A Hypothetical Doubling Of Everyone's Individual Income Tax Still Leaves A Substantial US Budget Deficit

Lost in the discussion about raising the US individual income tax rates on high income earners is that if the US raised EVERYONE'S individual income taxes by 100 percent, doubled everybody's individual income taxes, there would still be a substantial yearly US budget deficit.

In fiscal year 2010, the actual US revenues were $2,163 billion of which $899 billion was from individual income taxes. In FY2010, the US outlays were $3,456 billion for a deficit of $1,294 billion. (Data from CBO: AN ANALYSIS OF THE PRESIDENT'S BUDGETARY PROPOSALS FOR FISCAL YEAR 2012).

If the US had doubled everybody's individual income taxes and raised an additional $899 billion, the US would have still had a budget deficit of $395 billion ($1294 - 899).

For the first 6 months of fiscal year 2011 (October 2010 through March 2011), US revenues were $1,019 billion of which $394 was from individual incomes taxes. Outlays were $1,674 billion and the six month deficit was $830 billion. (Data from CBO: MONTHLY BUDGET REVIEW APRIL 2011).

Again, a doubling of individual income taxes would raise another $394 billion and still leave a six month US budget deficit of $436 billion ($830 - 394).

In FY2010, the US needed an additional 144 percent of the individual income taxes it raised to eliminate the budget deficit. For the first 6 months of FY2011, the US needs to raise an additional 210 percent of individual income taxes to eliminate the budget deficit.

The top 1 percent pay about 40 percent of US income taxes and the top 10 percent pay about 70 percent of US income taxes. If the US raised the individual income tax revenues from the top 10 percent by 50 percent, it would raise an additional 35 percent in individual income tax revenues and still would have been short 110 percent of individual income tax tax revenues in FY2010 and 175 percent of individual income tax tax revenues for the first 6 months of FY2011.