Really simple math

Is the purpose to raise the funds necessary to run the government? If so, then I doubt that having CEOs pay more (even much, much more) will actually make a real difference in the sum of all government revenue. There really are not THAT many CEOs making so much money that the revenue stream will be significantly enhanced.

That's from a comment by rick on this thread over Gladwell.com way.

Is he right? Well, as of 2002 the top 5% of income earning households had an average annual income of $278,790, the top 20% an average annual income of $159,298 -- source. I'm not sure how many households that covers, but the 2000 census said that there were 105,539,122 households in the U.S., which should be in the ballpark.

Using really simple math we can estimate that raising the effective tax rate on the top 5% by a single percentage point will generate close to $15 billion in revenues, while raising the effective tax rate by a single percentage point on the top 20% would generate around $34 billion.

The most recent federal budget weighed in at $2.466 trillion with revenues of only $2.119 trillion, leaving a deficit of around $350 billion.

You can't pay all of that off with a tiny tax increase, but who says the tax hike has to be tiny? Right now rumor has it that the richest households pay about an effective tax rate of about 31%. Bump that up to 41% for the richest quintile of earners and the deficit pretty much disappears.

In short, rick is wrong.

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