Raising Taxes Won't Raise Revenue
The Administration is failing once again to recognize that the problems that exist with this country, at this moment, does not lie with the "rich". Those greedy, selfish people that earn more than $250,000 are not the problem, in most cases, they are an overlooked solution. I say this because a big chunk of those individuals are business owners which are responsible for creating 70% of the jobs in the country and raising taxes on them will only serve to decrease their consumptive capability but also savings and productive investment.
Raising taxes does not increase revenue as higher taxes lead to lower economic growth. As shown in the chart if you want to increase revenue you need to produce economic growth. It will surprise most people that over the last 50+ years regardless of the level of tax rates - tax receipts as a percentage of GDP has remain mired between 16 and 21%. Why? Because when you raise taxes you lower economic growth and therefore you collect less in revenue. This is why during recessions your tax collections are at the lower end of the range. Not surprisingly, during periods of economic growth, the tax collections are at their highest levels.
Today, the administration continues to ignore the elephant in the room which is the creation of jobs and raising taxes is a job growth killer, not creator. What is lacking to be understood by this administration is that we are in a "balance sheet" recession and production, which leads to consumption, is a function of being able to create jobs. Without final demand from consumers there is no incentive for businesses to create jobs or expand. Raise taxes and you reduce the ability of the consumer to consume even more.
The NFIB is going to report tomorrow and we will find more evidence of the same. "Poor Sales" will be a major concern and those saying that this is a good time to "Expand" their businesses will be at very low levels. This isn't the type of backdrop that you need to create jobs or economic growth which would increase tax revenue for the government in a "healthy" manner.
Obama today reminds me more of the "Sheriff of Nottingham" trying to tax his way to prosperity from the meager earnings of the serfs in his kingdom. It will work for a while but ultimately those serfs will rise up and revolt.