Many think that, if governments just tax the rich more, the country's fiscal problems will be solved. Even Warren Buffett, one of the wealthiest men in the world, thinks taxing the rich should be public policy. Effectively, this is the top 1% of earners buying the obedience of the bottom 60% who don't pay federal taxes. Will raising taxes solve the budget problems, or is there a more fundamental problem that is not being addressed? When you tax someone more, what happens?

FTA:

AN important issue dividing the political parties is whether to raise taxes on those earning more than $250,000 a year. Democrats say these taxpayers can afford to chip in a bit more. Republicans say raising taxes on those who already face the highest marginal tax rates will hurt the economy...

As a professor at Harvard and the author of some popular textbooks, I am comfortably in the income range that would be hit by this tax increase. I have been thinking - narcissistically, to be sure - about how higher taxes would affect me. Maybe these thoughts can shed some light on some of the broader policy issues.

First, I have to acknowledge that the Democrats are right about one thing: I can afford to pay more in taxes. My income is not in the same league as superstar actors and hedge fund managers, but I have been very lucky nonetheless. Unlike many other Americans, I don't have trouble making ends meet...

Nonetheless, as Republicans emphasize, taxes influence the decisions I make. I am regularly offered opportunities to earn extra money. It could be by talking to a business group, consulting on a legal case, giving a guest lecture, teaching summer school or writing an article...

HERE'S the bottom line: Without any taxes, accepting that editor's assignment would have yielded my children an extra $10,000. With taxes, it yields only $1,000. In effect, once the entire tax system is taken into account, my family's marginal tax rate is about 90 percent. Is it any wonder that I turn down most of the money-making opportunities I am offered?

...Now you might not care if I supply less of my services to the marketplace - although, because you are reading this article, you are one of my customers. But I bet there are some high-income taxpayers whose services you enjoy...

Reasonable people can disagree about whether and how much the government should redistribute income. And, to be sure, the looming budget deficits require hard choices about spending and taxes. But don't let anyone fool you into thinking that when the government taxes the rich, only the rich bear the burden.

I Can Afford Higher Taxes. But They'll Make Me Work Less

DISCUSS!

Original posting by Braincrave Second Life staff on Oct 14, 2010 at http://www.braincrave.com/viewblog.php?id=349