STUDY: TO CLOSE DEFICIT, FEDERAL INCOME TAXES WOULD NEED TO DOUBLE

If you have been reading my blog you know that I am concerned about the deficit and the likely possibility that we could see inflation raising its ugly head. I have been through the 1970’s and 1980’s and I know how crippling such an economy can be to business. I recently had a person write me and say that I was being political on my blog. My father always told me to not discuss religion or politics. I have always tried to follow his advice. But I really think that the economy and government action that impacts business needs to be discussed. Here is an example.

According to the non-partisan Tax Foundation in Washington, D.C., federal income tax rates would have to more than double across the income spectrum if Congress were to close the U.S. budget deficit in fiscal year 2010. Instead of taxing joint filers with rates ranging from 10% to 35%, tax rates would have to start at 24.3% and reach up to 84.9%, according to the Foundation. Earlier this month, it was announced that the federal budget deficit in February was a whopping $221 billion – the largest monthly deficit ever in gross dollars. The deficit so far in this fiscal year (which began in October) is $651.6 billion, up 10.5% from the same period of the previous fiscal year. The current U.S. debt is about $12.6 trillion. “The federal government is spending so much that even if policymakers were willing to fund government services with actual tax revenue instead of piling on more debt, the federal income tax system in its current form wouldn’t be able to raise that much,” said a Tax Foundation spokesman. The press release and report can be read by clicking here.