Reply #15: I was speaking to the general point of your post and not to Obama's plan specifically. [View All]

[Xithras]

I do agree that the tax cuts should be permitted to either expire, or they should be repealed entirely.

My point was that simply that a tax hike on the rich in a recession is no panacea. A 25% income tax on a billionaire who's yearly income was $0 is $0. A 50% income tax on a billionaire who's yearly income is $0 is $0. While it's improbable that a billionaire could actually go a year with zero income, MANY of America's wealthiest people saw large percentages of their net worth evaporate this year. Those losses can be deducted, resulting in no tax liabilities.

An overdependence on income taxes weighted toward the wealthy can have some very negative consequences in downmarket years when the wealthy see little or no gain in their net worth. California is reeling from this problem right now because we've become very dependent on income taxes from our wealthiest citizens over the past decade, and since their incomes evaporated this year, they have little or no tax liability. That's caused state revenues to plunge.

I guess my post was intended as a counter to yours. It's extremely easy to say "Tax the rich", but the reality is a bit more complicated. Taxing hell out of the rich is only a good solution in an economy that is humming along nicely and where the rich are getting richer. With only a few exceptions, that isn't happening today.