Jeffrey Sachs, an economist and director of The Earth Institute at Columbia University, has taken exception to the assertion by The Wall Street Journal that it’s pointless to increase taxes on the wealthy.

 

Journal editors claimed that even a 100% tax on the top 1% of earners couldn’t erase the deficit. Sachs, however, says this is “nonsense,” adding that a full tax on the rich would bring in an extra $1.3 trillion into the U.S. Treasury, representing 9% of the nation’s gross domestic product (GDP). The deficit, meanwhile, from 2013 to 2021 is projected to be less than 6% of GDP, demonstrating a full tax on the wealthy would erase the deficit.

 

“The money received by the richest households is vast, and higher taxes on the rich will make a major contribution to closing the deficit,” Sachs writes. “Nobody says that the rich should carry the entire tax burden or that spending cuts shouldn’t play a role. The waste in military spending alone is so large that we can and should save at least 2% of GDP per year from the defense budget alone.”

 

He adds: “America’s richest households have enjoyed quite a ride in recent decades as they’ve accumulated a mountain of wealth unprecedented in human history, at a time when much of the rest of society has been suffering.” In 1980, the average income tax rate paid by the top 1% was 34.5%. By 2008, it was down to 23.3%. During this period, the richest 1% expanded their share of total income from 8.5% to 20%.

-Noel Brinkerhoff

 

How the Wall Street Journal Distorts the Truth About Taxes (by Jeffrey Sachs, Huffington Post)