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Exploding the “Tax The Rich” Lie

We hear no end to the Democrat call to tax the rich, make people pay their fare share, ask “millionaires and billionaires” to “pay a little more”. Republicans try to explain that raising taxes is pointless, particularly in light of the coming balloon of entitlement spending, but Democrats and the media don’t want to hear it and characterize resistance to more taxes as catering to rich “fat cats.” With the incredible magnitude of the numbers involved, it’s difficult to wrap your mind around the nature of the problem, so below you’ll find a way to easily and plainly see why the argument for more taxes is ridiculous.

The graphic below is interactive. The slider determines the income tax rate for “the rich.” The top pie chart shows how much “the rich” get to keep, and the bottom pie chart shows how taxes on “the rich” impact government spending. Some data points:

“Rich” is defined as per the Democrats, that is all single income households earning $200,000 or more and all dual income households earning $250,000 or more.

The top pie chart uses a basis of $3.5 Trillion dollars, which is what the Tax Policy Center estimates as the total annual income of “the rich.” This $3.5 Trillion dollar figure will not match what you might see elsewhere because it includes ALL forms of income, rather than paycheck alone, meaning interest income, dividends, etc. This was done to prevent the accusation of “hidden” income, which would then lead to the argument that the chart comparison is flawed.

The bottom pie chart uses a basis of $6.1 Trillion dollars, which is what the usgovernmentspending.com website calculates as the total combined spending of federal, state, and local governments for 2011.

IMPORTANT NOTE: We did not use the federal only 2011 expenses figure of $3.6 Trillion for the bottom chart, because it is impossible to designate a portion of income as for federal tax calculation only. In other words, the federal government does not say, “Well, we know you made $200,000 this year, but you also pay state and local taxes so we’re only going to calculate taxes on $100,000 of your income.” The only way to normalize the two charts is to compare all income to all expenses. (The $3.6 Trillion figure comes from the Congressional Budget Office.)

Let the charts begin!

Tax %

If you haven’t already, slide the percentage tax up to 100%. You’ll see that while all of the income of “the rich” is consumed, government expenses are still not covered. What does this mean? It means the Democrats are liars:

Proposing that the solution for our budget woes (deficit spending) is to have the rich pay more is a lie. You can take 100% of the income of “the rich” (everything – salary, commissions, interest, dividends…) and still not pay for the government.

The arbitrary $200,000/$250,000 definition of “the rich” is a lie. First, it’s stupid to say it’s ok if you make $199,999.99 but if you make $200,000.00 you’re an evil rich person. Second, you are kidding yourself if you think you’re safe below the $200,000/$250,000 limit. Without spending cuts, the only way to improve the scenario illustrated by the charts above is to lower the income thresholds so the first chart has a larger basis. Without spending cuts, “middle class” tax increases are inevitable. Think $100,000/$125,000, then $50,000/$75,000, etc.

What should be hitting you like a brick about now is that without a reduction in spending, your taxes will be going up. Yes, you. Not “the rich.” Not “millionaires and billionaires.” You.

Well then, let’s cut defense! Defense? Ok, take out $700 Billion, or $.7 Trillion. Disband the entire United States armed forces and you take spending from $6.1 Trillion to $5.4 Trillion. No Army, no Navy, no Air Force, no Marines. You’re still $1.9 Trillion short.

Keep in mind that this is just ONE YEAR. ONE YEAR of a 100% tax rate on “the rich” and complete elimination of the military and we’re still short $1.9 Trillion dollars. One year. “The rich” get nothing. The military gets nothing. $1.9 Trillion dollars short. ONE YEAR.

The Democrats are lying to you, to all of us. Why? The math doesn’t work, period. The “tax the rich” rhetoric has the sole purpose of making one group of people hate another. And it’s working, well.

This needs to end people. Before the whole thing comes crashing down, we need to open our eyes and see what’s really happening here. Taxing “the rich” is a lie. Taxes are not the answer. We must shrink government, radically, and immediately.

I’ll make this chart exercise available to anyone who wants it. I’m hoping it gets some use in the House and Senate. Contact me for details.