Taxing the Wealthy to Cover Future Deficits Won’t Work

Everyone wants to know more about the budget and here is some key information with a chart from the Heritage Foundation and a video from the Cato Institute.

Some argue for taxing only the wealthy to raise revenues and reduce federal deficits. However, hiking taxes on these taxpayers would increase their tax rates to mathematically impossible levels. To close the 2035 deficit, the top two rates would increase to 139 percent and 150 percent, and in 2050 they would reach 206 percent and 223 percent.

CURRENT TAX RATE AND TAX RATE NECESSARY TO CLOSE DEFICIT

Source: Internal Revenue Service and Congressional Budget Office (Alternative Fiscal Scenario).

In Depth

• Policy Papers for Researchers

  • WEBMEMO ON APRIL 14, 2011Tax Day 2011: Deficit Spending Hides Future Tax Hikes
  • WEBMEMO ON APRIL 25, 2011A Rose by Any Other Name: Clarity on Tax Hikes

• Technical Notes

  The charts in this book are based primarily on data available as of March 2011 from the Office of Management and Budget (OMB) and the Congressional Budget Office (CBO). The charts using OMB data display the historical growth of the federal government to 2010 while the charts using CBO data display both historical and projected growth from as early as 1940 to 2084. Projections based on OMB data are taken from the White House Fiscal Year 2012 budget. The charts provide data on an annual basis except… Read More

• Authors

  Emily GoffResearch Assistant
  Thomas A. Roe Institute for Economic Policy StudiesKathryn NixPolicy Analyst
  Center for Health Policy StudiesJohn FlemingSenior Data Graphics Editor