Tax Hikes Can't Balance Budget

As promised in my earlier post, let's discuss why tax increases can't realistically balance the budget.

In 2010, tax revenues pulled in $2.2 trillion, some $900 billion of which came from income taxes. We spent $3.5 trillion, meaning we ran a $1.3 trillion deficit. If Congress wanted to raise that missing $1.3 trillion via income taxes, they would have to increase the tax rates for ALL BRACKETS by 145%. That's right, they'd have to more than double our tax rates.

And what would that mean for our tax bills?
http://blog.heritage.org/2011/04/15/morning-bell-hiding-future-tax-hikes-on-tax-day-2011/

For a family of four earning $50,000 that takes the standard deduction, its current tax bill of $766 would increase by almost $4,000. A similar family of four that earned $75,000 a year would see its tax liability of $4,500 increase by over $9,000 a year. If the same family earned $100,000, it would pay more than $15,600 above the $8,800 it actually paid in 2010.

The top rate in this depressing scenario would be 85 percent! A top tax rate at that level would grind economic activity to a halt.

And that would mean our economy would take a HUGE hit. And do you think that Congress would respond by cutting spending? Or would they simply keep spending what they already are... and maybe a wee bit more?

I'm sorry, but the problem here isn't one of revenue, it's a problem of fiscal discipline and irresponsibly high levels of spending. The only way to SOLVE this problem is through spending cuts, not through tax increases.


Trying to solve our spending-caused budget problems with tax increases would be like a doctor ignoring an open, bleeding wound and treating the blood loss with transfusions. While I admit it makes no sense to let a wound bleed while pumping new blood into a patient, it makes just as little sense to raise taxes and keep spending levels at their current, unsustainable rate.

Our budget problems MUST be solved via spending reductions, not via tax increases.