Can taxing the rich pay for the deficit?

[Hannah Bell]

Columbia Journalism Review first notes that New Republic eviscerated a WSJ column that claimed the rich didn't have enough money to close the deficit, even if taxed at 100% -- then runs their own numbers:


That alone would cut the CBO’s projected deficits... by about a third over the next ten years and Obama’s by roughly a quarter.

Raising taxes on the top 1 percent back to pre-Reagan levels would drop the baseline and Obama budget deficits by roughly 1.2 to 1.3 percentage points of GDP per year (and presumably more, as income at the top has tended to rise far faster than the economy as a whole), putting both well below Reagan-era levels through 2020.

After that, Medicare costs have to be reined in or the deficits explode. Nobody I’ve seen questions that. The dispute is over how to do it.

The bottom line: contrary to what the Journal says, raising taxes significantly on the top 1 percent would indeed make a significant dent in future deficits.... There’s always a problem involved in wasting one’s time examining very bad arguments. But organs like the Journal editorial page — which just won a Pulitzer Prize! — are influential and prestigious. I think very few people realize that these people are just pure clowns. They’re not messing up complex economic theories here. They’re messing up basic arithmetic.

http://www.cjr.org/the_audit/wsj_editorial_board_and_taxes.php?page=2