in Club 250K and you have to jack up their taxes by an average of $500,000. Which you simply cant do, since a lot of them dont have $500,000 in income to seize: Most of them are making $250,000 to $450,000 and paying about half in taxes already. You can squeeze that goose all day, but thats not going to make it push out a golden egg.
But like certain other exclusive clubs, Club 250K has an inner sanctum, a special club within the club, the champagne room of socioeconomic status. And that is Club 1: the million-dollar-a-year club. Not the millionaires club lots of the people earning $1 million in any given year do not have $1 million in assets but, still, a million a year, even in rapidly depreciating U.S. dollars, is not too shabby. But the trouble for liberals is, Club 1 is really, really exclusive: Only 0.2 percent of U.S. households have incomes that high, meaning that theres only about 200,000 of them. And like Club 250K, Club 1 is bottom-heavy: There are a lot more $1 million men than there are $6 million men. And there are a whole heck of a lot more $6 million men than there are $60 million men.
You want to tax Club 1 to get rid of the deficit, you have to hit each of those 200,000 households with an average tax hike not an average tax bill, but tax increase of $6 million. And a lot of those Club 1 households dont have $6 million in income to start with, much less $6 million left after the taxes theyre already paying.
Every time you raise the threshold for eating the rich, you get a much, much smaller serving of meat on the plate but the deficit stays the same. The long division gets pretty ugly. You end up chasing a revenue will-o-the-wisp.
So, what about Lloyd Blankfein and Charlie Sheen and Tiger Woods? What about these people? You can tax the striped pants off of them, but you wont get enough money to balance the budget. If youre doing it, youre probably mostly doing it because it feels good. (And, yes, that does make you a bad person.)
Correction: You can try to tax the striped pants off of them. Lloyd Blankfein and Tiger Woods and Charlie Sheen have a lot of discretion about when, where, and how they get paid. Lloyd Blankfein does not look at a pay stub every two weeks and shake his head sadly, and make sad little sighing sounds; guys like that do something about it. They move to low-tax jurisdictions. They defer. They incorporate. They set up enormous trusts to keep their neer-do-well nephews in boat shoes and gin and political office while avoiding taxes. They lawyer up. They will play the game, and they are better at it than you are.
So, how about taxing people who make less than $250,000? Thats probably whom you want to tax, since they are the ones who have the money (Counterintuitive, I know.) The Bush tax cuts for the rich cost the Treasury about $800 billion in forgone revenue; the Bush tax cuts for the middle class cost trillions 2.2 of them, to be precise.
Repealing all of those Bush tax cuts, for rich and middle class alike, gets you about $3 trillion over ten years. The deficit is running from a third to almost half that every year. Will not balance. Does not compute.
Just as supply-siders are naïve to think that tax cuts are going to magically empower us to grow our way out of this mess, progressives are naïve to think that there is some magically delicious pot of Lucky Charms at the end of the IRS rainbow that is going to get us out of this in some kind of obvious or straightforward fashion. No, tax cuts do not pay for themselves, but supply-side effects are real things, and jacking up tax rates to the level necessary to sustain current levels of government spending is going to have real economic consequences, some of which could in aggregate mean that you dont collect the taxes you thought you were going to collect. This is doubly true when you already have the second-highest business-tax rate in the developed world and other significant economic challenges, like a backward K12 education system making the work force less competitive and public infrastructure that is being neglected in favor of gimmicky political shenanigans.
Capital is sensitive it just wants to be loved! and it will go where the love is, where it can be fruitful and multiply. Setting trillions of dollars worth of it ablaze on the altar of Washingtons self-importance every year is not going to get it done, and there simply arent enough rich people for us to pillage or enough loot to make it all work. We have finally, as the lady predicted, run out of other peoples money.
Kevin D. Williamson is a deputy managing editor of National Review and author of The Politically Incorrect Guide to Socialism, just published by Regnery.
All Empires fall. We’re no different.
Solution: Make me a millionaire, and then tax me.
If the money is taken from the rich, it will have to be taken out of circulation and millions of jobs will be killed just so public unions can get Cadillac health care plans.
Spending your way out of debt is like screwing your way out of aids
Sadly, we’re crumbling from witin. We were destroyed by our own success. Somewhere along the line, a minority convinced the majority that there is such a thing as a ‘free lunch’.
If I made comments on every thread on my Facebook page about the “evil rich”, posted by folks who think that social work is the highest calling of mankind, I wouldn’t have enough time to rape, pillage, plunder the world and post here on FR.
Taxing the rich is just a scam to warm us up for our taxes going up. Single party Maryland is the perfect example : The Democrats imposed two tax increases on ‘the rich’ and collected little revenue from it. But they did get their revenues from a huge (%) state sales tax increase, a very regressive tax, and they raised cigarette taxes. More regressive taxes on the way : alcohol and gasoline. On the bright side they are giving illegal aliens college tuition discounts. The liberal Baltimore Sun approves of all this.
If ‘taxing the rich’ is such a great idea and is what made the 1990s a great success as Democrats claim, then why didnt Obama-Pelosi-Reid just do it in a bill when they had the 60 in the Senate (2009-early 2010)?
Yup, I’ve said this for years. Success in many ways is just as dangerous as failure for it breeds apathy. We are in decline.
High inflation and default appear to be in our future. (Then, grinding depression)
Can’t you just see the Democrat reading this while snarling, Snidley Whiplash fashion: “Curses! Foiled again!”
There are 403 Billionaires who have a combined worth of $1.3 Trillion. If all of it was confiscated, it would cover this year’s deficit. Of course there would be no next year.
Yep...it’s no longer if, it’s merely when. And please stop believing (not you wolfie) the great republican party will save us. It can’t.
It is impossible for the Federal Government to raise $1.6 trillion in revenue to cover the deficit from ANY source. Any attempt to do it would destroy the economy and you would collect LESS revenue. We need to cut spending $1.6 trillion, period. The republican $60 billion cut dooms us.
Back in the 70’s P. Harvey said if you taxed all income over 50,000 at 100% if would fund the gov’t for just a few days! Things haven’t changed much have they?
Hollywood elite would be a good place to start taking the money from, Mikey Moore has quite a bit he can give up.....
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.