The President says the path to cutting deficits is routed through tax increases on the wealthy. In the aftermath of the fiscal cliff, and elevated taxes on anyone making more than $400,000 ($450,000 for couples), Democrats say more taxes are needed. Republicans have said, increases are off the table and spending needs to be cut. Of course, taxes actually increased on about 85% of Americans with the compromise that was reached, but let's proceed.
The problem is the President and his party are framing the discussion. They suggest all money is in a pile somewhere. Some of it is the taxpayers' pile, some the government's and some business'. The President wants to move more to the government's pile. That idea is easy to explain, easy to sell to the average taxpayer; especially if you persuade them the rich are manipulating, cheating, and taking advantage of opportunities not available to the average Joe.
John Boehner and Republicans suggested simplifying the tax code, closing loopholes for the rich and businesses, and not raising taxes, certainly not as much as the President asked. This idea was rejected. It would generate as much income, without the burden of tax increases, but the Democrats are not just seeking more income. They are trying to change our society, redistribute wealth, like a European socialist country. In many of these countries, tax rates are 50% or more. This funds government controlled programs for health care and entitlements. Obviously they don't fund a military or diplomatic missions like the United States. They don't have the population of the United States. They minimize an individuals' ability to earn or succeed, and many successful people look for alternatives, such as the Beatles and Rolling Stones moving to America, or Gerard Depardieu considering moving to Russia when France's government considered raising taxes to 75%.
In Nebraska, Governor Dave Heineman called for a "bold and courageous" discussion on taxes and funding for the coming years. In a 17-minute proposal, on January 14, 2013 to the Unicameral, he proposed eliminating state income taxes, while raising spending an average of 4.9% over the next two years. His proposal, being detailed in the next day or two, eliminates about half of the tax exemptions which exist (not including the one for grocery sales) to off-set the income. His goal seems very sound. Encourage businesses and citizens to move to, or stay in Nebraska, with a low or non-existent income tax.
That's where the President and his followers misunderstand the economy. It's not simply moving a single pile of money around. It is encouraging MORE PILES to join in, and create more income. In the end, the President's plan shuts down income, as smaller employers cannot pay and close up shop. This, of course, leads to raising taxes further, and the cycle continues. Will we reach 75% before France? If it keeps Gerard Depardieu out, it might be a consideration.