Economic Program | Report

Necessary but Not Sufficient: Why Taxing the Wealthy Can’t Fix the Deficit

by David Brown, Gabe Horwitz and David Kendall

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As policymakers seek to address the fiscal cliff, two Third Way papers offer a warning to both parties that purely ideological fixes will not solve our fiscal crisis.

This report explodes the myth that the long-term deficit can be solved mainly by taxing the rich. If we don’t touch entitlements and we do soak the rich, our annual deficit in 2040 will be a staggering $3.3 trillion (in 2012 dollars). While some Democrats, such as President Obama, have called for a balanced plan, too many in the base of the Democratic Party and the progressive movement claim that boosting taxes on the wealthy will largely fix our budget woes. As the data shows, that’s simply wrong.

Please also see Death by a Thousand Cuts: Why Spending Cuts Alone Won’t Fix the Deficit, which demonstrates the folly of solving the deficit problem through spending cuts alone.

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