Taxes on the Wealthy And Why It Won't Solve The Deficit

There's been much said about taxes forever. The biggest tax discussion centers around The so called Bush tax cuts. President George W. Bush passed a tax cut and actually sent out checks to the public. As part of that process, the tax rate on some individuals in the high tax brackets was reduced. To be fair, everyone's taxes were reduced. However, as a dollar amount, the higher tax brackets got a bigger chunk of that money.

Bear in mind all of this was before we had a deficit. We had a surplus. Then we cut taxes, had two wars, then the economy almost died and there were enormous bailouts. The result is that now we have a deficit. This means that we owe money instead of having excess money in the bank.

One thing to note about what caused the deficit is that a big part of it was caused by those very tax cuts. More than one third of the deficit caused by the actions of George W. Bush was a result from the tax cuts he initiated.

There isn't one magical thing that can be done to fix the problem.  The solution has to come from doing many different things that when combined will reduce the deficit and get things on a better financial basis.

One of the items that is proposed is to change the tax rate for high income individuals back to the rate it was before the Bush tax cuts.  There isn't an exact number but the discussion has been to make this for people who make 250,000 a year or more. It isn't a huge change but I am not surprised that there is resistance. And so, the talking heads and the "experts" take to the airwaves. And they paint a slightly different picture than I just laid out to you.

It goes like this. The deficit cannot be fixed by taxing the rich. I agree with this statement. If all we did was to do that, it would not fix the deficit. Remember when I said that the solution has to come from doing many things? No one is proposing that the tax increase be the only action. However, it should be one of the actions. And don't think for a minute that any of them will be hurting. They will still eat and drive a BMW and wear Armani suits or whatever. That's fine. But please stop complaining that a few percentage points on your taxes is going to hurt you so badly that it is unbearable.

The next time you hear someone making the argument that taxing the rich won't fix the deficit, remember to agree with them. They are right.  But also point out to them that it will take changes in many areas to get the deficit corrected and some of that solution should be in the form of tax changes.