Can We Tax Our Way Out of Debt?
Posted at 9:45 a.m. on Jan. 24
Eduardo Porter breaks down the impact of various proposals to reduce the deficit through taxes alone.
“In one possibility, the center estimated, the top federal income tax rate for the richest families…would rise to almost 54 percent… Middle-class families, earning $17,850 to $72,600, would see their top tax rate rise to 23.1 percent from 15 percent… High income tax rates blunt incentives to earn more, putting a drag on economic growth.”
“Another option is to tax the money that people spend, using the kind of value-added tax employed in every other advanced country. The Tax Policy Center estimated that the government could hit its revenue targets with a broad V.A.T. of 16.7 percent… But because the poor spend a larger share of their money than the rich, it would fall more heavily on lower-income Americans.”