{"id":278366,"date":"2010-02-04T12:30:25","date_gmt":"2010-02-04T17:30:25","guid":{"rendered":"tag:business.theatlantic.com,2010:\/\/3.35341"},"modified":"2010-02-04T14:28:10","modified_gmt":"2010-02-04T19:28:10","slug":"obama-should-raise-taxes-on-the-rich-heres-why","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/278366","title":{"rendered":"Obama Should Raise Taxes on the Rich. Here’s Why."},"content":{"rendered":"

President Obama’s budget calls for the 2001 and 2003 Bush tax cuts to expire for Americans making more than $250,000. This will not be popular — not among the rich, not among Republicans, and especially not among rich Republicans. But I am none of those things, so here I go defending it!<\/p>\n

In the spirit of positive, constructive debate, I wanted to take on this post from one of The Atlantic’s correspondents, former Rep. Mickey Edwards<\/a>. President Obama promised to let the Bush tax cuts expire throughout his campaign,
\nand Edwards said<\/a><\/b> he voted for Obama, so I’m not sure why he’s upset<\/strike> surprised. Here’s his paragraph, with my
\nthoughts numbered and footnoted:<\/p>\n

\n
Noticing
\nthat the country (actually, it’s the government, not the country) [1]<\/b> is in
\na deep, deep financial hole, the President has proposed to shrink the
\noutgo-income shortfall by raising taxes. [2]<\/b> The first part of that job,
\ntherefore, is to determine whose taxes to raise–everybody’s (hardly
\npalatable in an election year) or just those of a particular sub-group.
\nThe decision was easy, especially given the worldview, common among so
\nmany Democrats, that high earners are ipso facto the bad guys of
\nsociety [3]<\/b>, even if that income has been earned by hard work at two or
\nmore simultaneously-held jobs and is offset by the non-frivolous but
\nnon-deductible needs of loved ones (these incidentals are not taken
\ninto account). So how to determine who are the baddest of the bad guys.
\nThe apparent conclusion: anybody who earns at least $250,000 a year.\n <\/div>\n<\/blockquote>\n
[<\/b>1] <\/b>This parenthetical might seem incidental to
\nthe broader argument, but it’s important to clarify that the country is
\nquite surely in a deep, deep hole. One of out of ten Americans in
\nunemployed, and one of of six is out of work, forced to work part-time,
\nor given up looking for jobs. We’re also massively in debt. Between
\nJanuary 2000 and November 2009, non-revolving debt increased 72%<\/a>, and it shows no signs of abating. Let’s throw in stagnating wages<\/a>, a pinch of rising health care premiums which eat into income, and the expectation that we’re looking at another jobless recovery<\/a>,
\nwhich will suppress consumer demand — and, in a vicious spiral kind of
\nway, hiring, and income and government tax receipts — for years to
\ncome. That looks like a financial hole to me.<\/p>\n

[2]<\/b> But Obama’s budget actually grows <\/i>the outgo-income
\nshortfall by proposing a record nominal deficit. And that’s not a bad
\nthing, either. First let’s look at why the deficit is growing. It takes
\na group effort<\/a>
\nto build a $1.6 trillion debt, and this year the group effort includes: existing deficits from the Bush years, depressed tax receipts from the
\nrecession, increased automatic spending from the recession, bailouts, and stimulus. <\/p>\n

So why is Obama growing the deficit? Precisely because of the
\ncircumstances described in Part 1 above. One-sixth of the country
\nbroadly qualifies as unemployed, and with the economy producing under
\ncapacity Obama increased government outlays to replace private demand
\nthat has disappeared. The $787 billion stimulus, of which we’ll spend another
\ncouple hundred billion this year, was necessary to grow GDP — and did
\ngrow GDP by as much as 3 percent, according to many economic analysts
\n— even if it was imperfectly designed.<\/p>\n

Still, Obama has expressed concern for the deficit that
\nthe recession, and its response, has necessitated. He can’t cut spending
\ndramatically in the turnaround without risking a double-dip recession.
\nSo he’s raising some taxes. Moving on to number 3…. <\/p>\n

[3] <\/b>Now we get to the main argument: Raising taxes on rich people is an act of spite.<\/p>\n

Well, look. Reasonable people can disagree about the appropriate
\nmarginal tax rate for the top income bracket. But it is not a helpful
\ncontribution to the subject to say we have a progressive tax system
\nbecause Democrats think “high earners are ipso facto the bad guys of
\nsociety.” <\/p>\n

Let’s consider the plan to tax Americans who make more then $250K. They account for about 2%<\/a> of all earners. In 2006, the top one percent of earners made the highest share of income in American history (22%)<\/a> and their effective individual income tax rate was 19%<\/a>. That ETR is the lowest it’s been since the mid-1980s, when the top percent’s share of income was only 12%.<\/a> Surely if Congress is looking to raise money, it makes sense to aim for where the money is. In the top two percent, there is quite a lot of money being taxed at historically low rates.<\/p>\n

I don’t think it’s responsible politics to fund a country exclusively
\non the top one percent of taxpayers (and the top percentile does pays
\nthe all-time highest percent of taxes). That’s why my deficit-busting
\nplan, if anybody’s curious, would also trigger a VAT when unemployment
\ndipped below a certain percent. But it really, truly is not a matter of
\nanti-wealth conspiracy to call for a large deficit to fight the
\nrecession, and a tax increase on the wealthiest Americans to help
\nbring down the deficit.<\/div>\n



\n

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President Obama’s budget calls for the 2001 and 2003 Bush tax cuts to expire for Americans making more than $250,000. This will not be popular — not among the rich, not among Republicans, and especially not among rich Republicans. But I am none of those things, so here I go defending it! In the spirit […]<\/p>\n","protected":false},"author":1534,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-278366","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/278366","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/1534"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=278366"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/278366\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=278366"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=278366"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=278366"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}