“Tax the rich” is the Democrats’ favorite mantra because it sounds painless. Here’s the pitch, translated: Hey, working people — relax. We can keep spending your money recklessly and somebody else will pick up the tab. It’s a misdirection scam, and the arithmetic doesn’t survive closer scrutiny. As the Cato Institute lays out, you could confiscate every dollar every millionaire earns — a 100 percent tax rate, everything above a million, gone — and still not close the federal deficit.
Joseph Caruso
Taxing the Rich Can’t Close the Federal Deficit
In 2023, taxpayers earning over $1 million reported $2.5 trillion in total AGI and paid $747 billion in federal and state income taxes. To estimate state income taxes, we apply average rates by income group from the Institute on Taxation and Economic Policy. The 799,094 tax returns in the $1 million+ group accounted for 0.5 percent of all returns and paid an average federal and state income tax rate of 29.5 percent.
If Congress confiscated every one of the remaining $1.2 trillion after-tax dollars earned above $1 million, the resulting revenue would have fallen nearly $600 billion short of covering the cost of the 2023 $1.8 trillion calendar-year deficit
