Obama: Hey, I've Got A New Idea. Let's Raise Taxes on the Rich!

Obama's new plan, same as the plan for the last 50 years.

There's a problem with this plan. The problem is, "And then what?" I'm not talking about the almost-certain retardation of the economy due to a higher taxes. I mean "And then what?" because raising taxes on the rich produces a nearly trivial "windfall" in revenue.

It's not nearly enough. So -- "And what next?"

The obvious answer is "We tax the middle class at significantly higher rates," because that's the only way to really up the government's allowance. Only the middle class has the combination of money plus huge numbers of taxpayers in this class to really raise revenue.

Obviously revenue from raising taxes on any particular class is determined by:

X (the amount of $ you expect to get from each taxpayer on average) *
Y (the number of taxpayers giving the government that $)

There are a fair number of poor, but they don't have enough money to really tax the crap out of them.

The rich have the opposite problem -- X is high for them, but Y is pretty low.

Only the middle class has that wonderful combination of solid X and huge Y.

So, Mr. President -- "And what next?" The increased taxes on the rich will not more than scratch the surface of the problem.

And what next?

The Democrats know this is the only possible way to support the leviathan welfare state they want. But they will not be straight with the middle class taxpayers that they expect, at the moment of general economic collapse, to fund it.

They continue telling the middle class that if we just goose the tax rates on the rich by 5% or 10% the we're on Easy Street. And the middle class, unfortunately, largely believes them, because they don't understand the true size of the problem, nor the relatively few number of people qualifying as "rich."

Ed Morrissey notes that the Wall Street Journal points this out, but in a very soft way:

Eliminating the Bush tax cuts for the highest earners, however, will only put a small dent in the projected deficit.

When the media believes the public is "misinformed" on a key issue in such a way that hurts Democrats, they keep trying to "educate" the public out of its misunderstanding. They really, really wanted you to know that (in the opinion of most intelligence analysts who were wrong Iraq having WMD and Iran not working on WMD) Iraq had no connection to 9/11 or the anthrax attack.

But here, they seem to be quite comfortable with letting the public believe that the only thing we're really arguing about is whether we should raise taxes by 5% or 10% on a politically small and relatively unpopular group.

Not so.

And then what?

Republicans need to hammer this relentlessly and come armed with numbers.

The choice is not between reforming and reducing spending and keeping tax rates on the rich at their current level.

The choice is between bankruptcy and ruin, or raising taxes significantly, seriously on the middle class, or reforming and reducing spending.

"Raising taxes on the rich" is a "false choice," as our false choicer in chief would say, or better yet, a "distraction."

The media will not tell the public this, of course. Republicans have to, and insistently, and constantly.

posted by Ace at 02:10 PM

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