Will Raising Taxes on the Rich Increase Revenue?

A statistic I recently read in the poorly titled book “The End of Prosperity” has helped to convince me that the answer is no. (The book is not as depressing as the title, instead of talking about an end to prosperity it is more of an apologetic for supply-side economics, with a focus on the history of economic policies and their effects. Surprisingly readable for a book on economics.)

It said that under the Bush tax cuts of 2003, (which I believe primarily applied to top earners such as business owners, the investor class and the like) federal tax revenues increased from 2004 to 2007 by about $785 billion. According to the book this was the largest four year tax revenue increase in American history. I think the author’s make a good case for there being a causal connection here, at least to some extent. On a side note I found it noteworthy when reading it that this is about the amount of money that Obama’s stimulus package is said to cost. Now I realize it is unpopular to say positive things about policies of Bush’s such as his tax cuts, but leaving personal feelings about Bush aside, if the tax cuts helped to increase tax revenue (by lessening the incentive to engage in tax evasion and quite possibly by helping the economy to grow) by such a notable amount then doesn’t it make sense to think that raising taxes on top earners or letting such tax cuts expire would have an opposite effect on tax revenues?

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2 Responses to “Will Raising Taxes on the Rich Increase Revenue?”

  1. lekowitz Says:

    Yes it does make sense. It also makes sense to not label all businesses as evil boogey-men who need to be taxed to death.

  2. llabesab Says:

    Liberals must have been educated by the average American Teacher who, statistics show, graduated in the bottom third of the college class and scored 25% lower on SAT’s than any other discipline. They can’t do simple math. Here’s a stumper;

    If The US Treasury taxed, at a 100% rate, all the earnings of every person in the USA who earns $500,000/yr and over, the amount raised would only amount to $2 trillion; that’s half of The Anointed One’s projected budget. And, if the Treasury also “confiscated” all the earnings of every person in the USA earning $250,00/yr to $500,000/yr., The Anointed One would still be $1 trillion short. Can you guess where that $1 trillion will come from?

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