As a matter of basic economics, the top 1% of earning households do not have sufficient funds to close the yawning federal deficit. To close the deficit gap without entitlement reform, President Joe Biden must ask the middle class to pay higher taxes . 

Biden has promised not to "raise taxes by a penny on anyone making less than $400,000." He has also promised not to raise capital gains taxes on anyone making less than $1 million a year. In fiscal 2023 which ends on Sept. 30, the nation's GDP will be approximately $25 trillion. The top 1% of households will earn about 20% of national income or about $5 trillion . That 1% will pay about 43% of all federal taxes. Then there are the state and local taxes. California has a top state income tax rate of 13% for high earners. New York’s top income rate is 11%.

It is thus reasonable to conclude that the top 1% of households pay up to 45%-50% of their gross incomes in taxes on the federal, state, and local levels. Subtracting all taxes paid at all levels of government, this leaves the most affluent with between $2.25 trillion and $2.5 trillion in income after all taxes are paid. Again, the federal deficit for fiscal 2023 will be about $1.5 trillion. But the federal deficit is growing principally because of rising spending on Social Security, Medicare, and servicing the federal debt, which is about $25 trillion or 100% of GDP. 

To close the deficit by only taxing the most affluent would require that federal taxes on the most affluent increase by an additional $1.5 trillion. Combining that $1.5 trillion with the existing tax liability of between $2.25 trillion (45% of highest earner income) and $2.5 trillion (50% of highest earner income) would require effective tax rates of 70%-80%. That is, the top 1% of households would pay 70%-80% of their income in taxes to governments at the federal, state, and local levels. Such high tax rates would be a disincentive to effort. Such high effective tax rates would reduce investment which in turn would lower long-term productivity growth. The more affluent have a propensity to save. The less affluent have a propensity to consume.

Biden should tell the truth when he introduces his proposed budget for fiscal 2024, which begins on Oct. 1. Namely, that taxes will go up on the middle class. But Biden won’t do so. He will continue demagoguing and speak only half-truths .

James Rogan is a former U.S. foreign service officer who later worked in finance and law for 30 years. He writes  a daily note  on finance and the economy, politics, sociology, and criminal justice.