Tax Increases Will Not Fix The Problem

Liberal democrats are clamoring for the rich to pay their so called "fair share" of taxes. Wrapped in the language of a balanced approach to reducing the federal government's deficit, the liberals call for higher income taxes does resonate with much of the population, particularly those citizens who do not pay any federal income tax.

I am always amazed at the release of polling data indicating that a majority of Americans are in favor of increasing taxes on rich people. Such findings are really silly. What we need to know is, what percentage of people actually paying federal income tax, carrying the freight for the others who are not, are in favor of carrying even more freight? And if we are going to talk fairness, is it possibly fair to have about 50 percent of households not paying any federal income tax at all? And how do these liberals feel about the fairness of double taxing the distribution of corporate dividends?

Fairness is subjective. But facts from the Internal Revenue Service are not. Consider the following data from year 2009 individual returns.

There were 140 million returns filed in year 2009.

Of these returns, ONLY 8,274 returns contained adjusted gross income of $10 million or more.

Of these returns, ONLY 236,883 returns contained AGI of $1 million or more.

Of these returns, ONLY about 4 million returns contained AGI of $200,000 or more.

Note that $200,000 annual AGI is apparently the new Obama Administration definition of millionaires and billionaires. This group of $200,000 plus filers is being demonized for being somewhat successful and deserving of punishment for years of skill development as surgeons, professional athletes, and owners or managers of businesses. However, again according to the IRS, this successful group only accounts for 26 percent of taxpayer income in year 2009.

By the Obama Administration's own pronouncements, increased taxes on this group will produce $750 billion in additional revenue over the next 10 years. As a young child in the 1960's, back in the days when schools taught division, I can see that we are talking about $75 billion per year increased revenue. The next step of division, involving $75 billion in the context of a $1.5 trillion annual deficit, which is the denominator, yields a result of 5 percent. So increasing taxes on people with $200,000 or more AGI solves only 5 percent of the deficit problem. WOW. And that is before considering the adverse impact of higher taxes on private sector GDP.

The liberal democrats want to drag the country through a class warfare struggle over a tactic of increasing taxes on the rich, a tactic that, ultimately, will have virtually no impact on our deficit crisis. The spending problem is of such gargantuan size that $750 billion in new revenue over the next ten years is inconsequential. We are being diverted from the necessity of resizing the federal government into a much smaller, affordable entity focused on its key responsibilities.

The longer we are diverted, the worse the situation becomes.

November 2012 is coming soon. Get involved now.