EK: Tax experts will tell you, though, that we’re hitting the outer limit of how much pressure we can put on the income tax code, even if you’re just talking about the rich. If you believe that the retirement of the baby boomers means federal spending will rise, then we really need to be looking at adding something like a consumption tax or a carbon tax so we don’t have huge economic drag from the income tax.Can somebody please clarify for me how a carbon tax or a consumption tax wouldn't have a huge economic drag on the economy, but a higher income tax rate on wealthy people will? I'm under the impression that the main problem is that median wages aren't growing, and may be shrinking (excluding health insurance as wages), while incomes at the top are growing at an unsustainable rate. Wouldn't a consumption tax or carbon tax whittle away more of that already stagnant income at the low end of the scale while not being a blip on the radar screen of those at the top? I would think that would be a much larger drag on the economy than "punishing" the wealthy. Many of their so-called investments are just ways of skimming more of the money out of the economy and into their pockets. Private equity, anyone? There seems to be a real bias in the centers of power against the people who are struggling and for the people who are winning big. It just doesn't make sense to me. Tax reform is just another way of screwing the middle-class.
CS: I do think there’s a limit. And that, by the way, is another difference between what we’re saying and what happened in 1986. The top rate was 50 percent then. It was too high.
To introduce a whole new tax regime, that would be modern tax reform. But that’s too big a task. I take seriously the idea that in addition to revenues, we need to cut back on costs, and we can do a lot more of that in ways that keep the basic structure of Medicare and Medicaid but save a lot of money.
Monday, October 22, 2012
Tax Reform Bullshit
Ezra Klein interviews Charles Schumer:
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