[sethg]

I refer you to Brad DeLong (an economics professor who used to work in the Clinton Administration):

Back in 2000, the U.S. government's long-term budget was out of balance--although not by all that much. The government had, you see, made promises--very popular promises--for Medicare, Medicaid, and Social Security without proposing sufficient funding streams to pay for those promises.... So back in 2000,... we elected George W. Bush. Two wars.... A huge unfunded expansion of Medicare.... However, instead of raising taxes George W. Bush reduced them. This simply does not work. As Milton Friedman liked to say, to spend is to tax.... Taxes are going up over the next decade--barring cuts of 1/3 to Medicare, etc. They can either go up smartly or we can pretend they don't have to go up, in which case they go up stupidly. (http://delong.typepad.com/sdj/2010/09/in-which-mr-deling-res...)

Professor H., the author of the original complaint, does not want his taxes to go up at all. But if his taxes don’t go up, whose will? His gardener’s?

[CWuestefeld]

You're mostly right, and in my opinion the government needs to cut its spending very significantly.

However, you're confusing tax rates with tax revenue. It's quite possible that increasing the rate can lead to a net decrease in total tax revenue. And in some cases, lowering the rate can lead to an increase in revenue. This is known as the Laffer curve. See https://secure.wikimedia.org/wikipedia/en/wiki/Laffer_curve

While this concept is the subject of some controversy, it's demonstrably true at the extreme. Raising the rate to near 100% will clearly decrease revenue. But on the other hand, decreasing it to 0% will also decrease revenue. But with more moderate values, it's really anyone's guess as to whether it will hold or not.

It's the same in business, really. One's revenue can increase by decreasing prices: more people will buy your product, and that may be enough to offset the per-unit loss.

What's really controversial is the question over how much people will forgo additional income due to changes in marginal tax rate. There are certainly boundary conditions, such as when the amount you finally take home after taxes is less than your cost for child care. More fuzzy is when the amount you take home is less than your value for free time.

[Locke1689]

The Laffer curve isn't really relevant here. Pretty much every economist in the country agrees that we're left of the max on the curve.

[msluyter]

But with more moderate values, it's really anyone's guess as to whether it will hold or not.

I recently read a discussion about this in the NY Times in which economists tried to pinpoint the inflection point of the Laffer curve. Most put it between 30-60%, and iirc, the majority were on the 60% side of things. I can't find that discussion now, however.