Wednesday, August 10, 2011

Taxing the rich does not work

There are some in Washington -- and among our friends -- who believe we don't have a spending problem we have a revenue problem.  They surmise that what we need to do -- and Obama proposes this -- is to raise taxes on the rich.

Yet the UK Daily mail has a nice little article called "IRS:  Not enough rich to cover the debt."  The article proposes that even if we took all the profits to the richest in this country -- those making $10 million a year or more, that would amount to $240 billion in 2009 dollars.  This is enough money to cover the debt for only 18 days.

In total, 227,000 people earned a million dollars in 2009.  You add all their revenue up and you still don't have enough to make a dent in our national debt of 1.5 trillion dollars each year.

The truth is, the richest 25 percent in the United States already account for 86 percent of tax revenue to the Federal Government, according to the Internal Revenue Service.  The top 50 percent of income earners paid 96 percent of income tax revenue.

The truth is that the rich already account for nearly all tax revenues.  So if we were to tax the rich even more, the Federal Government will not make more money. This idea that we need to tax the rich to pay off the national debt is not only poppycock, it's poppycock.

The rich are the ones who create the jobs.  If you cut taxes, this gives the rich an incentive to invest because they know they will make more money.  If they invest in new buildings and equipment, this creates work for other industries, and the need for them to hire more workers.  More workers results in more people to tax.

Consider that when Reagan cut taxes from 70 percent to about 30 percent in 1983 tax revenue over the next ten years doubled from about 500 billion to a little less than a trillion dollars.  When Bush Cut taxes revenue also jumped.  So the best way to raise money -- the economic 101 way -- is to cut taxes, not raise them.

That's aside from the fact that taxing the rich is unfair and Unconstitutional if you were to take out the 13th amendment.  Taxing those who make the country stay afloat, those who exemplify American exceptionalism and the American dream, is no way to make a country work.

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