The Wall Street Journal points out some incovenient numbers (H/T: Powerline) for President Obama & his promises to pay for all this outrageous new spending through new taxes on the richest 2% (increasing taxes on the highest income earners to 42% over the next couple of years).
From the article:
But let's not stop at a 42% top rate; as a thought experiment, let's go all the way. A tax policy that confiscated 100% of the taxable income of everyone in America earning over $500,000 in 2006 would only have given Congress an extra $1.3 trillion in revenue. That's less than half the 2006 federal budget of $2.7 trillion and looks tiny compared to the more than $4 trillion Congress will spend in fiscal 2010. Even taking every taxable "dime" of everyone earning more than $75,000 in 2006 would have barely yielded enough to cover that $4 trillion.
And this is assuming that higher income taxes would in no way affect the behavior of those generating said incomes. Not only that, given our current economic climate, there will be far less earning those high incomes. And given that they'd be required to fork over ever increasing amounts of their income to Uncle Sam, how many older earners would just retire rather than watching their fruit of their labor go straight into the government coffers. Businesses will produce less (since the potential for earnings is lower). Fewer goods and services means fewer jobs.
My only critique of the Journal article is that it doesn't go far enough when it predicts that Obama will have to raised taxes on more than just the "rich". Yes additional tax hikes will become necessary, but, sooner or later, the Democrats are going to realize that the only way to pay off all this new debt is to fire up the printing presses leading to inflation.
Not only will this return us to the stagflation of the '70s, but will most certainly hurt our already tenous relationship with China - one of the chief foreign investors in the dollar. Tom at Radio Free New Jersey has more on that here.