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Why taxes for the rich (and the middle class) should go up “President Obama wants to extend the Bush income-tax cuts, but only on family income up to $250,000 per year. Mitt Romney wants to keep the Bush tax cuts for everybody and to further lower all existing income-tax rates by 20 percent. They’re both wrong.” — Timothy Noah, “Raise Taxes on the Middle Class!”
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Why taxes for the rich (and the middle class) should go up

“President Obama wants to extend the Bush income-tax cuts, but only on family income up to $250,000 per year. Mitt Romney wants to keep the Bush tax cuts for everybody and to further lower all existing income-tax rates by 20 percent. They’re both wrong.”

— Timothy Noah, “Raise Taxes on the Middle Class!”

Does cutting taxes actually decrease spending? “The Washington Post’s Ezra Klein has a fascinating post on the relationship between taxation and spending. It’s an article of faith among some conservatives that if you “starve the beast” that is federal spending by cutting taxes then spending will eventually have to come down. It’s been pointed out more than once that this hasn’t worked very well in the past. Cutting taxes without also cutting spending mainly has the long-term effect of increasing the deficit. What Klein contributes to this discussion is the tantalizing suggestion that cutting taxes also increases spending.” - Timothy Noah, “Cutting Taxes Increases Spending!”
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Does cutting taxes actually decrease spending?

“The Washington Post’s Ezra Klein has a fascinating post on the relationship between taxation and spending. It’s an article of faith among some conservatives that if you “starve the beast” that is federal spending by cutting taxes then spending will eventually have to come down. It’s been pointed out more than once that this hasn’t worked very well in the past. Cutting taxes without also cutting spending mainly has the long-term effect of increasing the deficit. What Klein contributes to this discussion is the tantalizing suggestion that cutting taxes also increases spending.”

- Timothy Noah, “Cutting Taxes Increases Spending!”

Would the best tax reform be to do nothing? “Democrats and Republicans agree that the federal income tax must be reformed. They even agree on some common goals. President Obama’s budget proposal calls for “fundamental reform” that would “simplify the tax code and lower tax rates” while eliminating “inefficient and unfair tax breaks.” House budget committee chairman Paul Ryan’s budget proposal, which the House passed in March, collapses the existing six tax brackets into two, both of them (10 and 25 percent) much lower than the current top rate (35 percent), and similarly pledges to eliminate “special-interest loopholes.” The Obama budget and the Ryan budget, a Bloomberg View editorial notes with approval, “aren’t as far apart as you might think.”” - Timothy Noah, No Deal Photo courtesy of Exchange Gold For Cash
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Would the best tax reform be to do nothing?

“Democrats and Republicans agree that the federal income tax must be reformed. They even agree on some common goals. President Obama’s budget proposal calls for “fundamental reform” that would “simplify the tax code and lower tax rates” while eliminating “inefficient and unfair tax breaks.” House budget committee chairman Paul Ryan’s budget proposal, which the House passed in March, collapses the existing six tax brackets into two, both of them (10 and 25 percent) much lower than the current top rate (35 percent), and similarly pledges to eliminate “special-interest loopholes.” The Obama budget and the Ryan budget, a Bloomberg View editorial notes with approval, “aren’t as far apart as you might think.””

- Timothy Noah, No Deal

Photo courtesy of Exchange Gold For Cash

What impact will Obamacare have on the deficit? “Critics of the Affordable Care Act keep insisting that the law will increase the deficit. But the best evidence we have, from the most trusted authorities we have, suggests that those critics are wrong – and that the law, if anything, will reduce the deficit. I know that many people find that difficult to believe. But, really, it’s neither complicated nor far-fetched. The law spends a lot of money, in order to make Medicaid available to more people and to provide subsidies for lower- and middle-income Americans buying private insurance. But it also finds a lot of money to pay for those new expenditures—mainly by raising some taxes, mostly on very wealthy people, and then reducing the cost of Medicare, mostly through cuts designed to eliminate corporate welfare or foster more efficient treatment.” - Jonathan Cohn, Today in Hackery: The Latest Attack on Obamacare Photo courtesy of Foreign Policy
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What impact will Obamacare have on the deficit?

“Critics of the Affordable Care Act keep insisting that the law will increase the deficit. But the best evidence we have, from the most trusted authorities we have, suggests that those critics are wrong – and that the law, if anything, will reduce the deficit.

I know that many people find that difficult to believe. But, really, it’s neither complicated nor far-fetched. The law spends a lot of money, in order to make Medicaid available to more people and to provide subsidies for lower- and middle-income Americans buying private insurance. But it also finds a lot of money to pay for those new expenditures—mainly by raising some taxes, mostly on very wealthy people, and then reducing the cost of Medicare, mostly through cuts designed to eliminate corporate welfare or foster more efficient treatment.”

- Jonathan Cohn, Today in Hackery: The Latest Attack on Obamacare

Photo courtesy of Foreign Policy

Could a carbon tax fix the deficit and the environment? “Most carbon tax proposals envision an initial tax rate of $15 per ton of carbon dioxide. The carbon tax is meant not to raise revenue but to change behavior: The ultimate goal is to have polluters avoid paying the tax by shifting to renewables. Nonetheless, Tufts economist Gilbert Metcalf, in a 2007 paper, calculated that a $15 carbon tax would raise about $82.5 billion per year, which would easily cover the $70 billion cost of extending the payroll tax cut through 2013. To maintain pressure on polluters to keep reducing carbon emissions, the carbon tax would have to rise steadily. Inglis and Flake’s bill would raise it to $53 in its twentieth year, which is about what’s envisioned in a report by Robert Shapiro, Nam Pham, and Arun Malik of the private U.S. Climate Task Force. The task force calculated that the revenues could keep the Social Security tax a little below its current lowered rate and still leave 10 percent of the money to pay for other programs to fight climate change. Alternatively, you could use this money to provide even greater payroll tax relief for people at lower incomes.” -Timothy Noah, “The Best Way to Fix the Deficit—and the Environment” Photo courtesy of the New York Times
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Could a carbon tax fix the deficit and the environment?

“Most carbon tax proposals envision an initial tax rate of $15 per ton of carbon dioxide. The carbon tax is meant not to raise revenue but to change behavior: The ultimate goal is to have polluters avoid paying the tax by shifting to renewables. Nonetheless, Tufts economist Gilbert Metcalf, in a 2007 paper, calculated that a $15 carbon tax would raise about $82.5 billion per year, which would easily cover the $70 billion cost of extending the payroll tax cut through 2013. To maintain pressure on polluters to keep reducing carbon emissions, the carbon tax would have to rise steadily. Inglis and Flake’s bill would raise it to $53 in its twentieth year, which is about what’s envisioned in a report by Robert Shapiro, Nam Pham, and Arun Malik of the private U.S. Climate Task Force. The task force calculated that the revenues could keep the Social Security tax a little below its current lowered rate and still leave 10 percent of the money to pay for other programs to fight climate change. Alternatively, you could use this money to provide even greater payroll tax relief for people at lower incomes.”

-Timothy Noah, “The Best Way to Fix the Deficit—and the Environment”

Photo courtesy of the New York Times

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“Let’s Be Honest: We’re in a Depression, Not a Recession”

“What can be done now? Probably nothing. Anything that involves spending, such as a new stimulus program, would come too late to be effective… At a 7 percent annual growth rate, our public debt in 2012, estimated at $12.4 trillion, will grow by 40 percent in five years if none of the reforms designed to limit that growth are implemented before the end of that period. Yet if they are implemented while the economy is still struggling, the result may actually be to increase the deficit by driving tax revenues down… The result is a quandary. I don’t see a way out of it. I hope others do.”

A contribution to “A TNR Symposium On The Economy” by Richard A. Posner, a judge on the U.S. Court of Appeals for the Seventh Circuit and a senior lecturer at the University of Chicago Law