Massive tax increases in our future?
Our entitlements are catching up to us:
Sen. Judd Gregg released (pdf) a Congressional Budget Office study (pdf) yesterday that attempts to quantify the tax rates needed to pay for the spending increases projected in Medicare, Medicaid, and Social Security.
Average taxpayers would typically pay marginal federal income tax rates in the 30s, much higher than the 15% seen today. And that’s before payroll taxes of 15.3% and state and local income taxes that would boost many into tax rate brackets of over 50%.
CBO also notes that “the highest bracket would have to be raised from 35 percent to 92 percent. The top corporate income tax rate would also increase from 35 percent to 92 percent.”
The agency concludes “Such tax rates would significantly reduce economic activity and would create serious problems with tax avoidance and tax evasion. Revenues could fall significantly short of the amount needed to finance the growth of spending, and thus tax rates at this level may not be economically feasible.”
Yet, there are candidates running for President and other federal offices that want to increase entitlement spending as well as introduce new entitlements, in the form of socialized medicine. We cannot continue our current course without increasing taxes so much that it would bring economic development, which is brought about by lower taxes and less government regulation and spending, to a screeching halt.