Guess what? Raising taxes on “the rich” does MORE HARM than good.
The drive by media and their comrades in the Democrat Party are in overdrive trying to sell us on getting “the rich” to “pay their fair share.” Let’s hold that thought and take a gander at some FACTS from the highly-respected non-partisan DC-based Tax Foundation:
- In 2013, 138.3 million taxpayers reported earning $9.03 trillion in adjusted gross income and paid $1.23 trillion in income taxes.
- Every income group besides the top 1 percent of taxpayers reported higher income in 2013 than the previous year. All income groups paid higher taxes in 2013 than the previous year.
- The share of income earned by the top 1 percent of taxpayers fell to 19.0 percent in 2013. Their share of federal income taxes fell slightly to 37.8 percent.
- In 2012, the top 50 percent of all taxpayers (69.2 million filers) paid 97.2 percent of all income taxes while the bottom 50 percent paid the remaining 2.8 percent.
- The top 1 percent (1.3 million filers) paid a greater share of income taxes (37.8 percent) than the bottom 90 percent (124.5 million filers) combined (30.2 percent).
- The top 1 percent of taxpayers paid a higher effective income tax rate than any other group, at 27.1 percent, which is over 8 times higher than taxpayers in the bottom 50 percent (3.3 percent).[…]
Paying more than half the country combined. Paying more than the bottom 90 percent. That seems like MORE than their “fair share.”
Okay. Now, let’s look at the spin that new government programs need to be “paid for” with higher taxes on “the rich.” Check out this chart from the wise people at Forbes:
The red line tracks the top federal income tax rate from 1960 to 2011. The blue line is government revenue. The FACTS indicate that, if you lower the rates on the nation’s top earners, the government ends up with more money to play with.
Here’s some more of that pesky fact stuff from The Tax Foundation:
The New York Times recently published an article by Patricia Cohen, titled “What Could Raising Taxes on the 1% Do? Surprising Amounts.” The basic claim of the article is that the federal government could raise a significant amount of revenue by increasing taxes on the richest Americans.
The article presents several statistics about how much money the federal government could raise if it increased the “effective tax rate” of high-income households: the total share of their income they pay to the federal government. For instance, the article claims that raising the effective tax rate of the top 1% of Americans from 33.4 percent to 45 percent could bring in “a whopping $276 billion.” […]
According to our estimates, Congress would have to raise the top rate on ordinary income to 74 percent, in order to raise the effective rate of the 1% from 33.4 percent to 45 percent. This would be a rate hike of over 34 percentage points, or an 87 percent increase in the top rate.[…]
The high rates that would need to be in place to tax the 1% at a 45 percent effective rate would almost certainly have negative economic consequences. According to our Taxes and Growth model, raising the top rate on ordinary income to 74 percent would shrink the size of the U.S. economy by 3.5 percent in the long run, by discouraging labor and pass-through business. While this tax increase would raise $3.49 trillion over 10 years under conventional scoring, after taking its economic effects into account, it would only raise $2.37 trillion. This is a significantly smaller figure than that cited by the New York Times.
Furthermore, raising the top rate on ordinary income, capital gains, and dividends to 56 percent would lead to an even larger decline in GDP, of 4.9 percent. This is because taxes on investment income are especially harmful to long-term economic growth. After taking economic effects into account, this proposal would only raise $1.96 trillion over 10 years.
In addition, none of these figures take into account the effects of increased tax evasion and profit shifting by wealthy Americans that would surely occur in response to such high rates. After all, when taxes rise, taxpayers have more incentives to avoid them. And it is well-documented that, when rates on capital gains rise, shareholders simply defer their realizations, making it difficult to raise much revenue from tax increases on capital gains income.[…]
Translation: Investments are delayed or cancelled. Not exactly a brilliant tactic for boosting an already anemic economy.
Here’s another fun chart:
Translation: Jack up the top tax rates, and you get LESS work, LESS investment, and LESS overall economic output.
It may be great theater to bash “the rich” at election time. But those are the folks who are doing the innovating and fueling the growth of our economy. Believe it or not, “rich” folks are always looking for ways to invest their money so it turns into more money. Send the tax goons after them, and they’ll just figure out ways to hide or sit on that cash. When that happens, pay raises don’t get awarded. New jobs don’t get created. Businesses don’t get started or expanded. Things tend to sit still, or even degrade. *And what fun is THAT?*
One thought on “Guess what? Raising taxes on “the rich” does MORE HARM than good.”
You know what surprises me is that so many of the “rich” seem to be on the side of those playing this fair share card. I assume part of the reason is they know they will just be able to move their money around enough to avoid the additional taxes if they happen to be implemented. They also probably assume that like most progressive issues it is a lot of hot air to get the low-intelligence crowd to vote for them.
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