Will Raising Taxes Balance the Budget?
January 20th, 2012 | 1 Comment
Balancing the Budget, For Real: This article makes the argument that the balanced budget of the late 90s came about as the result of two budget deals – one under Bush Sr. and one under Clinton – that both raised taxes and limited spending (via PAYGO).
These results run 100 percent contrary to Republican dogma, which is that tax increases, especially on the rich, do not yield additional revenue because people will cease working and investing, and the economy will stagnate. Yet the hallmarks of the 1990 and 1993 budget deals were an increase in the top income tax rate; first to 31 percent from 28 percent, and then to 39.6 percent. Revenue clearly rose, as did the economy.
The argument that lowering taxes increases revenue is something I discussed last month. This editorial claims proof that the reverse is true — raising taxes, when coupled with spending controls, lowers the deficit, apparently to zero and beyond.
January 20th, 2012 at 6:46 pm (#)
Whoa! Let me get this straight: Raising taxes and spending less will lower the deficit?
Genius! What a novel concept.
I wonder if I could extrapolate that theory out into other areas of my life? Could I:
- Earn more and spend less and get out of debt?
- Exercise more and eat less and lose weight?
I only wish I was smart enough to know the answer.