Cutting spending, not increasing taxes, is best way to reduce nation's debt
UNDER President Barack Obama, the nation has experienced deficits so large they defy easy comprehension. For four consecutive years now, the federal deficit has been over $1 trillion. National debt now totals $16 trillion.
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Obama says the solution is to increase taxes on those earning more than $250,000. A look at the Forbes 400, a list of the richest people in America, demonstrates the folly of that plan.
The combined net worth of the entire Forbes 400 list is $1.7 trillion. Even if the president ordered the outright seizure of those individuals' earnings, the national debt would still be over $14 trillion. And you couldn't repeat that trick a second time; the wealth would be gone but the debt would remain.
Think about that: Under Obama, we've reached a point where grabbing all assets of the leaders of Microsoft, Oracle, Walmart, Bloomberg LP, Amazon, Google and other corporate giants doesn't even come close to wiping out our national debt.
A new study by Douglas Holtz-Eakin for the American Action Forum further underscores the problems of Obama's tax-increase plan. Holtz-Eakin finds it is mathematically impossible to eliminate the deficit solely with taxes on millionaires; middle-class families will almost certainly take a hit.
If spending plans remain unchanged, Holtz-Eakin notes that erasing the deficit entirely through tax increases on millionaires “is infeasible” because it requires a tax rate of 123.9 percent. If tax increases are limited to those earning more than $500,000, the rate must surge to 95.5 percent, which Holtz-Eakin calls “an increase in excess of any economic reality.”
Holtz-Eakin finds those earning as little as $30,000 could face tax increases of as much as $1,500 annually — and that's if just half of deficit reduction is done through tax increases.
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