What would it take to cut our $2 trillion annual deficits without cutting any spending, but instead just by raising taxes? Following is one scenario, explained on video and with a chart that follows with the numbers quoted. This is not a policy recommendation. It is only meant to show how challenging our deficit numbers really are. If we actually did this, without phasing tax increases like this in over years, there would be a large recession because we are taking money away from people that they would otherwise spend, while government spending remains the same as it is now; that’s just one consequence. A previous video looked at one scenario if we only cut spending, and a third looks at a combination of both. We encourage you to use your own analysis and thinking, along with your favorite AI tool, to explore the scenarios and come up with your own point of view.
The key takeaway: Even after very large tax increases on households earning more than $200,000, corporations and estates, only about 55% of a $2 trillion deficit is closed; reaching the full amount requires taxes that affect a much broader share of Americans. Despite what some politicians claim, there isn’t enough money to get out of this hole simply by taxing the wealthy (who, by the way, already pay a disproportionate share of taxes compared to their share of income). We have spent more than we take in for years, largely due to structural increases in our largest government programs, and as a result we are in a big hole.
| Tax Change | Additional Revenue | Illustrative Annual Household Impact | Cumulative Revenue | % of $2T Goal |
|---|---|---|---|---|
| Higher taxes on households earning $1M+ | $275B | +$65,000–100,000+ for many affected households; varies widely with income source and capital gains | $275B | 13.8% |
| Higher taxes on households earning $400k–$1M | $250B | +$18,000–30,000 for many affected households | $525B | 26.3% |
| Higher taxes on households earning $200k–$400k | $300B | +$8,000–15,000 for many affected households | $825B | 41.3% |
| Higher corporate income taxes | $200B | Indirect burden through shareholders, workers and/or consumers | $1.025T | 51.3% |
| Higher estate & gift taxes | $75B | Primarily affects relatively large estates | $1.100T | 55.0% |
| Higher payroll taxes | $450B | Eliminate/raise Social Security wage cap plus higher payroll rate; substantial burden on higher earners and additional cost for most workers | $1.550T | 77.5% |
| Higher income taxes on households earning $100k–$200k | $250B | +$2,500–4,000 for many affected households | $1.800T | 90.0% |
| Higher income taxes on households earning under $100k | $100B | Roughly +$500–800 for many affected households | $1.900T | 95.0% |
| Higher existing excise taxes & tariffs | $100B | Roughly +$700 per household on average through taxes and higher prices | $2.000T | 100.0% |