So, here it is, the defining moment of both parties. This one argument is the central and defining paradigm of our two party political system. Weasel how you will; obfuscate and employ every rhetorical misdirection under the sun, the facts can't be denied.
Liberals want to raise taxes and increase spending, while conservatives want to lower taxes and cut spending.
"The path forward ... seems to be blocked by the insistence on raising taxes in the middle of an economic slowdown," Senate Republican leader Mitch McConnell said at a news conference, one day after meeting with President Barack Obama.The problem with the Democrats' plan―raising taxes―to solve the debt crisis is that we're already spending so much borrowed money that a tax increase would merely be a symbolic gesture, an asinine point in a game of political one-upmanship. If they doubled or even tripled the taxes of the "Super Rich," the additional income would amount to nothing more than an insignificant drop in the bucket when compared to the amount we're already spending.
"Republicans walked away from the negotiating table to save tax breaks for corporate jets," Senate Democratic leader Harry Reid said on the Senate floor.
Calling for raising taxes on the wealthiest is the same thing as raising taxes on everyone. When we raise taxes on the "Super Rich," we're increasing their cost of doing business. This increased cost is usually offset by paying lower wages to their workers, and sometimes it's offset by increasing the price of their goods and services and passing on the tax increase to consumers.
Don't be fooled by a call to tax the "super rich." Any tax increases will ultimately fall disproportionately on the shoulders of those who aren't super rich in the form of lower wages.
The Questionable Tax Martyrdom of the Super-Rich
More importantly, as we know, the statutory incidence of a tax is very different from its economic incidence. Take the corporate income tax: As I have mentioned in the past, several much-discussed studies have found that it is likely that most of the burden of the tax is borne, not by capital, not by shareholders, but by domestic labor, in the form of lower wages. Here is CBO’s William Randolph (2006):
Burdens are measured in a numerical example by substituting factor shares and output shares that are reasonable for the U.S. economy. Given those values, domestic labor bears slightly more than 70 percent of the burden of the corporate income tax. The domestic owners of capital bear slightly more than 30 percent of the burden. Domestic landowners receive a small benefit. At the same time, the foreign owners of capital bear slightly more than 70 percent of the burden, but their burden is exactly offset by the benefits received by foreign workers and landowners.