Reams have been written about extending, or not, the Bush tax cuts. Many in Washington claim, now that the election is upon us, that something must be done to reduce the deficit, and, we are presumably led to believe that increasing taxes on the very wealthy is the answer.
In 2009, this country ran a deficit of $1.3 trillion dollars, and another $1.3 trillion is expected to be added for fiscal year 2010. As of September 16, 2010, the total debt owed by this country was $13,464,896,653,374.11. In fact, as I was writing this post, we added another $3 billion in debt… in one day.
Through the first 11 months of this fiscal year we have paid $395,768,649,928.53 in interest on that debt.
Enter, Treasury Secretary Timothy Geithner urging the tax cuts be repealed for individuals making more than $200,000, and families making more than $250,000. According to Mr. Geithner,
The White House estimates the one-year cost of extension at $35 billion and the 10-year cost at $700 billion.
Of course, letting people keep their own money doesn’t cost the government a nickel, but, I’ll leave that for another day.
Even though the government is notoriously wrong in estimating the effects of tax policy,
typically overestimat[ing] the revenue gain from raising tax rates, and overestimat[ing] revenue losses from tax rate cuts,
raising $700 billion over ten years doesn’t even cover the 2009 budget deficit, much less the anticipated 2010 budget deficit, the debt incurred before 2009 and any future deficits going forward.
These figures are startling, and, no amount of “taxing the rich” is going to make them go away. In fact,
A tax policy that confiscated 100% of the taxable income of everyone in America earning over $500,000 in 2006 would only have given Congress an extra $1.3 trillion in revenue. [and] even taking every taxable “dime” of everyone earning more than $75,000 in 2006 would have barely yielded …$4 trillion.
We can no longer afford to live beyond our means. We must cut our spending and begin to pay off our debt…no more cash for clunkers, or dishwashers, or heating systems, or windows, or honey bee research, or swine odor, or whatever the pet project du jour in Congress is.
Our very future depends upon it.