This morning in his Monday column Paul Krugman discussed the need to raise taxes to
deal with the long run structural federal deficit.
You can read the column at Economist’s view without worrying about the Times’ pay wall.
Every time any one proposes higher taxes Larry Kudlow and the right wing noise machine shouts to the rooftops that it is a tax the rich scam and that there are not enough wealthy people to raise the necessary revenues.
But as usual with these claims maybe we should actually look at the data before we accept this meme. Since 1980 the top 5% of family’s share of national income has increased from 15% to 21% — the percent is derived from the five year moving average centered on 1980 and 2007. The last year that this data is available is 2009
If we taxed away half of this increased share of national income it would generate a sum roughly equal to 3% of GDP, or about the CBO estimate of the long run structural deficit.
Moreover, it would still leave the top 5% of families with some 15% of national income, a larger share than was ever recorded before 1993.