Standard & Poor’s warning last week of a possible downgrading of America’s credit rating sent tremors through markets worldwide — and underscored the nation’s short- and long-term deficit and debt woes.
The warning came just days after the speech in which President Obama basically dismissed the House GOP’s comprehensive long-term budget outline — which addresses the need to restrain growth in discretionary spending and entitlements.
Instead, the president just focused on raising income — and possibly payroll — taxes on the wealthiest Americans.
On cue, administration supporters pushed the usual talking point: The wealthy aren’t paying “their fair share” since the average federal income-tax rate on the 400 wealthiest Americans is 17 percent; in 1992, it was 26 percent.
This analysis overlooks an essential fact: Hiking taxes on the “rich” won’t rescue the nation from flooding red ink.
As The American Thinker’s Steve McCann notes, even if the government decided that no American could have a net worth above $1.5 million, confiscating everything above that figure would net the Treasury $6.1 trillion in one fell swoop.
But the national debt is now nearly $14.5 trillion — so Uncle Sam would still owe $8.4 trillion.
Meanwhile, the richest 1 percent of American taxpayers pay 32 percent of all income taxes (up from 27.5 percent in 2007). And as the Tax Policy Center reports, 45 percent of American households pay no federal income tax whatsoever.
Yes, that’s partly because of more legislated tax breaks in the code.
But it’s also due to bipartisan policies — like the Earned Income Tax Credit, a federal cash handout championed by Bill Clinton and George W. Bush alike — that simply removed lower-income Americans from the tax rolls.
Fiscally and morally, an honest conversation on the nation’s deficit problems is impossible when fewer and fewer Americans are actually helping to pay the nation’s bills — and feel they have no real stake in getting the books into balance.
Exactly a quarter-century after Ronald Reagan’s historic tax reform brought equity and order to federal revenues, the current system is in shambles.
This can’t stand.