Yglesias on Taxes

In an admirably frank piece in the American Prospect, Matt says the problem with Obama’s budget is that the government doesn’t have enough money to pay for it and so Democrats will need to raise taxes on the middle class if they want all this spending. This is such an important message because many Democrats are now going through a phase of magical-thinking freelunchism. Every huge new program will save money! Well, it won’t. So Matt’s right. It’s better to face up sooner rather than later to the fact that taxes need to go up a lot to pay for all this stuff. Or, we could spend a lot less. I know Matt’s down with slashing defense budgets, but I guess he just wants to spend that money elsewhere.  For my part, I think it’s easiest to get people to face up to tax increases if they don’t have the sense that they’re paying more just so the special interests of the winning coalition can get more. Large, comprehensive spending cuts together with a modest increase of tax rates on the middle class seems to me the most plausible way of regaining something like fiscal balance. After the recession.

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9 thoughts on “Yglesias on Taxes

  1. I disagree with your prognosis, Will. And with Matt's. One of the discouraging things about this modern world is that government spending always increases — mostly in small increments, sometimes in larger leaps — regardless of the party in power. The difference seems to be that (depending on the administration) sometimes we pay for it.We are being set up for a value added tax. Really, that's what the Cardon Tax will turn into.

  2. After the recession is right.I've written about this ad nauseum but it bears repeating: our advantages in conventional military conflicts are so great, particularly in naval and air combat, that we could cut the defense budget by significant percentages and see no meaningful loss in our ability to defend the country.On the broader level, you and Matt are both right; we have to pay for these programs by raising taxes, and cutting a few things. My cuts would involve means testing Social Security and Medicare, bringing them on budget, among a few other things. But you've got to raise taxes, and as much as I favor steeper marginal tax rates for the top quartile, as you and Matt say, middle class tax increases are inevitable if we're to genuinely work to balance the books. Me? I think on balance the majority of Americans would be benefited by a modest increase in the tax burden on the middle class, particularly if we could work culturally to ease the pressure people feel to consume conspicuously. (It would be particularly great if middle class Americans didn't feel that they had to own a large home in order to be taken seriously or considered successful.)But it's long since been established that I'm a raving leftist.

  3. A serious proposal for a VAT should split the libertarian world between the reasonable people (Brink Lindsey) and the crazies. A VAT is the last distortionary way for the American people to pay for the federal government they clearly want.”But they shouldn't want it!” says the libertarian fundamentalist. “What are you going to do about it, invade? Live on a manmade island with money launderers?” .”If we increase taxes, that will mean more spending” says the slightly more reasonable libertarian. “There is no evidence for that proposition. Delaying increased taxes to pay for the government the American people want just means bigger taxes and inflation later.”VAT. Get used to it.

  4. Democrats love their taxes and spending. Apart from actually paying taxes that is. Then they cheat and lie as much as possible and then some.

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  6. Marginal income tax and FICA rates are only two pieces of the puzzle. For the ongoing health of our society, the current federal tax structure must be junked and reinvented. Corporate and capital gains taxes are now manifestly harmful to economic efficiency and growth. An overemphasis on income taxes rather than consumption taxes inhibits savings and investment. The tax burden should be spread more widely and transparently (see California for the results of establishing a tax policy based on punishing “the rich”). The $50+ trillion unfunded liability entitlement spending pits, Medicare/aid and Social Security, must be reformed immediately. Needless to say, the “ginormous” number of pages in the tax code hides loop-holes for the favored few and a general feeling in the middle class tax payer that he or she is being screwed; simplification now, please. Oh, and we must, must reverse the growth of so-called discretionary spending which has become a giant pork production facility aimed at bribing/rewarding the party-in-power's favorite constituencies. My wife and I have retired to Central America. The effort to escape the seemingly unstoppable municipal/state/federal tax black hole was one of the reasons.

  7. Well of course the Democrats are going to raise taxes. Thats what they do.If you think about Democrats as Tony Soprano with a law degree (they will steal from you, but all the forms will be filled out properly), you will know what to expect.The whole point is to make everyone dependent on the government, and thus easier to control. In order words, they want you to be a serf. “Tony” just wants a little taste …

  8. Marginal income tax and FICA rates are only two pieces of the puzzle. For the ongoing health of our society, the current federal tax structure must be junked and reinvented. Corporate and capital gains taxes are now manifestly harmful to economic efficiency and growth. An overemphasis on income taxes rather than consumption taxes inhibits savings and investment. The tax burden should be spread more widely and transparently (see California for the results of establishing a tax policy based on punishing “the rich”). The $50+ trillion unfunded liability entitlement spending pits, Medicare/aid and Social Security, must be reformed immediately. Needless to say, the “ginormous” number of pages in the tax code hides loop-holes for the favored few and a general feeling in the middle class tax payer that he or she is being screwed; simplification now, please. Oh, and we must, must reverse the growth of so-called discretionary spending which has become a giant pork production facility aimed at bribing/rewarding the party-in-power's favorite constituencies. My wife and I have retired to Central America. The effort to escape the seemingly unstoppable municipal/state/federal tax black hole was one of the reasons.

  9. Well of course the Democrats are going to raise taxes. Thats what they do.If you think about Democrats as Tony Soprano with a law degree (they will steal from you, but all the forms will be filled out properly), you will know what to expect.The whole point is to make everyone dependent on the government, and thus easier to control. In order words, they want you to be a serf. “Tony” just wants a little taste …

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