Can We Tax Our Way Out Of Debt?

The former director of the President’s Office of Management and Budget (OMB) made waves on Tuesday, September 7^th, with this provocative thesis in The New York Times: Congress should extend the Bush tax cuts for the next two years, for Americans of all income levels, and then end them completely.

Why is this controversial? President Obama has made clear that he’s in favor of extending only the tax cuts for individuals making less than $200,000 a year (and families making less than $250,000 a year)—but doing so permanently.

The President and his former appointee both hold concerns about our country’s rapidly rising $13 trillion national debt. And rightly so: there are serious personal consequences for all Americans from out-of-control deficit spending.

There’s a difference of opinion as to what percentage of our total taxes wealthy Americans should shoulder. Some favor a “soak the rich” approach to debt reduction. As the above chart shows, the top one percent of income earners already pays 40 percent of federal income taxes.

The chair of President Obama’s debt commission (and former chief of staff to President Clinton) Erskine Bowles, recently warned that Congress can’t tax its way out of a national debt crisis. You can read elsewhere on this website why he’s right.

Instead, Congress needs to stop spending its way to over $3.5 billion a day in new debt. No one has suggested these spending cuts will be easy; but unless we start soon, higher taxes for everyone won’t be one unpleasant option – it will be the only option.

Read the original story at Defeat the Debt