BALANCE THE BUDGET THE OLD FASHION WAY: TAX THE RICH | WisCommunity

BALANCE THE BUDGET THE OLD FASHION WAY: TAX THE RICH

 

Now is the time to balance the budget the old fashion way: Tax the Rich!

The recent Tea Party snit regarding a balanced budget has really ignored basic mathematics. It is not a surprise that people who deny science will also deny mathematics. Mathematics Professor, Dr. Stephen Block from Adelphi University has been keeping track of the U.S. Federal Deficits, Presidents, and Congress and has some very interesting conclusions.

You can see his work at

His unbiased analysis is excellent (unless you believe that mathematics, like climate science, evolutionary biology and gynecology, has a liberal bias).

The first definition that has to be clarified has to do with the difference between a deficit and a debt.

It is simple: When you spend more than you take in you have a deficit.

When you take in more than you spend, you have a surplus.

The debt is the sum total of your deficits plus interest minus any payments that have been made.

How do you reduce the debt? You take in more than you spend and you do it year after year.

How do you take in more than you spend? In order to answer that I analyzed professor Block's data as follows;

I looked at the top-bracket marginal income rate between for the years immediately after WWII until this year and grouped the years according to these rates. So, lets look at where we are now and go back as far as 1946 (WWII ended in 1945). All analysis will be done in 1983 dollars to be consistent with Professor Block's data.

From 2003 to 2012 the Bush tax cuts set the top-bracket marginal rate at 35%. All of those years ran deficits and the average was $364 billion. Even the five years before the Great Recession and the stimulus, the average deficit for the 35% rate was $184 Billion per year.

From 1993 to 2001 the top-bracket marginal rate was at 39.6%. During those years, President Clinton had three budgets that ran surpluses; +$9 billion in 1998-1999, +$102 billion in 1999-2000, and +$9.5 billion in 2000-2001. Because of these Clinton surpluses, the average deficit over these years was only $61.5 billion per year.

Let's now go back to when we were running smaller deficits and years with surpluses. From 1965 to 1981, the top-bracket marginal rate was 70%. Six of these 17 years ran surpluses, and the average deficit was $8 billion per year. (one eighth of the average deficit when the top bracket was 39.6%) Notice the trend, as the taxes on the very rich go up the deficit goes down.

Let's now step back to the 18 years of prosperity for our country from 1946 to 1964. These years were unprecedented in job growth and growth of the middle class. The years most conservatives look back on with nostalgia. During these years the top-bracket marginal rate was 91%. Eight of those years ran surpluses and the average deficit over those years , well, there was no average deficit. There was an average SURPLUS of $9 billion per year. Enough said.

 

 

 

 

 

 

 

Published

October 23, 2013 - 9:34pm

Author

randomness