The Risk To Raising Income Tax Rates

In my view, US history shows that the biggest risk to raising tax rates is that political
forces can conspire to keep raising them over time to the point where the wealthy and the
successful can, in effect, wind up working for others to whom income is redistributed.
The elixir of tax rate boosts spurs politicos to find ways to spend the revenues and reduces
incentives to manage government spending. Solid fiscal conservatives can accept raising
taxes to fund national security and other emergencies as well for funding government
investment programs that enhance longer term growth potential and wind up paying for
themselves. Here in the new century the major evident funding requirements are for
consumption via social insurance and medical care outlays. The revenues will feed back
quickly into the economy, but unless there are sensible cost management controls, serving
the income and medical needs of the huge Boomer cohort, allocation of resources to
these sectors could create imbalances which might damage the economy in the lon run.
Top Marginal Income Tax Rate Through History

So, as most economists recognize, there will have to be tough balances struck between not only
revenues and outgo but between sectors requiring resources. Our problem is compounded
by the fact that the US has not run up a large surplus to meet the needs ahead and is instead
running a large budget deficit in a fragile economy in which the budget shortfall reflects
inadequate cumulative revenue generation.

Budget management going forward is going to be a dominant socio-economic issue, and
there may be wisdom in making a modest initial down payment on the eventual restoration
of fiscal integrity in the near term.

The problem now is that the House GOP is trafficking in an alternate socio-political  reality
of which "never raise tax rates" is but one facet. And, the GOP is using that leverage they have
in the House to try and force a set of social and political judgments on a society which is not
 by and large accepting of this regimen.

I hope that GOP members of the House are verbally savaged over the holidays in their districts
so that they return to DC with a far more balanced perspective regarding the fast approaching
fiscal cliff. Minority movements in the US are often right, but this one is not. This one is
tyranny, and what should concern us is that minority tyrannies in the US can last for a long
time if the power base remains intact. Serious business is this.