No, the issue that gets me riled up is taxation. Both Ezra Klein and Matthew Yglesias have excellent posts on the matter. And today, former Deputy Treasury Secretary Roger Altman wrote an Op-Ed in the Wall Street Journal regarding this matter.
Yglesias makes the key point. Obama played into the notion that we need to reduce taxes, or playing the games of "Don't tax you; don't tax me; tax the man behind the tree (or corporations across the sea regarding the new corporate tax matter)." The promise not to raise taxes on the middle class is ludicrous. Even if we kept things the way as it is, or even eliminated earmarks, you would need more revenue just to service the debt and handle growing entitlements. Anyone who thinks Medicare is something fun to tamper with, well, needs to look at the health reform debate and throw in angry old people, who incidentally, vote, as well as baby boomers who are near retirement and still a large part of the population.
We must raise taxes. We need to fix the mess that is the code. In 2005 President Bush convened a panel to create a report along those lines. Nothing happened. The report was circular filed. The panel created a very thoughtful and politically worthwhile report. Of course, there were problems, but it tried something and failed.
Others have tax reform proposals. Some are disingenuous. Anyone who thinks we can replace the federal income tax with a sales tax at 15% is smoking something illegal, because that produces even less revenue than now. Michael Graetz has a worthwhile proposal that is somewhat savvy and administrable in his most recent book 100 Million Unnecessary Returns where we shift to a less progressive VAT/consumption tax base, but put a much steeper income tax at the top. That said, people still would need a tax increase.
Part of the problem is that we risk moving ever closer to the pre-1986 tax code. Once upon a time, the top marginal rate was pushing 90%. You thought tax arbitrage is bad now, I shudder to think of what returning to that situation would be like. The corporate tax increase proposed comes with nothing for corporations too like lowering rates. Lowering rates is tough.
Also trying to determine economic efficiency, while worthwhile, is utterly debatable. We can bring in experts to no end on that regard on both sides. When you do something like change tax treatment of things, some results you can see. But many results are unintended and manifest only later.
Regardless of what you think, we must move beyond this idea of the middle classes also wanting to skirt taxes. Once upon a time, it may surprise you, before the insane top marginal rates of 90% in the late 60s and 70s, people saw the tax code as a relatively good thing. We have lost that partly because of the mess the code made. However, I also posit that part of it is our distrust of government and a growing individualization of American culture. It is much harder to tell someone focused on me to think of a larger societal goods (and I am not just talking about welfare and health care, but education and roads too).
Ultimately, make no mistake, this is one issue that the conservatives are winning. As Graetz writes in another book, co-authored by Ian Shapiro, Death by a Thousand Cuts: The Fight Over Taxing Inherited Wealth, the estate tax is merely the opening salvo in a fight to undo our tax system and reduce it to a regressive tax that fails to fund anything. "Their goal is simple. It is death by a thousand cuts. What is the proposal for the other side?"
No comments:
Post a Comment