Balancing the deficit by ending tax breaks for the rich

This past Monday, President Barack Obama declared that he would veto any bill that came to his desk that made changes to entitlement spending but didn't demand more tax revenue from the wealthiest Americans.  

Thank you, Mr. President. After watching how much the democrats conceded to the republicans this summer in the debt ceiling talks, I needed that.

The country needs it. Frankly, I don't understand how people expect us to make a dent in our deficit by only touching one side of our budgetary equation. We need to decrease spending and increase revenues, no matter how much the republicans want to sign pledges to never raise taxes.

To those who would agree, but insist that instead of asking more of millionaires, as Warren Buffet and President Obama propose, we "broaden the tax base" and tax middle and lower-income Americans more, I offer the following.

According to data from the Economic Policy Institute, the top 1 percent of Americans owned 35.6 percent of the country's wealth in 2009 and the top 5 percent collectively owned 63.5 percent. That's one-twentieth of the population owning almost two-thirds of the entire country's wealth. In contrast, the data also tell us that the bottom 80 percent of Americans owned a mere 12.8 percent of the country's wealth in 2009. That's eight-tenths of the people owning just slightly more than one-tenth of the wealth.

In the words of President Obama: this isn't class warfare, this is math.

Because of this gross inequality, I applaud the president's commitment to placing a greater tax burden on Americans making at least $1 million per year while he still upholds his commitment to cut billions in government spending. That's the kind of balanced approach we need: cut spending and increase revenue. And where does the revenue come from? The biggest pool, of course – the people with the most.

Still, some people will say that taxing the rich kills jobs because they are "job creators." Instead, we should cut taxes on them so that the effects will magically trickle down to all of America.

Except that's not how it works. Increasing the income of America's wealthiest citizens does not, as a matter of fact, result in comparable relief for America's poor. According to data from the Congressional Budget Office, after-tax income of the top 1 percent of earners had increased by 281 percent from 1979 to 2007. Over that same time period, the after-tax income of the middle fifth of earners increased by a mere 25 percent, and the bottom fifth saw an increase of a paltry 16 percent.

What those numbers mean, quite simply, is that money does not trickle down. Period. In fact, by allowing the wealthy to keep more of their income after taxes, the gap just becomes greater, and this gap is a problem. It is not a morally acceptable consequence of our economic model.  

As for creating jobs by cutting taxes on the rich: according to data from Moody's Analytics Inc, which compared savings trends following the Clinton tax increases of 1993 and the Bush tax cuts of 2001 and 2003, history suggests that when the wealthiest Americans are given tax cuts they will save it, not spend it. So the argument that cutting taxes for the wealthy will allow them to spend more (e.g., to pay more workers) is contradicted – or at least called into question – by historical precedent.

Thus, since a solution to the deficit problem must be balanced by both decreased spending and increased revenue, and because increasing revenue by taxing middle and lower-income Americans contributes to this morally unacceptable financial gap, we should accept the president's plan and increase revenue by increasing taxes on millionaires.

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