Tax the middle class!
December 3, 2012 6 Comments
A couple of good pieces on raising middle class taxes from a couple of mostly-conservative writers. First, Josh Barro:
A blanket ban on tax increases for families with incomes of less than $250,000 also makes Democrats’ larger policy goals impossible. Whatever tax increase the president gets on the wealthy as part of the fiscal cliff negotiations isn’t going to be enough to finance the entitlement state in the long term — in a few years, we’re going to need another fiscal adjustment that includes another tax increase. If “protecting the middle class” entails never raising broad-based taxes on them, then Democrats won’t be able to afford to preserve Medicare, Medicaid,Social Security and Obamacare in anything similar to their current form.
Yep. Many liberal bloggers have suggested that it has been a large mistake on Obama’s part to keep on insisting that those making less than $250,000/year never see their taxes go up. Some how the country got by with higher middle-class rates during the 1990′s. And, as Barro suggests, if Democrats really want to finance the amount of government that they seem to, you can’t do this all on the backs of rich people (definitely a point Yglesias makes repeatedly).
Meanwhile, Ross Douthat writes about the importance of raising the marginal rates for Democrats:
Obviously the President doesn’t want a double-dip recession. But when it comes to his second-term legacy, I’m not sure anyone in the White House is privileging the possibly-illusory hope of a major immigration reform compromise and the almost-certainly-illusory dream of a major cap-and-trade bill over what they’re trying to win on taxes in the here and now. And if so, they shouldn’t be! The reality is that it has proven very, very difficult over the last twenty-odd years for the Democrats to find the votes, the willpower or the political cover to raise taxes. Yet for the edifice of the liberal welfare state to endure in anything like its current form — the president’s health care law very much included — taxes need to rise, and rise, and then probably rise some more. “We’re not collecting the revenue we need to support the spending we want,” the left-leaning economist Jared Bernstein says in today’s Times story on taxation trends, and that has to be liberals’s rallying cry for the foreseeable future, or else the government they want cannot be sustained.
In this context, the White House’s quest to extract as much tax revenue as possible from the current negotiations looks less like an impediment to the rest of the president’s second term ambitions, and more like the sine qua nonof his agenda as a whole — because without more tax revenue nothing else about the Obama program makes much sense.
Yep, yep, yep. Long-term, we’d be better off if all the Bush tax cuts expired. It’s just a very bad idea for them all to expire immediately and in our current economic situation. As Ezra has pointed out, there’s no reason we couldn’t gradually phase back in Clinton era rates except for the fact that there’s basically no political will whatsoever for this, regardless of how sensible it may be. I think one of Obama’s larger strategic mistakes has been completely ceding ground to the Republicans on the idea that 98% of Americans should never have to pay more in taxes. Historically speaking, I think this earns Bill Clinton extra kudos for raising the rates in 1993.
And, of course, one could argue that we shouldn’t be raising rates and just have a much smaller government. The very clear truth is, though, when you get down to the specifics of what to spend on and what to cut, it is eminently clear that the vast majority of the American public has no interesting in meaningfully shrinking government.



