increasing taxes, as a practical matter, is necessary for the financial well being of the USA

-----Background----- Thanks Pro for your arguments! Surely this kind of discussion is important at a time when the federal government is running a significant budget deficit and putting debt on the shoulders of my generation and the economy. For Fiscal Year 2014, federal government expenditures will be roughly $3.602 trillion. [1] The resolution basically states that "increasing taxes is necessary for the federal government's fiscal health." The Congressional Budget Office states that in 2014 we will have a $560 billion deficit. [1] Let us use this figure. -----Arguments----- C1: Cost to the Economy Pro basically says we need to hike taxes so that we can reduce the deficit. Empirical evidence indicates that "the tax multiplier is roughly 3 in the year or two following a tax shock", and additionally, "these results corroborate [other studies]". [2] So over time, collecting a dollar in tax revenue sharply contracts the economy by roughly a factor of three. The "total burden of collecting $1 in additional income taxes is between $1.30 and $1.50, not counting compliance costs." [3] Taking the midpoint of these projections and factoring in compliance costs yields us a reasonable estimate of $1.50 for each dollar of revenue for the total burden of raising tax revenue through federal income taxes. And this is the immediate impact, not the devastation over time. America's economy has been suffering for awhile now. Under President Obama, median household incomes are down by over $4,000. [4] A tax hike on the rich (which we already imposed) will only raise around $50 billion per year. [5] The deficit is still $560 billion. Labor income is about the equivalent of 60% of GDP (the remainder is capital income, interest, etc). [6] To eliminate the budget deficit, income taxes on the median income earner would need to be raised by almost 8.5 percentage points. - GDP at $16.646 trillion [1] - Labor Income at 60% of GDP [6] - Deficit + Negative Incentives at $840 billion (.840/ 9.9876 = 0.084) The average taxpayer pays an income tax rate of 10.1%. [7] After crunching the numbers (shown above), for the median taxpayer income taxes will need to be raised by about 8.4 percentage points. So for the middle class household earning about $50,700 [8]... their tax burden would go up by about $4,260. Can taxpayers really afford such a burden, especially at this time? And once the economy sharply recedes further from such a hot and horrid imposition, the deficit will remain. Raising income taxes, and any taxes in general, will reduce an individual's disposable income. With less income, future consumption patterns are shifted. There will be less investment and business activity as a result, and less savings. As a result, the economy will grow weaker, incomes will fall, and jobs will be shed. C2: Civil Liberties A laissez faire economy, with the free exchange of goods and services, is based on the voluntary decisions of the individual. Taxes reduce an individual's disposable income. They have less economic freedom as a result. Their decisions about how much to spend, invest, and save; their decisions regarding how much they work; these choices are all distorted. Tax hikes like Pro suggests would reduce America's economic freedom, and to the extent the ability of an individual to choose -- to that extent human dignity and conscious is eroded. Economic freedom is strongly correlated with higher average incomes, better health outcomes, and greater political freedom. [14] Prosperity thus emerges when people can keep most of the fruits of their labor and exchange them for their own wants how they see fit. The private sector is the source of America's economic power, and we must go back to this ideal. C3: Balance the Budget: Making Government Simpler and Smarter There are plenty of spending adjustments we can make! Let us remember that in fiscal year 2014 the projected budget deficit will be $560 billion. Budget Adjustments: 1. End the Drug War ($15.6 billion) [9] 2. Social Security Reform - Eliminate Fraud in the Social Security Disability Program ($36.25 billion) [1] [10] - Modernizing Social Security [Raising Retirement Age, Progressive Indexing] ($170 billion) [20] 3. Medicare Reform - Medicare Choice ($88 billion) [1] [11] - Cap Medicare Growth ($58.611 billion) [18] - Cut Payment Error Rate by 75% ($42.9 billion) [15] - Raise Retirement Age by 2 years ($12.5 billion) [26] 4. National Defense Improvements [17] - Reducing/Canceling unnecessary or unwanted systems ($38.58 billion) - Reforming Out-of-Control healthcare/ retirement costs ($61.86 billion) - Correcting Deficient/ Unnecessary processes and operations ($87.85 billion) - Ending the Overseas Wars ($79.4 billion) [19] - Ending Foreign Military Assistance ($14 billion) [28] 5. Eliminate LIHEAP ($3.02 billion) [12] 6. Limit TANF Benefits to 6 months ($14.53 billion) [12] [13] 7. Lawsuit Abuse Reform ($10 billion) [15] 9. Eliminate the Department of Energy ($28.789 billion) [16] [11] Re-Establish the Atomic Energy Commission 10. Eliminate the Department of Commerce ($5.868 billion) [11][16] Transfer the Bureau of the Census, International Trade Administration, National Oceanic and Atmospheric Association to other appropriate agencies 11. Eliminate the Department of Housing and Urban Development ($49.479 billion) [16] 12. Eliminate the Department of Labor ($74.3958 billion) [21] [22] [16] Maintaining the Bureau of Labor Statistics and OSHA 13. Privatize Air Traffic Control ($10.316) [23] 14. Eliminate Department of Agriculture ($95.4836 billion) [16] - Block Grant Food Stamps at FY2008 Levels [24] - Block Grant Child Nutrition FY2011 Levels [25] 15. Privatize the Corps of Engineers ($10.6 billion) [15] 16. End State and Local Justice Grants ($5 billion) [15] 17. End Head Start ($8.1 billion) [27] 18. Repeal Davis-Bacon Labor Laws ($9 billion) [15] 19. Eliminate the Department of Education ($3.028 billion) - Block Grant Education Funds at FY2008 Levels [16] 20. Eliminate the Department of Transportation ($28.8865 billion) [16] [29] - Block Grant Highway Infrastructure Funds (Increase by 25%) Total Cuts: $1.0620469 trillion ($502 billion surplus) Conclusion As I demonstrated above, there are plenty of spending cuts that we could make to balance the budget. These cuts are mostly noncontroversial to be bluntly honest. Liberals should embrace the idea that the states can control their own education systems, and the drug war as well as the foreign wars could be finished. Optimally we should cut government spending further and replace federal taxation with indirect consumption taxes, but that is beyond the scope of this debate. Tax hikes will reduce the economy's size and health even further. A $4000 tax hike will destroy many livelihoods, and is just bad economics. Instead, we should look to find efficiencies in government and cut Washington's wasteful spending. Sources [1] http://tinyurl.com... [2] http://tinyurl.com... [3] Economic Report of the President (2005), p.77 [4] http://tinyurl.com... [5] http://tinyurl.com... [6] The Budget and Economic Outlook: Fiscal Years 2013 to 2023 (Congressional Budget Office), PDF. [7] http://tinyurl.com... [8] http://tinyurl.com... [9] http://tinyurl.com... [10] http://tinyurl.com... [11] "A Clear Vision to Revitalize America" Rand Paul, FY2014, pg.98. PDF. [12] http://tinyurl.com... [13] http://tinyurl.com... [14] http://tinyurl.com... [15] http://tinyurl.com... [16] http://tinyurl.com... [17] http://tinyurl.com... [18] http://tinyurl.com... [19] http://tinyurl.com... [20] http://tinyurl.com... [21] http://tinyurl.com... [22] http://tinyurl.com... [23] http://tinyurl.com... [24] http://tinyurl.com... [25] http://tinyurl.com... [26] http://tinyurl.com... [27] http://tinyurl.com... [28] http://tinyurl.com... [29] http://tinyurl.com...