Debunking Stupid Liberal Arguments: Can We Pay Off Our National Debt by Taxing the Rich?|
April 14, 2011, Matthew Cochrane
Ever get tired of listening to the same liberal arguments over and over again? I sure do. Most of the time, many arguments are simply not worth the time and effort to refute. After all, arguing with liberals can be as pointless as teaching a pig to sing. Often their talking points are based upon false assumption after false assumption, so that, even if you wanted to try to convince them the error of their ways, it would take more time than you or any normal person has.
There are some arguments, however, that are repeated so often they just need to be debunked once and for all. One such argument, repeated by liberals ranging from President Obama to Michael Moore, is that our fiscal crisis can be resolved by simply taxing “the rich” at higher tax rates. In his speech yesterday, President Obama announced he would like to do this very thing, cynically trying to sell the idea that this would solve our financial woes.
Michael Moore is even bolder with his proposal. He simply wants to seize the wealth and assets of the country’s billionaires to pay off our deficits and debt:
“What’s happened is that we’ve allowed the vast majority of that cash to be concentrated in the hands of just a few people, and they’re not circulating that cash. They’re sitting on the money,” Moore said. “That’s not theirs, that’s a national resource, that’s ours. We all have this… we all benefit from this or we all suffer as a result of not having it.”
Suspending any moral objections one might have of doing this, would this plan actually work? Could we pay off our national debt, or even significantly pay it down, if we were to seize all of the billionaires’ wealth in this country as if it were really a national resource? The Daily Caller’s Mary Katherine Ham breaks down the numbers:
The grand total of the combined net worth of every single one of America’s billionaires is roughly $1.3 trillion. It does indeed sound like a “ton of cash” until one considers that the 2011 deficit alone is $1.6 trillion. So, if the government were to simply confiscate the entire net worth of all of America’s billionaires, we’d still be $300 billion short of making up this year’s deficit.
That’s before we even get to dealing with the long-term debt of $14 trillion, which if you’re keeping score at home, is between 10 to 14 times the entire net worth of all of the country’s billionaires, combined. That includes the all-powerful Koch brothers ($40 billion between them), the all-powerful George Soros ($14.5 billion), all the Walton family (of the Wal-Mart fortune), Steve Jobs, Oprah (at a paltry $2.7 billion), the Google Founders, Michael Bloomberg, and the Mars family (of the candy bar empire).
So, if seizing the debt of billionaires only pays off a fraction the national debt, what chance does marginally raising the tax rates on the country’s wealthy have of even balancing our budget deficit? None. CNN Money reports:
In his most recent budget request, the president proposed letting the top two income tax rates revert to 39.6% and 36%, up from 35% and 33% today. He also called for an increase in the capital gains and dividend rates to 20% that high-income households pay, up from 15% today. And he would reduce the value of their itemized deductions and personal exemptions.
All told, those proposals -- which would affect individuals making at least $200,000 and couples making $250,000 and up -- would reduce deficits by just under $1 trillion over 10 years.
So, even if we were to give liberals their dream-come-true scenario, and allowed the Bush tax cuts to expire on the wealthy, our savings over a decade would be less than this year’s deficit. Thus we would still be adding to our national debt at an incredibly high rate.
This does highlight one critical truth: America does not have a revenue problem, it has a spending problem:
Another charge leveled by liberals all the time is that the rich don’t pay their fair share, yet America’s wealthiest 1% paid about 28% of all federal taxes collected in 2005, according to the Congressional Budget Office. The top 5% pay about 60% of the taxes collected.
This is to say nothing of the devastating effect raising tax rates on “the wealthy” would have on an already-sputtering American economy. Rep. Ryan explained this to MSNBC host Chris Matthews last year before the midterm elections (relevant comments are roughly the first minute and last minute):
Just like Ryan says, several small businesses files as individuals. Small businesses are the largest source of employment in our country. If we taxed the "wealthy" any more, these companies would have to lay more people off and stop hiring. This would be disastrous for the middle class in our country.
In the opening remarks of his speech yesterday, President Obama said that the budget debate was about more than numbers. He said, “This debate over budgets and deficits is about more than just numbers on a page, more than just cutting and spending. It’s about the kind of future we want.” But he’s wrong. This is a numbers game. Budgets are always about numbers. And Obama’s great solution for our budget deficits and national debt, taxing the rich, just doesn’t add up.
Heard a stupid liberal argument lately? Drop me a line and if I've heard the same argument making the rounds I will take the time to refute it in this space when time permits.
Others in this series:
I'm thinking these guys should get political... they've obviously been able to teach this pig to sing.
Yeah, I get tired really quickly of the "animosity" some people have towards the wealthy. Any sane person would realize that how much a CEO makes has absolutely no affect on what you as an individual make. What someone else makes does not mean that you're earning potential has been reduced in any way, shape, or form. When someone succeeds, it only means that success to that level is possible for anyone.
Creating and fostering an animosity towards the job providers in the United States, is really bad medicine. It certainly doesn't encourage a person to work harder, and certainly doesn't encourage a person to further their own goals. It simply teaches the youth that they are victims, and nothing else.
- Todd (04/14/11 11:49 AM)
I actually agree with Todd on this. It feels weird. He should talk like that more often.
Anyway, everyone knows that taxing the rich wouldn't get us anywhere:
http://www.youtube.com/watch?v=661pi6K-8WQ - Stephen (04/14/11 12:11 PM)