What Soaking the Rich Gets Us: Deficits Forever

Last week, the progressive think tank Center for American Progress (CAP) released their tax reform plan [pdf], supported by prominent left-wing budgeters and economists like Robert Rubin and Lawrence Summers. The net effect of this tax reform plan is a massive tax hike on “the rich” in order to fall far, far short of the revenue necessary to eliminate America’s deficit.

The CAP plan would eliminate deductions, close loopholes raise rates, implement new taxes, increase sales taxes, create new taxes… basically every form of a tax hike you can think of, all implemented on households with income above $250,000 per year.

What this gets, according to the Center for American Progress, is a tax system that barely raises Clinton-era levels of tax revenue, while the spending side of the ledger still projects to explode. CAP’s plan gets tax revenue of 20.3% of GDP, below the Clinton years’ high of 20.6% of GDP, with government spending projected to be significantly higher even under the most optimistic of situations. And by the 2030s, government spending is still projected to be over 25% of GDP in the most optimistic of scenarios. (You do not want to know what the pessimistic scenarios are. Something along the lines of an apocalypse.)

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