The economic and tax revenue pies
There are many things about economics and mathematics that most people don't know about, don't understand, or are capable of understanding but don't want to believe because it doesn't jive with political beliefs. The economic and revenue(tax revenue) pies are perfect examples of this.
First of all, one needs to understand that the economic and tax revenue pies are not fixed in size. Each can grow and shrink. Another important issue is their relationship with each other. All things being equal, the revenue pie is directly proportional to the economic pie. Growing the economic pie will automatically increase the size of the tax pie. However, simply increasing the tax pie (raising taxes) will not increase the size of the economic pie. This is because it robs the pie of the stuff it needs to grow, which is of course money, and gives it to the federal government. It is not that simple either because you have to consider the economic growth as a result of government spending (ie govt jobs, defense spending, etc). However, they never give as much as they take.
I respectfully disagree. Less tax revenue from the rich means somebody else would have to shoulder the load. Namely, You and I, and the rest of the middle class.
That is inaccurate. This argument makes assumptions and avoids basic economic facts. First, this argument assumes that the tax pie is fixed. This is not accurate. 2nd, for this argument to be valid, when taxes are cut on one individual or "class' of taxpayers, they then must be raised on a second individual, or "class" of tax payers. This is not what happens. Tax cuts for the rich do not raise taxes on or increase the tax burden on the middle class in any way. Now, one can certainly argue that in this scenario, more of a percentage of the federal taxes are paid by the middle class. However, it is all smoke and mirrors. This higher percentage DOES NOT translate into a higher amount that is paid and therefore is not an increased burden on any individual and therefore any "class" of people.
Democrats have been successful in using the argument that the Bush tax cuts have "Shifted the tax burden to the middle class." This a BS argument created by democrats to pray on the economic ignorance of the population. It is a BS argument for 2 reasons, the first of which I stated above. The 2nd reason its BS is because the Bush tax cuts actually resulted in "the rich" paying a higher percentage of the federal tax burden. This happened because everyone who paid taxes got a tax cut and it shrunk the overall size of the tax pie, initially. The tax pie actually grew tremendously following the tax cuts because of the resulting increase in the economic pie.
While the housing and financial sector started this recession, but it is primarily sustained because of less spending from the middle class.
Naturally...
If the middle class has to continue to shoulder the extra loads in tax obligations that the rich is avoiding, than the middle class' spending will continue to be depressed.
So by this logic, only by increase taxes on the rich will you have more money to spend? You and I are not shouldering anything. Our taxes have not increased. No one in the middle or poor class has had any tax increases. This argument is completely illogical for the reasons stated above. As evidence, following is the federal tax burden on a family of four making $70k in 1998 and 2007. This is one example but they all play out the same.
1998;
Taxable Income: $52,100
Federal Tax: $8,290
Payroll Taxes: $5,355
Total Fed Tax: $13,645 (19.5%)
2007;
Taxable Income: $45,700
Federal Tax: $4,073
Payroll Taxes: $5,355
Total Fed Tax: $9,428 (13.5%)
Where is it that this typical family has less money as a result of those tax cuts on the rich? Where is the extra load that this family is shouldering, holding them down?
