For Immediate Release: Friday, August 5, 2011
Contact: Phoebe Silag or Karen Conner, news@epi.org 202-775-8810
Revenue increases on highest-income households appropriate for balanced approach to budgeting
Effective and fair strategies for reducing the deficit necessarily include revenue increases on the highest-income households, particularly now, when income distribution is extraordinarily skewed to the top and federal revenue is at the lowest level relative to the economy since 1950. In The facts support raising revenues from highest-income households, Andrew Fieldhouse, Economic Policy Institute/The Century Foundation Federal Budget Policy Analyst, and Isaac Shapiro, EPI Director of Regulatory Policy Research, discuss the key facts that indicate why taxes should be raised on the highest-income households:
- Meager revenues and Bush-era tax cuts contribute greatly to the deficit.
- The top one percent of households benefited disproportionately from the Bush-era tax cuts.
- Recent income gains for the highest-income one percent have far exceeded gains for everyone else, leading to dramatic income concentration at the top of the scale. Now, more than ever, the highest-income households are in a better position to pay taxes.
- Wealth is even more concentrated at the top than income, and the main wealth tax—the estate tax—has been sharply reduced in recent years.
- Reasonable proposals for taxing the highest-income households can raise significant amounts of revenue.
- By not taxing the highest-income households, deficit reduction relies too heavily on spending cuts that harm low- and middle-income Americans.
- Raising taxes on the highest-income households reduces the deficit without having much impact on the economic recovery or job growth.
- Few small business owners have exceptionally high incomes, and thus few would be affected by these tax increases on the highest-income households.
- Even if taxes on those with the highest incomes are substantially increased, income gains at the top over time would still dramatically outpace gains among the rest of the population.
- The progressivity of the federal income-tax system offsets the regressive nature of federal payroll taxes and state and local tax systems.
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