A bit more on the subject of whether there’s significant money to be raised through higher taxes on the very rich. As it happens, there’s a recent analysis from the nonpartisan Tax Policy Center that bears quite closely on this subject.
The TPC analysis points out that before the 1981 tax cuts there used to be a larger number of tax brackets, with a number of brackets well above the current 35 percent maximum. And it asks how much revenue would be raised if those above-35 brackets were still in place; that’s quite close to the question of how much money might be raised through higher taxes on the very rich.
Their answer is that in 2007 the higher brackets would have raised an additional $78 billion, or a bit over half a percent of GDP. By the way, that estimate takes into account the likely “elasticity of taxable income”, i.e., the disappearance of some income from the tax rolls either through reduced actual earnings or through avoidance.
So, what I did was to apply that revenue as a percent of GDP to CBO projections of GDP over the next decade. And what this says is that going back to pre-Reagan-type higher-income taxation would yield about $1.1 trillion over the next decade.
That would not by itself close the budget gap– but as I’ve been saying, no one thing would. And, you know, $1.1 trillion here, $1.1 trillion there, and soon you’re talking about real money.
Seriously, the notion that denying health care to the near-poor is a serious deficit-reduction policy, but raising taxes on the very rich is not, is not something you can justify at all on the basis of the actual numbers. Anyone who says different is practicing, well, class warfare.
The TPC analysis points out that before the 1981 tax cuts there used to be a larger number of tax brackets, with a number of brackets well above the current 35 percent maximum. And it asks how much revenue would be raised if those above-35 brackets were still in place; that’s quite close to the question of how much money might be raised through higher taxes on the very rich.
Their answer is that in 2007 the higher brackets would have raised an additional $78 billion, or a bit over half a percent of GDP. By the way, that estimate takes into account the likely “elasticity of taxable income”, i.e., the disappearance of some income from the tax rolls either through reduced actual earnings or through avoidance.
So, what I did was to apply that revenue as a percent of GDP to CBO projections of GDP over the next decade. And what this says is that going back to pre-Reagan-type higher-income taxation would yield about $1.1 trillion over the next decade.
That would not by itself close the budget gap– but as I’ve been saying, no one thing would. And, you know, $1.1 trillion here, $1.1 trillion there, and soon you’re talking about real money.
Seriously, the notion that denying health care to the near-poor is a serious deficit-reduction policy, but raising taxes on the very rich is not, is not something you can justify at all on the basis of the actual numbers. Anyone who says different is practicing, well, class warfare.
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