Several of the potential Democratic presidential candidates, including Elizabeth Warren and Kamala Harris, are talking up plans to tax the heck out of “the rich” in this country as a way to pay for their expensive social programs. These include not only a higher income tax but a so-called “wealth tax” on those who are deemed to have accumulated too much material gain. It’s a tried and true talking point which always gins up the liberal base, but that formula is a proven loser.
To point this annoying fact of life out, Indiana Senator Mike Braun attempted to put the concept into plain language during hearings with the Congressional Budget Office. In this video, Braun explains why Democrats’ plans to raise taxes on the rich won’t work.
“We’ve got a spending problem, and it hasn’t snuck up on us. The Democrats want to raise taxes on the rich, but even if we taxed our highest income brackets at 100% we’d still never cover our budget deficit. We don’t need more revenue, we need backbone.”
Braun points out that revenues are currently rising faster than the rate of growth in the economy. This wasn’t true as recently as two years ago and how long this condition will remain sustainable is an unknown. But at least for the moment, we’re seeing significant growth in government revenue. So why are we still losing ground at the rate of more than a trillion dollars per year?
Because there has been zero appetite to curb spending even marginally. Ed Morrissey and I have had a running debate over the years as to whether America has a spending problem or a revenue problem. I’ve consistently argued that the two are not mutually exclusive. If you want to get the debt issue under control, a reasonable amount of revenue is required. There are two ways to achieve that. One is to set tax levels that bring in more cash, but the other is to grow the economy at a rate that generates more revenue from a larger number of people who are earning more money. If the economy is strong enough, that can happen without tax increases.
But the one constant factor in this equation is spending. Our government has consistently shown that there is no limit to how much money it can spend when given the opportunity. If revenues skyrocket, they can and will come up with new spending programs to flush that money away rather than allowing us to pay down our debt. Spending cuts are painful and unpopular, but until this pattern changes, we will continue our headlong plunge toward national bankruptcy.
UPDATE: (Jazz) After some reader feedback, I was reminded that perhaps not everyone is familiar with the phrase “Eat the Rich.” If that applies to you, read this book.
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