Sunday, May 15, 2011

The Failure of "Tax The Rich"

Digby has a post critical of rich people objecting to higher taxes because they misinterpret the impact of marginal tax rates. She points out the error, which she says is typical, of a person with an income of $262,000 per year. As Dean Baker points out, she reports,

Since the 3 percentage point increase in the tax rate would only apply to income above $250,000, or $12,000 of his income, Mason would have to pay an additional $400 a year in taxes.

Digby has been an advocate of the “tax the rich” plan since it was first advanced, but what we see here is that it doesn’t really raise taxes very much. It does not appear that it will come even close to raising enough revenue to balance the budget. The "tax the rich" plan which is supposed to allow most of the country to enjoy its "free lunch" mentality indefinitely is not going to work. If the middle class want to have the government provide programs like education, flood insurance and such, they are going to have to be willing to be taxed to pay for it.

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