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AAL 2:
So I got a response to my facebook status....
"YAY We're all going to going to make less money! YAY for hope and change (and if you think it's just the rich that are screwed you are sorely mistaken)."
This is in reference to Obama's nomination of a Pay Czar. To "reform" (they used every word they possibly could without admitting it's a "cap") exectutive pay. And what started as a two graph response morphed into a full fledged essay, because I wanted to be as thorough as possible.
Even without going to the fact that revenue and buisness investment and jobs created all increased after the Regan Tax cut lets just think about it terms of President Obama's own words.
His stated goal is to "spread the wealth around," which lead to his campaign promise was not to touch anyone making under $250K/yr (see cu blogword OWL). According to the most recent IRS Data in 2006, The top 5% for income earners ($154K) payed 60% of the income tax despite earning just 37% of the income.
Okay we're going to have to deviate here in the context of President Obama's budget. Obama is going to spend $3,500,000,000,000 (3.5T, but I think we need the zeroes for effect) in the budget approved. Right now our tax revenues are just over $1T. To make up for this shortfall Obama assumes he can raise another 1T by letting the Bush Tax cuts expire (which I obviously question, but will let slide for the sake of argument).
But people in the top 5% are paying an average tax rate of 21% (keep in mind this does not account for any state, local, sales taxes or user fees).
Back to why the Pay Czar is bad,
If they drop the incomes of people in this bracket, that's less income they tax, plus the risk they would then be paying at a lower rate if they fall into a smaller bracket, which seems foolish beacuse these are the people he's counting on for $1T in tax revenue by letting the Bush tax cuts expire. Either they will be paying a percentage on less income, or a smaller percentage on less income, unless Obama is so determined to raise his $1T that he will have to...
1) Raise taxes on the lower brackets (not just the people above the OWL)
2) Print money (which devalues all dollars in circulation, which raises prices, which is essentally a pay cut for everyone).
Both of which would be disasterous for the economy as prices would skyrocket (inflation from printing money, essentially a pay cut for everyone) and would raise unemployment. I believe unemployment hits the least qualified among us first, then paying out unemployment benefits puts a further burden on our budget (not that I'm against all forms of welfare, I'm just stating the fact there is a cost to society for it).
Of course I think the easy solution is not to propose a $3,500,000,000,000 budget in the first place, and give tax cuts to encourage buisnesses to hire and invest. (though admittedly it would probably take a few years to recover from this deficit). However, Obama will likley take the route of higher taxes, because the left generally rejoices in assigning higher percentages to higher income. But in the end, we're staring at inflation, fewer jobs, less pay for lower level jobs, therefore cutting everyone's throats in the end.
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