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Reality Check: Higher Taxes Simply Won't Solve the U.S. Revenue Problem


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Human Events:

Economically, liberals ascribe to this dictum: The floggings will continue until morale improves. At least that is what their call for higher taxes to close the federal deficit implies. Instead of seeing an economy struggling to recover, they see income awaiting redistribution.

The Left has been making much of the fact that federal tax revenue, as a percentage of the economy, is at its lowest since 1950. Instead of ascribing this to the recent recession, liberals attribute the federal deficit to it. Curiously, they do not manage to place the deficit at spending’s doorstep—or mention that its increase is even more pronounced—though it is at t its highest point since 1946 and exceeded only by WWII.

The most interesting part of liberals’ lament over receding revenues is their neglect of the obvious reasons for it.

First and foremost, federal revenues are where they are, because the economy is where it is. The federal tax system simply harvests income. If the nation’s income does not grow sufficiently, less rises to the height of the tax man’s scythe. Washington reaps less—along with everyone else. The proof of this came just four short years ago. In 2007, federal revenues equaled 18.5% of the gross domestic product (GDP). This is significant—besides being above the 40-year average, 18% of the GDP, according to the Congressional Budget Office (CBO)—because the above-average level was produced during the Bush tax cuts.

Liberals are exceedingly fond of blaming today’s low revenue levels on the Bush tax cuts. However, as a percentage of the GDP, the 2007 revenue level is also very close to the 19% average of the Clinton years. snip
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I saw a segment on Fox Business yesterday about rich people renouncing their citizenship and moving to other countries. Started last year. 500 have moved so far this year.

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