Civics: Confiscatory Taxation of the Rich Won’t Cover Federal Deficit for a Year
Politicians on both sides of the partisan spectrum are proposing plans to subject the wealthiest Americans to significantly higher taxes as a response to the federal government’s rapidly increasing annual budget deficits, but such proposals are doomed to fail, according to a new analysis by the Cato Institute.
“Senators Elizabeth Warren (D?’MA) and Bernie Moreno (R?’OH) propose removing the Social Security payroll tax cap, subjecting earnings above $184,500 to the 12.4 percent combined employer-employee payroll tax. Senators Chris Van Hollen (D?’MD) and Cory Booker (D?’NJ) each propose exempting more wages from income taxes at the bottom while raising taxes on higher earners. President Trump has pursued a similar strategy of expanding tax exemptions, while President Joe Biden and Vice President Kamala Harris both pledged not to raise taxes on anyone earning less than $400,000,” Cato Institute Director of Tax Policy Adam Michel explains in an August 12 analysis.
The flaw in all of those approaches, according to Michel, is that “each approach shifts more of the tax burden toward the top. One problem with this approach is that there are not enough high-income Americans to finance the current federal budget deficit, let alone fund additional spending or tax cuts.”
