April 20, 2011

Cutting tax breaks won't cut the deficit

Antony Davies

Senior Affiliated Scholar

President Obama’s budget proposal promises to save about a trillion dollars through reforms to the tax code, but the problem with these projections is that they fail to consider how people will react to the changes in the tax code. 

The rich will respond be shifting  their income from wages to capital gains.  Additionally, the rich are somewhat tapped out.

Taxing every household that earns more than $200,000 at 100 percent of their income would not raise enough money to pay for Federal spending. We don’t have enough rich people to close the deficit through taxes.

With a lack of funding available, entitlement reform must be put on the table.

It’s not an ideological debate, it’s a mathematical debate.  It doesn’t matter if you’re for or against Social Security.  It’s a mathematical impossibility to continue funding it.