Raising taxes not the answer to the deficit

April 07, 2011

In Tom Schaller's recent Op-Ed article ("Taxing the rich: good policy, good politics," April 6), he makes the case that the cure for our economic ills is more taxes on the rich.

Tom argues that (1) increasing government spending stimulates the economy, (2) reducing income taxes retards economic growth, (3) the tax burden in the US too low, and (4) increasing taxes on the wealthy is justified because it's popular.

Let's see, Obama and the governments of Greece, Ireland, and now Portugal have all spent trillions with little or no economic growth to show. As evidence that reducing taxes is ineffective he cites economic statistics from the Bush years and apparently doesn't understand the difference between factors that are associative and those that are causal. According to Tom, the federal government isn't big enough and taxes aren't high enough, (and he wonders who is from Mars?). As further evidence, he cites a USA Today article that reports that the tax burden in the US is the lowest since 1950.

Besides the fact that the article is written by two leftist groups, it's totally misleading. The tax burden is low because it has been shifted almost entirely to a small minority of the citizenry -- the "rich." For those who do pay taxes the burden has never been greater. In 1980, the top 1% of wage earners paid 19% of all federal income taxes and the bottom 50% paid 7%. In 2008, the top 1% paid 38% of all income taxes (a 100% increase) and the bottom 50% paid just 2.7%, (see http://www.taxfoundation.org). Secondly, the tax burden argument ignores the other half of the equation, which is spending. Under the Obama administration federal spending as a percent of GDP is the highest since World War II, topping a whopping 41% of GDP in 2009, (see http://www.usgovernmentspending.com). In 2008, the top 1% earned a total of $1.7 trillion. If we tax that group at a 100% rate, (take all of their income) we will only raise enough cash to reduce the federal deficit by 18%.

Finally, according to Tom, because the citizens that don't pay taxes vastly outnumber the citizens that do, it is justified for the majority take more from the minority because they have more votes. We should expect more rigor from a professor and hopefully he expects more from his students.

Steve Williams, Towson

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