The latest Business Week addresses that question after reminding us that congressional ?Democrats have proposed more than a half-dozen ways to target high earners to pay for a growing list of priorities.?
Writer Ryan J. Donmoyer continues:
Soaking the rich may appeal to the Democratic base, but tax analysts say there isn’t enough money at the high end of the income ladder to finance the Democrats’ wish list without imposing confiscatory rates. About 4.5 million households filed tax returns reporting $200,000 or more of income in 2007, according to IRS data. They paid a combined $610 billion, or 44%, of all federal income taxes. “It’s just not possible to get the revenue you need only from this group,” says Joel Slemrod, director of the Office of Tax Policy Research at the University of Michigan.
Eventually, tax experts say, Democrats will have to relent and raise taxes on those making less than $200,000, or introduce a value-added levy on goods and services, a type of consumption tax common in Europe. “There’s widespread agreement that you are going to have to adopt fiscal measures that go beyond the top 2% or 3% of the population,” says Alan D. Viard, a resident scholar at the American Enterprise Institute, a Washington think tank.
Of course, the idea of limiting tax increases to the ?rich? has its own flaws.
