Obama's Soak-the-Rich Tax Hikes Won't Work; Income tax revenues have been remarkably stable at 8% of GDP, regardless of tax rates. The way to increase revenue is to grow the economy.
Author: Alan Reynolds</br></br>President Obama's response to congressional efforts to curb runaway federal spending is to emphasize, once again, his resolve to greatly increase tax rates on married couples whose joint incomes are above $250,000. This insistent desire to raise taxes--which he repeated in a speech yesterday while complaining about "trillions of dollars in . . . tax cuts that went to every millionaire and billionaire in the country"--is a distraction. It won't solve our nation's fiscal problem.</br></br>Preliminary estimates from the Congressional Budget Office (CBO) project that federal spending under the president's 2012 budget plan would average 23.3% over the coming decade--up from 19.7% in 2007 and 18.2% in 2001.</br></br>Even if the president could persuade Congress to enact all of his proposed tax increases, in addition to surtaxes already included in ObamaCare, the CBO finds we would still face endless budget deficits averaging 4.8% of GDP.</br></br>"Federal debt held by the public would double under the President's budget," says the CBO, "growing from $10.4 trillion (69% of GDP) at the end of 2011 to $20.8 trillion (87% of GDP) at the end of 2021, adding $9.5 trillion to the nation's debt from 2012 to 2021."