Guest Post: Will "Tax the Rich" Solve Our Deficit/Spending Crisis?

Tyler Durden's picture

Submitted by Charles Hugh-Smith from OfTwoMinds,

Will "Tax the Rich" Solve Our Deficit/Spending Crisis?   (December 28, 2011)

If we look at tax revenues and income in a practical way, we find "tax the rich" will not close the widening $1.5 trillion gap between Federal revenues and spending.

Clearly, $1.5 trillion annual Federal deficits to fund the Status Quo--fully 10% of the nation's GDP--is unsustainable. Eventually, the ad hoc "solutions" currently being pushed by the Federal Reserve--zero interest rates to keep borrowing costs artificially low and money-printing operations that buy Treasury debt--will encounter political and/or market pressures which will limit the marginal effectiveness of these interventions, and the real cost of these historically unprecedented deficits will trigger a host of unintended consequences--all negative.

Everyone knows there are only two ways to bring deficits back to sustainable levels: skim more tax revenues from the national income or cut spending on the massive Status Quo programs of Defense/National Security, Medicare/Medicaid and Social Security. The rest of the Federal programs so reviled by various constituencies are a relative drop in the bucket.

Everyone with a stake in the Status Quo Federal spending--and that is certainly in excess of 100 million residents of the U.S.--is vocally in favor of "taxing the rich" as the "obvious and just solution" to the widening gap between revenues and spending.

If there is one stance that can gather non-partisan support, it's "tax the rich." More knowledgeable observers refine this to "tax the super-rich," as the majority of the wealth and income of the top 1% is actually held by the top 1/10th of 1%.

We can break this idea down into two basic parts: the ethical case and the revenue case. Ethically, at least in a democracy, the idea that everyone with substantial wealth and income should pay at least as much (as a percentage of income) as wage-earning citizens is compelling.

Various studies have found that the extremely wealthy pay about 17% of their income in Federal taxes, which is less than half of what we self-employed people pay (15.6% self-employment + 25% Federal tax on all income above about $34,000 = 40.6%).

The merely well-off--typically professionals, managers and small business owners--pay the majority of Federal taxes, with the very wealthy paying a substantial share as well. Roughly half of all those filing tax returns pay no Federal tax other than the employees' 7.65% FICA (Social Security) tax.

In the larger scheme of things, the bottom 60% of the workforce pays relatively little of the total Federal tax revenues. (Check U.S. Census records or search my site for sources that break down the sources of Federal tax revenues.)

In other words, the "rich"--or those who the average person considers "rich"--already pay most of the Federal taxes.

How much additional tax could be raised were the super-wealthy to pay the same 40% rate that we self-employed people pay? It is tempting to estimate that another $1 trillion or so could be raised from the super-wealthy, largely from non-wage (unearned) income.

I have addressed this yawning gap between spending and revenues in the past, for example:

The Promises That Cannot Be Kept (July 6, 2011)

As noted in the above entry (the TrimTabs chart), Americans' after-tax income is around $5.3 trillion and $900 billion in income from "other sources." Additional taxes would of course come from current after tax-income. It's difficult to sort out all the various measures of income; the BEA, for example, includes "government transfers" as personal income--though those transfers come from tax revenues.

Including government transfers and arcane categories such as "inventory valuation adjustment (IVA) and capital consumption adjustment (CCAdj)", the BEA counts $12 trillion in earned income. But if strip out transfers and inventory adjustments etc., that number drops to around $8.4 trillion. (Two Americas: The Gap Between the Top 5% and the Bottom 95% Widens August 18, 2010)

Total Federal tax revenues are about $630 billion from Social Security taxes and $1.5 trillion from Federal income taxes, or a total of $2.1 trillion. To Fix Social Security, First Ask Why It Is Deep in the Red (January 18, 2011).

There are local and state taxes, too, of course, which leaves the $6.2 trillion in after-tax income noted earlier. Since the top 10% collect roughly half the income, we can guesstimate that the top 10% receives about $3 trillion. To balance the current budget, they would need to pay 50% of their after-tax income ($1.5 trillion)--on top of the substantial taxes they already pay. (maybe the top 1/10th of 1% pay 17%, but the merely wealthy pay much higher rates on earned income.)

Add this up and you get tax rates of around 65% on the top 10% (25% total income rate plus 50% of the remaining income).

We then have to ask whether these rates would ever be collected.

There are a number of factors that affect actual tax collections from theoretical calculations. One is that Congress is a collection of wealthy people who are seeking to increase their power while minimizing their taxes and those paid by their cronies and contributors. As long as this is the case, then the tax code will continue to be thousands of pages long with exclusions, taxbreaks and exemptions for the politically connected wealthy.

Another is that studies have found Federal tax collections have historically topped out around 21% of total income. Above that level, people make choices that reduce their tax burdens.

Just as a thought experiment, put yourself in the shoes of someone with $20 million in assets and an income of $1 million. First off, you have a tax attorney who works the complex tax code to put as much of your income as possible in lower-rate income--for example, long-term capital gains.

Wealthy individuals shelter their income and assets with corporations, which have many more options in terms of shifting income.

Secondly, you have overseas accounts, assets and options. Let's say you are ethical, and pay your legal taxes without resorting to questionable tax havens. Let's stipulate that you are just like any other taxpayer--you feel no obligation to pay more than your legal share.

International agreements mean that income need only be declared and taxes paid on it in one jurisdiction. So income declared in Switzerland is exempt from taxes in the U.S., as taxes have already been paid in Switzerland.

Though I am not that knowledgeable about tax law, anecdotally it seems total tax rates in Switzerland are around 25%. If rates in the U.S. were jacked to 50% or higher, then very wealthy individuals will shift income to places like Switzerland and pay the lower tax rates there--perfectly legally. They would also liquidate assets in states which attempted to raise taxes on real property or enterprises, and shift those assets to lower-tax states or nations.

This would not be perceived as "tax avoidance," but as rational money management. In this sense, the super-wealthy are simply doing what every household does--attempt to lower taxes by whatever legal means are available. The means available to those with income and assets that can be shifted around are simply more capacious.

In practical terms, collecting another $1.5 trillion annually is problematic on multiple levels. Practically speaking, it might be wise to align total U.S. tax burdens with those of Switzerland and similar developed-world tax havens, for those essentially set the top rate that very wealthy individuals will pay.

Such a system would flatten taxation rates and very likely increase total tax collections. But it is simply not practical to think that the Federal government can skim 45% of the nation's $8.4 trillion in income to fund the bloated, corrupt and inefficient $3.7 trillion Federal budget.

How about those soaring corporate profits? If we taxed 100% of the $1.5 trillion corporate profits, then we could close the $1.5 trillion budget deficit. But then Wall Street would have nothing to support those sky-high stock valuations.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Mercury's picture


For one thing, if the government gets bailed out with more tax revenue they'll just spend more (if nothing terrible happens, why would they change their behavior?).

A lot of rich guy, tax-free income comes from muni bonds (which I see no discussion of here).  Tax that all of the sudden things are costlier for state/local government.

LetThemEatRand's picture

Come on.  This whole spend into oblivion thing was orchestrated by the oligarchs, starting with their puppet Ronald Reagan, to funnel money to the wealthy.  It is no coincidence that the very wealthy and the large corporations pay real tax rates that are at multi-generational lows even as government spending increases.  The idea is to convince the sheeple that they are the problem, not the oligarchs.  Too much spending on social programs and all.   Of course it can't be fixed now by simply taxing the rich.  That was the whole plan.  The real question is not whether taxing the rich will solve our spending crisis.  The question is why we are all dumb enough to let the Red and Blue Teams continue to rape the middle class and keep the spoils.

T-roll's picture

The question is do we default now on our own terms or do we turn into Greece and have the terms of our default dictated by foreigners?

economics1996's picture


To review, the max. tax collection point is about 28.6% (Laffer) and anything above that will create tax avoidance behavior, as ZHers probably know very well.

Tax collections above 25% of the GDP (we are at 45.4%) is counterproductive and will result in slow economic growth.

Around 22% of the GDP (Fed, state, local), 11% of the GDP for the federal government is optimal, is where the government should be taxing and consuming.  

If the politicians were honest they would cut federal taxes to a flat 17% rate or a 23% Fair Tax, and gradually lower the taxes as expenditures are reduced to 11% of GDP.

Kill the Federal Reserve.  

Set spending caps based on GDP consumption of not more than 11% at the federal level, and start private medical and retirement savings accounts.

Let the states and local government do the social engineering, as intended by the constitution.

It’s not complex. 


Max Fischer's picture



Anyone who references the Laffer Curve is an idiot.  Even Laffer, himself, has admitted that over the past 3 decades there is no evidence to back it up.  In truth, it's pure right-wing, propaganda BULLSHIT leftover from the Reagan era, designed to fool the 99% into believing tax cuts for the 1% are for the betterment of our economy. 

You know what I think?  If you increase my pay by 25%, I'll produce higher quality widgets with a smile on my face for my bosses, which, in turn, will increase sales for my bosses.  If you simply pay me more, my boss will sell more widgets and tax revenues will increase.  Therefore, the key to solving our debt crisis is to mandate that all wages under $200K/year are increased by 25%.  I'll include some math equations and some geometry so that everyone will think it's legit. 

If you think the Laffer Curve has credibility, perhaps you can tell me how the Bush tax cuts over the past decade have increased government revenue and/or jobs?

Max Fischer, Civis Mundi


Urban Redneck's picture

Anyone writing "anyone who references or thinks..." is an idiot.  Your notion of your own behavior is various economic circumstances provides additional evidence to support this.  "Anyone who" has run a business in the real world can testify that the law of diminishing returns didn't magically skip over tax rates.  Regardless of your misguided notions of superior performance soley as a result of higher pay, the much more likely scenario is- someone raises US taxes too high, I'll shutter the shop that provides your job, fire your ass, redomicile overseas, and hire a Chinese wage slave  to make a superior product at a lower price, you can then collect your 99 weeks with a smile on your face.

The Laffer Curve's credibility has nothing to do with the Bush tax cuts, since the Bush tax cuts were never designed or intended to maximize the revenue to the Treasury.  The Bush tax cuts were a Keynesian knee jerk reaction to 9/11 economic train wreck, and as usual in Washington the notion of "we'll fix it later" is snakeoil  for the masses since even absent DC gridlock the legislative process for an extension or renewal is far smoother than the process for an overhaul.  

LetThemEatRand's picture

"I'll shutter the shop that provides your job, fire your ass, redomicile overseas, and hire a Chinese wage slave  to make a superior product at a lower price...."

Your threat has been the American model for some 30 plus years.   I can understand why the oligarch class would support it, because it centralizes wealth at the top and makes slaves of the former middle class.    If you are all about the Lord and Serf system, this is the best way to achieve it.  But small business owners are slowly starting to figure out that the model doesn't work so well for them.  Assuming that most small businesses serve their local communities, the average Joe is no longer able to afford their services in the "suck it and get paid less or I leave" economy that you advocate.  They shop at Walmart, not at your small business.   If you are a restaurant, they eat in.  If you are a carwash, they do without.  If you are an insurance agency, they do without.  If you are a movie theater, they stay home.  If you are a realtor, you can't sell houses because no one can afford to buy them even when the sellers are willing to take a loss.  This is what is crushing our economy.  The trickle down theory has proven to a big lie that works only for the biggest players.  Sending jobs overseas to reduce retail cost coupled with easy credit temporarily created a false wealth effect for the average guy, but the chickens are coming home to roost.

Urban Redneck's picture

On the expense side the US regulations are actually far worse than the labor.

On the revenue side the multinationals who can both afford by buy their own tax loopholes and then establish separate overseas manufacturing subsidiaries for their big box shops can offer products in the marketplace that anyone without that scale can't compete with, so riight out of the starting gate the average business owner is screwed and stretched both ways.

There is a fixed amount revenue from any given sales volume.

Babies who want a price for their services that the marketplace won't support don't get any sympathy from me, especially when they turn around with their paychecks which are 1) guaranteed and 2) serve as basis for potential future unemployment benefits and then they patronize Apple, Google, Nike, Amazon, and the rest of the agents of economic doom who domestically kill off the small market participants and then buy their own 3rd world wage slaves.  In the long run they kill their own markets, but in the short run make a fortune for shareholders.

I moved from the US to Switzerland so it's not I actually have a problem paying someone a higher salary for the same amount of work, but when anyone feels entitled to more, irrespective of what's coming in the door, then they need to be shown the door. 

LetThemEatRand's picture

"On the expense side the US regulations are actually far worse than the labor."

Clean air, safe workplace rules, the legal system, general infrastructure etc all have a price.  What is amazing is that the multinationals have figured out how to get all of the benefit of the socialist polices of the U.S. and the West in general, while paying little or none of the cost.  The best example is the oil industry.  They get the benefit of the socialized U.S. military that not only protects the worldwide distribution system, but that also opens up vast new oil fields for them (see Iraq).  The thanks to the average taxpayer who makes all that possible for the majors?  Your quote above, e.g, "go get stuffed if you don't like it.  Pay more, get paid less, and like it."


In a world where only the biggest money talks and thus the oligarchs make the rules, the middle class will eventually die out.  You obviously believe you are immune from or directly benefit from the effects of the system as it is currently constructed.  Hopefully for your sake you are right.  I believe that most people who support the system have simply been progandized into believing what the oligarchs want them to believe.

economics1996's picture

You want to save the middle class?  Cut corporate taxes to zero and eliminate the Federal Reserve.  Figure it out how that would do it, if you can.

LetThemEatRand's picture

I'm with you on the Fed, but what possible long-term benefit could flow from zero corporate tax rates?   Large corporations pay less now as a percentage of income than they have in generations, and it's not helping the middle class.  What other than untested ideologicial theory do you have to support the idea that eliminating corporate tax would benefit anyone but the top?  And under what theory is there a benefit in corporations getting something for nothing (they benefit from our socialized schools, roads, courts, military, police, etc)?   Won't corporations make bad decisions for the rest of us if they are not paying for the infrastructure that they need to exist?  

jeff montanye's picture

notice how the "ethical" argument above that the rich (at 18% tax rate) should pay the same as high end wage earners (40%) kind of fades away into talk of congressional corruption and other countries' policies?

we should tax the rich but we just "can't".  they are too rich to tax.  kind of like too big to fail. 

WatchnSee's picture

You are either completely ignorant or intentionally naive. In either case, you exemplify the current US public education system.

Urban Redneck's picture

I am not immune, I have literally started a year with x dollars in the bank, put in 3000 hours at the office, and ended the year with no deposits (income or dividend) and less all my living expenses.  As an exercise- I looked into unemployment between giving up on the US and restarting overseas, and it turns out- even though I paid 15% FICA for years on top of the upper tax brackets some people are so eager to raise- I wasn't eligible for unemployment benefits. 


I also do a lot a business in dirt poor countries where even globalist wage slave jobs would be a big a step up, so when I see people with jobs who complain that they get less than those who deal with the big picture everyday, and yet look at their pay in a vacuum or microcosm while continuing to support the very people and instructions which in the big picture are destroying their future, I think that they are probably already getting more than their fair share, especially since the ultimate ambition of the globalists/NWO/big green movement is PARITY, and not by bring the dirt poor up, but showing the spoiled 1st world brats what dirt poor really is.    


The big beneficiaries of the Iraq invasion were the military supply manufacturers and PMCs and not the oil majors, unless you are talking about the Russian and Chinese oil majors- although in the last major round of concessions some of the prospects were such shitty deals that the Chinese weren't even throwing out a low-ball joke bid on them.  There was an incident on Capitol Hill before the war where some neo-clown (Wolfowitz I think) blew an amazing amount of smoke up some enormous Congressional asses about  paying for the invasion of Iraq with oil revenues, but as far as I know no one senior in the oil industry was dumb enough to believe anything he was shoveling.  As a basic international law thing the US would have had to either annex Iraq (which it didn’t have a UN mandate for) or actually declare war on them as basis for seeking reparations at the end of a war, and regardless- since the next 30+ billion dollars in oil profits was earmarked for Kuwait under the UNCC claims process – this was simply never going to happen, especially since Carlyle was trying to get GoK to park several billion of those dollars in a Carlyle fund at the time.  Of course it is possible that the management on the military side of the military-industrial complex is actually dumb enough not to realize that there are actually whole bodies of law and treaties that deal ownership of mineral rights and obligations in armed conflict and that the US itself (which even has a veto on the UN Security Council) had already “spent” that oil money paying Iraq’s bill for the last war...    

economics1996's picture

The best way to deal with foreign competitors is;

1.  Cheap energy, drill.

2.  Stable dollar, gold.

3.  Low or no corporate taxes.

4.  Tort reform, limited liability.

5.  One set of regulations for all 50 states.

You see where labor cost is on the list?  Maybe 6th.  Blaming the rich and WalMart is beyond stupid.

Max Fischer's picture




Anyone writing "anyone who references or thinks..." is an idiot......

On an internet forum, when a person references something, they are writing it.  

Therefore, in this example, referencing (a) = writing (b).

If (a) = idiot, and if a = b, then (b) must also = idiot.  By the commutative laws of mathematics, I've just proven that you've called yourself an idiot.

It's very difficult for me to take you seriously if you call yourself an idiot straight out of the starting gate.  

But I shall look past that for the moment....

No one is saying that the law of diminishing returns does not apply to taxes.  Yes, indeed, if you tax me enough, I'll just stop working.  You're trying argue a point that I wasn't making.  In fact, I think you're trying to oversimplify the argument to make it appear ridiculous because you cannot defend the REAL argument:  does the reduction in taxes create more government revenue?  Is there any historical precedent to give the Laffer Curve merit?

This has been the CORNERSTONE of Republican ideology for decades.... cut taxes on the rich, and not only will the wealth trickle down, but government revenues will, conversely, increase - it's almost like Jesus turning red ink into black.  Therefore, deficits supposedly don't matter. Well, as it turns out - like virtually all the other Republican lies - it's all BULLSHIT.  Even Harvard professor Greg Mankiw, chairman of Bush's Council of Economic Advisors from 2003-05 devotes an entire section of his 2007 best selling textbook to debunking this nonsense.*  That's the point being discussed, which you didn't address, at all. Instead of discussing the credibility of the Laffer Curve, you diverted the conversation into the ridiculous.  And I would argue that you did it because the Laffer Curve is, indeed, indefensible.  

.......the Bush tax cuts were never designed or intended to maximize the revenue to the Treasury......

Unfortunately, that's BULLSHIT, which can be proven wrong by Bush's own quotes, as well as quotes from other leading Republicans.

In 2002, during a meeting with cabinet members, George Bush said:  "Well, we have a deficit because tax revenues are down. Make no mistake about it, the tax relief package that we passed -- that should be permanent, by the way -- has helped the economy, and that the deficit would have been bigger without the tax relief package." 

Then, he repeated it again in 2006 at a speech in New Hampshire:  "One of the interesting things that I hope you realize when it comes to cutting taxes is this tax relief not only has helped our economy, but it's helped the federal budget.    

Bush press secretary Ari Fleischer said in March 2003: "The entire package the president does believe will lead to growth, which will over time grow the economy, create additional revenues for the federal government, and pay for itself."

John McCain said in 2006:  "Tax cuts, starting with Kennedy, as we all know, increase revenues."

In June 2010, John Boehner said, "We've seen over the last 30 years that lower marginal tax rates have led to a growing economy, more employment and more people paying taxes."

Etc. Etc. Etc....the examples are endless.  It's very clear that our Republican leaders have a much different opinion about the Bush tax cuts than you assert. Republican tax cuts for the 1% get sold to the American people the same way, every single time. 


Urban Redneck's picture

You believe what people on TV say- that's funny, in a Beavis & Butthead sort of way...

I guess the Iraq oil revenues were also going to pay for the invasion of Iraq?  Or NiggerCare is going to "bend the cost curve" and "if you like your current insurance you can keep it"?  You really shouldn’t believe what you see or hear on TV, it's just as full of BS as the internet.

When the 2001 and 2003 tax cuts were being sheparded through the legislature, the primary concern of that side of the pigpen (and TPTB behind them) was "How do we prevent W. from becoming another 1-termer just like his daddy?"  Everything else is noise and sheeple feed.  The ideological and tactical reflexive response of one side to higher taxes, or another side to lower spending, on any given issue is ever present, and a basic part of the political process.  The public fascination with process is a diversion from any discussion of the actual aims and ambitions of any legislative acts, and is always welcome by the TPTB, because they sure as hell don't want anyone publically discussing or debating their bigger issues.

You make cheap ad-hominem attacks, decry an admittedly cheap ad-hominem attack against you, and then proceed to make more, all while reeking of intellectual snobbery.  Here's some simple logic for you- since you admit there is a diminishing return on tax collections beyond a certain rate point, and if at the opposite end of the spectrum you think a 5% income tax rate is going to yield more than a 0.5% income tax rate, then, by definition, you have a bell curve distribution- i.e. a Laffer Curve, you can debate the size, shape, and position of it all you want, but it exists.

You should really pull your head out of your partisan ass and smell the stench of corruption on that pervades every corner of Washington DC, otherwise, you will eventually and inevitably be reduced to nothing more than a global wage slave of TPTB, if you aren't already, which is most definitely their longer term desire.   

Max Fischer's picture



NiggerCare?  So you really ARE a redneck, and I guarantee you vote Republican because of it.  Damn NIGGER in the White House! Isn't amazing how SO MANY of the right-wingers in America are racist rednecks at heart?  There's only three types of Republican voters:  the 1%, the totally clueless who have been properly conditioned by the Murdoch Propaganda Machine, and racist, bigoted freaks from the American backwaters.  Which category do you fit?  My guess is you're a 1%'er, originally from the American backwaters.  Am I right?  

So your defense is basically that the Republicans were just LYING to everyone about the Laffer Curve?  And that the tax cuts were just a sneaky ploy to ensure that W wasn't a one term president?  Well, then, I FUCKING AGREE WITH YOU, YOU IDIOT!  Going back to Reagan, none of the tax cuts have ever been about increasing revenue.  Ever!  It's all just bullshit to take money away from the middle class and place it directly into the pockets of the rich, while LYING to the middle class while their pockets get picked.  

Virtually EVERYTHING can be plotted into a bell curve if you don't care about the size and shape, you moron.  The question is, does this particular bell curve have any credibility whatsoever for cutting taxes on the rich?  The answer is NO!  And that's been my point from the beginning. The Laffer Curve - as used by Republicans - is a JOKE!

Lastly, I'm not partisan.  I fucking hate the democrats, too, but not for the same reasons that everyone else here does....  you know, because they try to help the poor and downtrodden, and those with "alternative" lifestyles.  In your parlance, that's NIGGERS AND FAGGOTS. I just happen to think the hypocrisy of the Republicans runs deeper, is more comical and more pathetic.  I also happen to think the Republicans are vastly more despicable than Democrats - like NiggerCare, for instance.    

Max Fischer, Civis Mundi

Urban Redneck's picture

You are a little name calling partisan tool, and you have no idea what I believe because you apparently see the world through your brown shirt party propaganda issued theater glasses.  

Either your little childish sensitivities or well trained dog reflexes kick in when your hear or see a certain word that you have been trained to respond in a certain way to.  Pavlov would be proud.  

No, it’s not NiggerCare because Obama is nigger, although he certainly behaves like the loyal house nigger of the big banking houses.  No, it's NiggerCare because its treats Americans like chattel, and herds them into a system not fit for a nigger, much less a freeman, all while relying on those very Americans to demonstrate either the passivity or stupidity of a nigger to allow its implementation.  

I've confronted and fought far more sadistic and blood thirsty racists than self proclaimed civil rights shucktsters like John Lewis ever have or will- and while I won't give him or his sell-out contemporaries the time of day, I still break bread with the few left of those they drove out of the movement because they were too radical (i.e. those who wouldn't sell out those they led to the man). 

As for tax rates- it is exactly the middle, lower, and lower-upper classes that benefit from reductions in tax rates.  The top of the top don't care what the nominal rate is, or who it hurts, because it will never touch them.  Warren Buttfuck is a great example.  Taxes can nominally go to 90% and he won't pay 1% more of his wealth in taxes to the IRS.  The Macmillans can arrange another expatriation holiday in the unlikely event they ever run out of cash after the first one, which is exactly the only time the exercise ever increased revenue despite both parties dragging out the maneuver whenever their other paymasters need to top off the USD accounts.  Justice for the 99% is achieved through closing the loopholes, not adjusting marginal rates, Obama himself has said as much, but he relies on his loyal dogs to be dumb as niggers and forget that he once spoke the truth...

By the way, you are being presumptive about not only my political affiliation, but also my race.  I am far too mixed blooded to ever fit in with those you seem to associate me with, even though by Society of the Cincinnati standards- I am a direct descendant of one of Virginia founding families.  If you saw my sister, you might think I’m a nigger, but the world is confusing when you’ve been conditioned to only see or accept things in certain ways.  Perhaps I should adjust my avatar for the PC fools- since by their own BS rules, and even absent the freedom of speech, I can call anyone anything I damn well please, and if you have a problem with that then you are an insensitive racist…


economics1996's picture

When Bush cut taxes in 2003 revenues increased 40.1% over the next four years.  The problem was the spending.

Max Fischer's picture



I'm glad you posted that because it exemplifies the STUPIDITY of the those who buy into this right-wing BULLSHIT.  You're cherry picking your dates. The Bush tax cuts haven't expired yet, so why stop at 2007?  

The surge in government revenues during those cherry-picked dates had NOTHING to do with Bush's tax cuts.  NOTHING.  It came from an entire nation converting their houses into ATM machines, coupled with encouragement from Alan Greenspan and George Bush.  "Go shopping!"  "Option ARM's are fine!"

Your IDIOCY is exactly why Rush Limbaugh, Glenn Beck, Hannity, et al, and the entire Republican party can maintain any semblance of credibility after the monstrosity of the Bush administration and several decades of pure Republican hypocrisy.  

Max Fischer, Civis Mundi   

Woodyg's picture

I think you mean Goldman Sachs don't you?

GS = homegrown terrorists

LetThemEatRand's picture

"Starving the beast" is a fiscal-political strategy of some American conservatives [and all oligarch supporters including most Democrats and Republicans] to create or increase existing budget deficits via tax cuts to force future reductions in the size of government.


economics1996's picture

There is no starving, if you look at table 1-3 on the link you can see the inverse relationship between federal consumption of the GDP and tax collections.

Economists call it "crowding out."  ZHers call it the banksters.

LetThemEatRand's picture

The "starve the beast" theory did not work.  Stockman has since admitted that it was wrong.   But the large deficits are blamed entirely on the poor and the "socialists," nonetheless.

Mercury's picture

Yeah, if only we gave Carter four more years...

LetThemEatRand's picture

Ronnie grew the military industrial complex and the overall budget deficit much more than the peanut eating clown.  Pointing out that Carter was an idiot does not render Regan a hero.   Wake up and smell the red team/blue team bullshit.

Mercury's picture

I don't know about the industrial part.

Team Red/Blue is bullshit mostly because they're both pro- big government and pro- direct beneficiaries of big government.  Soon the only difference between the "conservative" party and the "liberal" will be (as is more or less the case in the UK now) that the former wants the VAT to b 22% and the later 23%.

If you recognize the problems for society inherent in the mere existance of mega-corporations and TBTF banks it's a bit of a leap of faith to think that things will be much less pernicious with TBTF, mega-government.  We can chicken-and-egg this all day but I think its reasonable to assert that if government were not so big, there wouldn't be so much to buy.

Once upon a time we had oligarchs who tried to limit the size and scope of government because they recognized this.  They even put it in writing.

eureka's picture

CHS - bla bla bla - CHS always ends up confusing both himself and his readers, babbling a little in all directions.

The issue is simple: yes, of course the very rich should always pay a higher percentage in taxes - for one simple reason:  a person who makes $20,000 per year, which IS the US median household income per person, will after a net tax rate of 20% have a $16,000 disposable post tax income - whereas a person who makes $20,000,000 i.e. TWENTY MILLION USD per year, will after a net tax rate of 15% (capital gains tax) have a  $17,000,000 i.e. SEVENTY MILLION USD post tax disposable income.

The gap in disposable net income is the qualifier for whether a nation is A) civilized, that is to say equitable and unified through principles of unity or B) in-equitable, that is to say divided between a ruthlessly manipulative elite of "haves" who skillfully leverage their fiat "incomes" by market and political manipulations - and - an uneducated mass of empoverished, unemployed and or minimum paid service/servant workers, who's sole chance of survival is catering to and servicing the whims of the very rich/very manipulative.

Stop whining, Peter Schiff et al, about your taxation percentage rates - you very rich do not pay those rates anyway, but off-shore all your hedged profits - just like every single major US corporation.

The Tax Rate Percentage "debate" is a cover up for the fact that the very rich pay next to nothing in taxes. Whatever relevance then, does the debate of percentage rates have? None, except being another diversion and manipulation - tripple sided theatrics for the masses.

Zero Hedge, Bitchez - means exactly that, zero hedge - i.e. zero bullshit.

The very rich fuck everybody on earth and there are only two ways to control them:  A) tax them very progressively and remove all their loopholes - or B) kill them - which makes progressive taxation look very benevolent, doesn't it?

Mercury's picture

Just so you know, the kill all the rich people strategy doesn't have a very good track record (in world history) in terms of generating long range, positive outcomes for society as a whole.

Vergeltung's picture

don't distract the simpleton with facts or a keen historical insight. he's on a roll.


JW n FL's picture



He said very Rich..

anyone who has more than one 100,000 sq ft home.. that they spend less than 1 month a year in.. who has no job and lives on a 100+ year old trust.. who has multiple Gulfstream’s with 5,000+ miles ranges.. sister ships... in case one breaks down.. are not necessary to the economy.


he might be a littel worng.. but he is WAYYYYYYYYYYYYYYYYYYYY more right in the over all than matters with the lil bit of wrong.


Things that go bump's picture

Yes, but one must have the exterminator in occasionally anyway. 

JW n FL's picture



I Love You Man!

Merry Christmas to You and Yours!

and a Happy New Year filled with eating those Lucky Sperm Club Rich Fuckers who dont do shit!

We will easily be able to pay off the debt once we confiscate thier Trusts!!

Things that go bump's picture

Merry Christmas and Happy New Year to you and yours as well, JW.  I don't believe that confiscating the trust funds of social parasites will save us now, but at least it will drag them down with the rest of us, as is only fair. 

JW n FL's picture




Just so you know, the kill all the rich people strategy doesn't have a very good track record (in world history) in terms of generating long range, positive outcomes for society as a whole.

It will be so enjoyable that I am willing to struggle thru with any of the problems that may arise from dispatching the lucky sperm club to hell where they almost certainly belong!


Trust fund babies are of no real consequence to the World or the betterment of the World or betterment to mankind.


Eat the Rich! And anyone who sides with them!!

Blankman's picture

Mercury -


Worked great for the Polish when the Germans killed off their rich and intelligent during WWII - Katyn.

ElvisDog's picture

I have a question for you, and I'm not ripping you when I ask this but who will create the jobs in your world? Most jobs in our society are generated by small to medium-sized businesses. Starting a small business or trying to grow an existing small business into a larger one takes a lot of work, a lot of long-hour days and personal sacrifice. Why do people bother? Either they love what they do a lot or because there is a chance to make money. With your "very progressive" tax policy, you've taken away the profit motive.

So my question is: who is going to create and give you a job in this brave new world of yours?

karzai_luver's picture

Although I am for zero taxes, the history of this country would not prove your theory.


More jobs of worth and greater standard of living was accomplished under the more progressive rates you decry. There are many other factors but that is not in dispute.


There is of course the fact that if you started and ran something in a brave world sort of  way, yeah sure, that did produce jobs and profits you would realize that the progressive tax rates are a joke.

The games are endless, you just need better lawyers.


Mercury's picture

But tax rates today (as opposed to say, the 1950's) apply more to gross rather than net income. No one actually paid 90% when the top bracket was 90%. So, not apples-to-apples.

MachoMan's picture

There have been more than a few loopholes patched since then ;)

Goatboy's picture

Taken away profit motive by leaving millions and billions of dollars intact? And they complain and still have options to refuse? Could a single mom refuse her "job" (slave position more likely) just because she doesnt have any motive to do it? I dont think so.. she is forced to work whatever is available or starve. Its a huge difference when you are up against the wall of fewer options and literal starvation. and you all forget that and constantly blabber about jooobs.

And most people dont need jobs but income (as can be seen by observing people living of their wealth through sweat and tears of others). Job is relatively modern concept akin to modern slavery. You are just conditioned to think otherwise. Slaveowners were too.

DFCtomm's picture

What reality are you in? What single Mom is starving??? The single Mom's I know in the real world get free housing(not good housing, but free), free food, free utilities and some spending money. I really don't know what fucking world you're living in.

LetThemEatRand's picture

The current "productive class" Red Team talking point you are repeating is nothing more than a repackaging of supply side a.k.a. trickle down economics, which the Red Team knows will no longer sell.  The fundamental message is:  give the wealthy more/tax them less, and they will create jobs and the wealth will trickle down and we'll all be better off.  We've been doing it now for more than thirty years.  It doesn't work.  

economics1996's picture

Hes a communist, Uncle Joe will pass out the jobs.

eureka's picture

Elvis Dog - Look at the Scandinavian countries. There's your model. Lot's of education and R&D, little to no wealth re-distribution from the working/middle class to the rich (as in the US & UK, the USUKs, my term).

Knowledge and current/upgraded skillsets form the basis for high tech industries. Putting public revenues (taxes collected) back into the economy via education and R&D and intelligent infrastructure (that is to say cost effective transportation systems, which are cheaper per capita than private/individual transportation) - all adds up to create the foundation for lots of future oriented jobs.

Denmark, for example, excells in software language development for mass transit, and has the world's largest and or near largest future and R&D  oriented companies within transportation (Maersk), energy (Vestas), cognitiion promoting toys (Lego), pharmaceuticals, genetics, enzymes (Novo Nordisk), as well as optimized self-sufficient and massively food exporting agricultural system (cheeses, butter, bacon, cookies. It's capital, Copenhagen, has been generating a third of it's electricity from windmills placed in the sound between Denmark and Sweden for the past two decades. Add to those industries Danish design, furniture and architecture and you begin to see complete 360 sector coverage. 

My main point is this: if a nations core, large companies cover all essential industries - and you fuel and sustain all the essential sectors with R&D implementation and then market your specialized national products to the world, you at the same time create the need for all the smaller support and supply businesses, which creates all the jobs and job types a nation needs. US has done the opposite: outsourced all manufacturing,  off-shored all profits, socialized all private corporate losses to taxpayers AND built a megalomanic military machine - and it is all financed with money borrowed from China and OPEC - under the guise of "free enterprise" and "cheap" Chinese "consumer goods" to the US masses.

The US is now paying the price - and will increasingly so - for its glorification of its hyper rich elite (who runs it) and its pride of it military apparatus, who is the one and only reason the USD is still the World Reserve Currency, which is the only reason ANYONE is still buying US Treasuries and USD.

US'ians MUST dismantle their Elite's Empire - or die with it - because IT, and no other force on earth, is exactly what is killing the US working and unemployed masses - and with them, within the next two years, the evil elite and their beloved super-tool - the US Empire itself.

Tax the very rich progressively - or continue to be fucked by them. That is your choice.

ElvisDog's picture

Nice, well-reasoned response. Thanks.

Xkwisetly Paneful's picture

Yea look at the Scandanavian countries.

Avg living space 450 sq ft

Avg living space in USA 850 sq ft

Avg Cars owned=1/2

Avg cars owned in the US-1 1/2

Avg price of petrol $6.10/gal

AVg price of petrol in the US $3.55gal.

Number of indispensable items to the human race-ZERO




The US should dismantle it's elite empire like Sweden did and watch it flee like Sweden did.

Must take an awful lot of practice to keep promoting epic fail governance.

For every Denmark there are currently 10 Portugals-but keep clinging to the idiotic epic fail notions of big centralized goverment. There ain't a fukking thing that comes from Europe that any human needs to survive in the world.  Now go try and exist a day without product borne in the US-without being a delusional moron.

Highest survival rates for the top 12 forms of cancer? Europe or US?

80% of the top 20 grossing drugs in the world? Europe or US?

The technology that runs the most complicated creations besides man on earth? Europe or US?

I could go on for five days here, but it gets tiresome pointing out the earth is round under every idiotic wah wah wah Eureka post.


eureka's picture

XP - you list no specific US benefits to mankind - only hints - except of course for US centralized government - which indeed IS the largest on earth and VERY busy playing cop of the world on behalf of US corporations, oxymoronically so in return for their out-sourced production/jobs, off-shoredprofits/tax-evasion and general anti-national i.e. anti-US behavior. 

XP - you clearly love US corporations - and measure your country's and your own worth vicariously, i.e. by looking up to the possessions of the very rich and anti-US behaving corporations, who are US only in name.

Do mention the essential specific products that US so generously and supremely provides the world.... -come to think of it the biggest US exports are: chemicals, war/weapons & bankster derivatives - there, fixed it for you.

You can keep Monsanto - and for that matter Windows 7 and all of Microsofts other miserable, monopoly and garbage software - and for that matter every stinking taxed-evaded I-Product coming out of Apple - though I have to admit I love MacBook Air I do hate Apple software (it's like kindergarden crap) and it's all made in China for slave wages and Apple sits on USD 82 BILLION and pays near zero US taxes.

So babble away - I'll take European foods, clothing, design, furnishings, art, cars and entertainment over US dittos any day.

How many US'ians will join you in your rejection of European goods.... - well, for one thing, most certainly NO ONE with any kind of pocket money; everything US'ians always wanted and buy every day for pleasure and status comes from Europe - and you know it.

Cheers - in good ol' anglo ale!