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A Warning About Raising Taxes

The Congressional Budget Office, according to this paper from the Heritage Foundation, is “Congress’ nonpartisan official ‘scorekeeper.’” Accordingly, they were “recently asked by Representative Paul Ryan (R–WI) to estimate the impact of raising marginal tax rates to pay for the projected huge increase in entitle­ment spending in future decades.” The CBO’s conclusion, reports the Heritage paper:

  • “Marginal tax rates for every bracket, along with corporate tax rates, would need to more than double.”
  • “These tax rates "would significantly reduce eco­nomic activity and create serious problems with tax avoidance and tax evasion," and such rates "would probably not be economically feasible.””

The paper’s conclusion, which was written by Hertigage’s VP for domestic and economic policy studies, is:

“The CBO's letter on the tax increases needed to pay for future projected entitlement spending is another dire warning to Congress that it should deal quickly with the unsustainable promises associated with the major entitlement programs. Already, three former CBO directors and many other budget analysts from across the political spectrum have urged a fundamental restructuring of these programs, both to avert an economic crisis and to avoid placing an unacceptable burden on future generations.

“Yet proposals abound in Congress and on the campaign trail to create new entitlements and to raise taxes to pay for them in addition to the steadily rising tax burdens built into current law. These new entitlements and proposed tax increases would be on top of the levels that the CBO's letter says would "probably not be econom­ically feasible."

“It is time for those who argue that we do not need to renegotiate the promises made in today's entitle­ments to explain to Americans that their children and grandchildren will face the huge marginal tax rates indicated by the CBO. It is also time for those who advocate increased spending commitments financed by increased tax rates to explain to the American people that future rates would be even higher under their proposals.”

Take some time, and read the entire “backgrounder.” When you’re finished, you’re likely to want to ask your favorite “tax-and-spender” in Congress what he or she is doing to bring entitlements spending for Medicare, Medicaid, and Social Security under control.

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