Let’s put aside the destructive effects of raising tax hikes during a recession. Let’s focus exclusively on the budgetary effects. Obama and the Democrats speak ad nauseam about implementing a “balanced approach” to the debt crisis. They claim that we must raise taxes on the rich in order to get our fiscal house in order. Well, a picture is worth a thousand words, and Veronique de Rugby of the Mercatus Institute posted a chart that illustrates the absurdity of the notion that taxes increases will solve our problems:
The reality is that we will never be able to tax our way out of the problem. Remember that the $47 trillion spending baseline for the next 10 years is a modest estimate. In order to properly purvey our current welfare and entitlement state, we will need to spend even more than the CBO is projecting. More importantly, on the tax side, it doesn’t take a great supply-sider like Art Laffer to understand that such massive tax hikes will destroy the economy. After just several years, we would actualize diminishing returns on revenues from those tax hikes, as a result of a weakening economy. Hence, it would be impossible to sustain the $850 billion in revenue that is projected to flow in to the treasury as a result of the Obama tax hikes.
Some day we will nee to face reality. There are no short cuts to balanced budgets. We will never balance the budget in the long run unless we cut the size of government and restore private enterprise into all but the constitutional jurisdictions of the federal government.
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