While Congress debates whether to increase taxes on the “rich” (yes, allowing the Bush tax cuts to expire is a tax increase), it it worth reflecting on the words of the late economist, Milton Friedman.
Politicians will always spend every penny of tax raised and whatever else they can get away with.
And, a study done by Richard Vedder and Lowell Gallaway of Ohio University examining the data from World War II forward bears this out. For every new dollar in taxes raised by the government, Congress appropriates anywhere between $1.05 and $1.81 in additional spending. The study was done in the late 1980’s and has been updated over time using data since then, variables and models,
[b]ut no matter how we configured the data and no matter what variables we examined, higher tax collections never resulted in less spending.
So, when you hear the left bemoan the fact that taxes must be increased on the “rich” in order to reduce the deficit, understand that no such deficit reduction will happen. New income will result in new spending, and then some.
Congress seems incapable of doing anything else.