Just a reminder: A fiscal-cliff deal won’t remotely solve our debt problem
So, we’ve committed to spending tons of money just as we’re not bringing in enough cash to pay the bills. Moving the tax threshold to $1 million does not help that issue. Taxing household income above $1 million is estimated to bring in $463 billion over 10 years, whereas taxing rich families above the $250,000 threshold rakes in $829 billion, according to an analysis by the left-leaning Center on Budget and Policy Priorities. That’s a big difference.
But, the most significant problem with the $1 million mark is that politically it creates a false sense that we’ve solved the budget problem by raising taxes on the uber-rich. Not even close. If Americans want to keep the programs everyone seems to enjoy (and not drastically change the make-up of the federal government by cutting agencies, medical research, or education, as the Ryan budget proposes), then a greater share of people are going to have to pay more in taxes—and that inevitably will include families who earn more than $250,000 but also probably families that make over $100,000 a year. That’s because the bulk of the money in the tax code comes from households making between $100,000 and $200,000.
Setting the standard of only taxing millionaires lets politicians off the hook–both Democrats and Republicans.