First off I'll say I think the Income Tax is terrible. If we want a Federal Tax to fund the "Big 4" (Medicare, Medicaid, Defense, Social Security), I think the Fair Tax (a rational national sales tax) would be more efficient, generate more revenue, and be more "fair" in terms of progressively taxing the rich more. So even though I think the Federal Income Tax should be 0% for everyone, I am not entirely opposed to raising the top marginal rates, for a few reasons. First, if it is the law, and we cannot get rid of it, we might as well set rates at an optimal level. Make the best of a bad situation as it were. Second, it hasn't been shown over history that raising the top marginal rate has any significant negative impact on the economy (Raising Capital Gains Taxes, though, WOULD have a negative impact, but that's not what I'm talking about here) Finally, with these previous points in mind, we could help reduce the deficit some (therefore reducing inflation) which would helps low and middle income earners, without slowing GDP growth much (if at all). See the Clinton years. Tax rates were higher, and there was actually good growth. I'll argue that the growth was not related to the top marginal tax rates at all. What I'm trying to say is that those higher rates certainly didn't slow growth. The tax rates seem to have no impact on GDP, but it does impact the deficit. === Summary of everything above: Raising the top marginal income tax rate has, historically, not hurt GDP growth. It does, however, help reduce the deficit=== All of that being said, here's what I want to say: Raising top marginal income tax rates reduces the deficit in the same way that consuming 200 less calories per day helps an obese old man lose weight Raise the top marginal rates from 35% (Bush-rates) back up to 39% (Clinton-rates), and we will generate a projected $500B over 10 years. The deficit is projected to raise to something like $25T by 2020 ($1.5 T per year over the next 10 years, I believe is the official number). And we think that $500B out of $10T is worth bickering and fighting about? The bottom line: We have a spending problem, not a revenue problem. Even I will admit that raising the top marginal rates is not a huge deal, and this is coming from a Libertarian who believes smaller Government is better Government. It will likely not negatively affect our GDP growth. But to believe that it will positively affect our deficit-reduction efforts? Think again. Look at the numbers. Raising top marginal rates is a drop in the bucket in terms of deficit reduction. It will have virtually no impact on day-to-day matters of ordinary Americans. But Obama seems to view it as integral to an economy that is "built-to-last"? Rebublicans seem to think it will send the recovery off a cliff? Left and Right, none of them get it.
So why did you call your thread the opposite of your conclusion? Are you trying to trick people into a skewed response? I think your conclusion is based on a naive faith in statistics (saying tax doesn't impact GDP). Of course you can find hundreds of studies which "prove" there is no correlation, statistics lean whichever way the researcher wants them to. Modelling human behavior, which is the source of GDP, is hypothetical at best. Also, be careful with your analogies---reducing caloric intake aids in weight loss, because it's a zero sum equation, which is not true of human production. GDP increases are actually increases; technological development, work ethic, efficiency in natural resource harvesting, etc. lead mean simply "more to go around". Deficits depend on revenue, which depends on GDP, which depends on tax rates. You can't change one element of the equation without affecting all the others.
All great points. Except the title of the thread is exactly the conclusion. The only thing raising taxes is good for is reducing the deficit, but we can see with the projections that it will hardly reduce the deficit at all, so there's really no point in even talking about it. I agree with your point on statistics. Maybe we would have seen greater growth in the 90s if Clinton had lowered rates. Maybe growth would have been slower in the 00s if Bush hadn't lowered the rates. It's hard to say conclusively. It's just hard to say conclusively that higher rates slows growth, which is what most Republicans say will happen. I would bet that growth may slow a tiny bit, but I doubt it would be significant. It's impossible to know, you're right. The analogy is not perfect, agreed. I'm just trying to paint a picture. Trying to show how raising taxes would really have almost no impact on anything. Yet Democrats and Progressives seem to treat it as a panacea.
If we repealed ALL of the Bush tax cuts - including the ones on the rest of taxpayers that everyone seems to have forgotten about - we'd see closer to $330 Billion per year ($3.3 Trillion in political 10-year speak). The tax cuts on the richest were only a drop in the bucket when it comes to the reduced revenue. Why aren't people willing to suggest that everyone pay more, instead of just the rich?
It's not as practical. The cost of living in America has risen, wages have not. Most people don't have more to spend, whereas the rich, who have gotten richer at the same time everyone else got poorer, do have more. So they can pay higher taxes while still remaining rich, while everyone else can't pay higher taxes while still having money for food and rent.
Wow... Yes...the last thing we should do is require a little more from the people that have profited the most and can afford it the most... Much better to raise taxes on those making under 30K a year, while giving tax subsidies to the super wealthy (as proposed in the PinkSlip plan).
The deficit is everyone's problem. The programs provided by the government are used by everyone. Everyone should step in and help. Everyone should pay their share.
Yellen and crew keeps interest rates on hold... US Fed keeps interest rates on hold Wed, 27 Apr 2016 - The US Federal Reserve has kept interest rates between 0.25% and 0.5%, the rate its held since December.
Rate hike in June unlikely... Wall Street gives up on June rate hike by Fed after payrolls disappoint: poll May 06 2016 - Wall Street's top banks have all but abandoned any expectation that the Federal Reserve will raise interest rates in June, and most now see the U.S. central bank's next rate hike coming in September, according to a Reuters survey conducted on Friday.
World stocks slip as Fed rate hike signal spooks investors... Stocks slide after Fed signals June rate hike now possible May 19, 2016 -- A surprise indication from the U.S. Federal Reserve that it may raise interest rates at its next policy meeting in June weighed on global stock markets on Thursday.
Interest rates to stay put... Fed seen holding rates steady as inflation watch continues July 26, 2016 - The U.S. Federal Reserve is expected to keep interest rates unchanged this week, deferring any possible increase until September or December, as policymakers hold out for more evidence of a pickup in inflation.
