As federal income taxes come due this Thursday, Americans are well aware of just how expensive government is becoming.
But as the Wall Street Journal warned today, we ain’t seen nothing yet. Obama’s go-to strategy for cutting the deficit is to tax the so-called rich, but this would send tax rates to exorbitant levels.
For example, to reduce the deficit from 11 percent of the economy today to a sustainable 3 percent of GDP, families with more than $209,000 would see tax rates rise from 33% and 35% to 72.4% and 76.8%, according to new findings from the Brookings-Urban Tax Policy Center.
Why are these rates so high?
Number 1, the government is spending too much. Over the next ten years, government will expand by (an inflation adjusted) $12,000 per household, totaling more than $36,000 per household. That’s a whole lot of spending that requires a whole lot of new taxes to pay for it.
Number 2, the arbitrary requirement that new taxes only be paid by the “rich” ignores the critical fact that the top 10 percent of earners already pay more than 70 percent of federal income taxes.
And this trend has been accelerating through time.
But the greatest problem with this tax-trend is that it balances the burden of paying for growing government on the backs of a few families is that it creates immense dependence on the government by non-payers—those who collect federal benefits but pay no federal income tax—who have no skin in the game.
Instead of focusing on who to tax, Congress should focus on the real problem—spending—and start tightening its belt to save us from having to fork over even more of our income this time next year.