Not Enough "Rich" People for 0bama to Tax

[TBoneTX 45,568]

http://www.worldnetdaily.com/index.php?pageId=286217

Tuesday, April 12, 2011

A MINORITY VIEW

There aren't enough rich people

Walter E. Williams demonstrates folly of government hoping to tax away the deficit

By Walter Williams

I've often said that I wish there were some humane way to get rid of the rich. If you asked why, I'd answer that getting rid of the rich would save us from distraction by leftist hustlers promoting the politics of envy. Not having the rich to fret over might enable us to better focus our energies on what's in the best interest of the 99.99 percent of the rest of us. Let's look at some facts about the rich laid out by Bill Whittle citing statistics on his RealClearPolitics video "Eat the Rich."

This year, Congress will spend $3.7 trillion dollars. That turns out to be about $10 billion per day. Can we prey upon the rich to cough up the money? According to IRS statistics, roughly 2 percent of U.S. households have an income of $250,000 and above. By the way, $250,000 per year hardly qualifies one as being rich. It's not even yacht and Lear jet money. All told, households earning $250,000 and above account for 25 percent, or $1.97 trillion, of the nearly $8 trillion of total household income. If Congress imposed a 100 percent tax, taking all earnings above $250,000 per year, it would yield the princely sum of $1.4 trillion. That would keep the government running for 141 days, but there's a problem because there are 224 more days left in the year.

How about corporate profits to fill the gap? Fortune 500 companies earn nearly $400 billion in profits. Since leftists think profits are little less than theft and greed, Congress might confiscate these ill-gotten gains so that they can be returned to their rightful owners. Taking corporate profits would keep the government running for another 40 days, but that along with confiscating all income above $250,000 would only get us to the end of June. Congress must search elsewhere.

According to Forbes 400, America has 400 billionaires with a combined net worth of $1.3 trillion. Congress could confiscate their stocks and bonds, and force them to sell their businesses, yachts, airplanes, mansions and jewelry. The problem is that after fleecing the rich of their income and net worth, and the Fortune 500 corporations of their profits, it would only get us to mid-August. The fact of the matter is there are not enough rich people to come anywhere close to satisfying Congress' voracious spending appetite. They're going to have to go after the non-rich.

(Column continues below)

But let's stick with the rich and ask a few questions. Politicians, news media people and leftists in general entertain what economists call a zero elasticity view of the world. That's just fancy economic jargon for a view that government can impose a tax and people will behave after the tax just as they behaved before the tax, and the only change is more government revenue. One example of that vision, at the state and local levels of government, is the disappointing results of confiscatory tobacco taxes. Confiscatory tobacco taxes have often led to less state and local revenue because those taxes encouraged smuggling.

Similarly, when government taxes profits, corporations report fewer profits and greater costs. When individuals face higher income taxes, they report less income, buy tax shelters and hide their money. It's not just rich people who try to avoid taxes, but all of us – liberals, conservatives and libertarians.

What's the evidence? Federal tax collections have been between 15 and 20 percent of the nation's Gross Domestic Product every year since 1960. However, between 1960 and today, the top marginal tax rate has varied between 91 percent and 35 percent. That means whether taxes are high or low, people make adjustments in their economic behavior so as to keep the government tax take at 15 to 20 percent of the GDP. Differences in tax rates have a far greater impact on economic growth than federal revenues.

So far as Congress' ability to prey on the rich, we must keep in mind that rich people didn't become rich by being stupid.

[mawilson 2,133]

According to Forbes 400, America has 400 billionaires with a combined net worth of $1.3 trillion.

Net worth of 400 richest billionaires: $1.3 trillion

Net worth of all US households (as of Q3 2010): $54.9 trillion

Something for Zero Sum to think about.

[luckytxn 2,264]

The solution is simple enough. Stop spending more than we take in.

[TBoneTX 45,568]

November 2012 can't come soon enough, no man...

[Mr. Big Dog 10,747]

The solution is simple enough. Stop spending more than we take in.

And let's not reduce revenues w/o reducing spending. The budget was in good shape at the beginning of 2000. Receipts were at roughly 20% of GDP while expenditures were slightly below 20%. Enough to pay for things that need to be paid for and pay down some of that debt that had piled on. And then we slashed revenues some 4 trillion dollars and added a trillion dollar entitlement on top of that. And started two wars on Uncle Sam's credit card on top of that. As a result, quite unsurprisingly to those that have a basic grasp of math, more than 5 trillion dollars are added to the debt. And it was your "budget hawks" over there on the right doing all that. All by themselves. And now they want to lecture me on fiscal responsibility?

[ready4ONE 5,400]

Let's not go pooping a great rant party based on an op-Ed piece from World Nut Daily Mr Dog...

Edited April 14, 2011 by ready4ONE

[luckytxn 2,264]

And let's not reduce revenues w/o reducing spending. The budget was in good shape at the beginning of 2000. Receipts were at roughly 20% of GDP while expenditures were slightly below 20%. Enough to pay for things that need to be paid for and pay down some of that debt that had piled on. And then we slashed revenues some 4 trillion dollars and added a trillion dollar entitlement on top of that. And started two wars on Uncle Sam's credit card on top of that. As a result, quite unsurprisingly to those that have a basic grasp of math, more than 5 trillion dollars are added to the debt. And it was your "budget hawks" over there on the right doing all that. All by themselves. And now they want to lecture me on fiscal responsibility?

They are not my budget hawks. I think they are possibly a bigger threat than the Socialists. I personally was very happy myself with a nice balanced budget and when we even paid some of the deficit down. Maybe the one thing that would shock the world would be if we roll back the Federal government to 2000 levels. Just our revenue now would be enough to pay down the deficit a bit. The market outlook and then jobs would become very rosy. Every country in the world and even China would more than likely ####### their collective pants knowing that our resurgence would swamp their dominating the financials themselves. Then while this is all going down we start marching our troops worldwide back home. Tell everyone that it is now up to them to figure their own squabbles out from here on out. When we are safely slashing the military industrial complex appetite we tell our own hemisphere neighbors to stop pissing us off.

As it stands now we are still a world leader but a declining one. We could change this but neither two major political parties will do it and no third party can crack the obstacles thrown in their way.

[Mr. Big Dog 10,747]

They are not my budget hawks. I think they are possibly a bigger threat than the Socialists. I personally was very happy myself with a nice balanced budget and when we even paid some of the deficit down. Maybe the one thing that would shock the world would be if we roll back the Federal government to 2000 levels. Just our revenue now would be enough to pay down the deficit a bit.

Nope. Outlays were close to 20% of GDP in 2000. Revenues are about 16% of GDP today. There would be a 4% gap still. You do the math: with GDP at 14 trillion, that 4% gap translates into a $560 billion annual deficit if all you did was reduce outlays to 2000 levels relative to GDP and don't touch the revenue side of things. Seeing that health care cost alone has gone from 13% of GDP in 2000 to over 16% of GDP today, reducing spending to 2000 levels relative to GDP would already require cuts. Seeing that we're still executing 2 wars that we didn't need to fund in 2000 and are seemingly in the process of gearing up for yet another one, there are additional funding requirements that would have to be taken form some place else in order to arrive at 2000 spending levels - even if those spending levels would be relative to GDP. This is why no deficit reduction plan that tries to address the deficit problem on the outlay side alone can be taken seriously. Much less can you take seriously any plan that not only focuses exclusively on the outlay side to reduce the deficit but also seeks to actually reduce the revenue side of the equation. This is why Ryan's proposal doesn't really balance the budget for decades to come - let alone pay down any debt.

Here's a great idea to get it all taken care of: DO NOTHING.

The overarching principle of the Do-Nothing Plan is this: Leave everything as is. Current law stands, and spending and revenue levels continue according to the Congressional Budget Office's baseline projections. Everyone walks away. Paul Ryan goes fishing. Sen. Harry Reid kicks back with a ginger ale. The rest of Congress gets back to bickering about mammograms. Miraculously, the budget just balances itself, in about a decade. ...

So how does doing nothing actually return the budget to health? The answer is that doing nothing allows all kinds of fiscal changes that politicians generally abhor to take effect automatically. First, doing nothing means the Bush tax cuts would expire, as scheduled, at the end of next year. That would cause a moderately progressive tax hike, and one that hits most families, including the middle class. The top marginal rate would rise from 35 percent to 39.6 percent, and some tax benefits for investment income would disappear. Additionally, a patch to keep the alternative minimum tax from hitting 20 million or so families would end. Second, the Patient Protection and Affordable Care Act, Obama's health care law, would proceed without getting repealed or defunded. The CBO believes that the plan would bend health care's cost curve downward, wrestling the rate of health care inflation back toward the general rate of inflation. Third, doing nothing would mean that Medicare starts paying doctors low, low rates. Congress would not pass anymore of the regular "doc fixes" that keep reimbursements high. Nothing else happens. Almost magically, everything evens out. ...

...the do-nothing plan proves the point that the budget revolution does not need to be particularly revolutionary. Yes, the dollar figures are enormous, so big that it would appear to require "bold" plans that include massive new taxes or cruel new cuts. But, in fact, we don't really need to end Social Security, sell Alaska, or ship the poor to Canada to get back in the black. We just need to stick to current law--particularly the tax and health care provisions--and then we can tinker our way toward a better, healthier economy.

[^_^ 5,021]

Wait, what is so bad about patching the AMT?

[Mr. Big Dog 10,747]

Wait, what is so bad about patching the AMT?

Nobody is saying that there's anything bad about patching the AMT. The point is that existing law w/o amends amends would balance the budget faster than Ryan's plan. That's interesting, isn't it?

[^_^ 5,021]

Nobody is saying that there's anything bad about patching the AMT. The point is that existing law w/o amends amends would balance the budget faster than Ryan's plan. That's interesting, isn't it?

It is not all that surprising. Congress loves it some short-term measures.

[Obama 2012 1,714]

And let's not reduce revenues w/o reducing spending. The budget was in good shape at the beginning of 2000. Receipts were at roughly 20% of GDP while expenditures were slightly below 20%. Enough to pay for things that need to be paid for and pay down some of that debt that had piled on. And then we slashed revenues some 4 trillion dollars and added a trillion dollar entitlement on top of that. And started two wars on Uncle Sam's credit card on top of that. As a result, quite unsurprisingly to those that have a basic grasp of math, more than 5 trillion dollars are added to the debt. And it was your "budget hawks" over there on the right doing all that. All by themselves. And now they want to lecture me on fiscal responsibility?

There are a multitude of factors that put us where we are. "slashed revenues" is a bit dishonest however. The US made more money than it's ever made before year after year when the tax cuts were put into place. The problem is the spending went on the rise with it.

President Bush didn't veto a single piece of legislation, no matter what it was until 2007. THAT says a lot right there in itself. Spend Spend Spend was what happened. Of course it's easy when the economy is 'growing' and the money is flowing. You don't worry too much about any debts aquired if you think you'll pay them just fine..

The only way Clinton was able to get a balanced budget was because he had the line-item Veto, but a certain Republican mayor filed a lawsuit that caused that to disappear. It's that same decision that makes the entire health care law null and void if the SCOTUS finds any bit of it unconstitutional...

[mawilson 2,133]

Nobody is saying that there's anything bad about patching the AMT. The point is that existing law w/o amends amends would balance the budget faster than Ryan's plan. That's interesting, isn't it?

Yes, but not surprising. Ryan wouldn't be a Republican-Democrat regimer if he didn't stuff his budget full of handouts to special interests and pork dripping out the sides, all the while pretending to be cutting spending.

[Zero Sum 305]

Net worth of 400 richest billionaires: $1.3 trillion

Net worth of all US households (as of Q3 2010): $54.9 trillion

Something for Zero Sum to think about.

Net worth. As in after all that accounting. Like you said, wealth begets wealth.

What I would ask, as I asked before philosophically is:

Would increasing taxation on the richest individuals drive them to be not rich anymore?

If the answer is YES: then the method is wrong and should not be done.

If the answer is NO: then there should not be a problem asking the rich to give more of what they will not miss.

Furthermore, as wealth begets wealth- lowering the taxation rates on that other 99% of Americans will free up more funds to fuel the economy that are not proportionately spent on by the top 1%.

[^_^ 5,021]

Would increasing taxation on the richest individuals drive them to be not rich anymore?

I don't think that's the right question to ask at all.

The right question to ask is, IMHO, how should the revenue stream of the federal government be designed to minimize its volatility?