Matt Yglesias

31 Responses to “Taxes, and Plenty of ‘Em”

1. Eric Says:
   June 17th, 2009 at 12:23 pm

   Maybe a Cross-Promotion tag would be more appropriate than the Self-Indulgence tag.

2. DTM Says:
   June 17th, 2009 at 12:26 pm

   Generally a good piece, and I think your long-term strategic thinking is correct: this will likely be a centerpiece battle in Obama’s (hypothetical) second term, and it good to be talking about these issues in advance.

   However, I still think you are being a little too squishy on progressive taxation. One of the basic problems with your analysis is that you are implicitly dividing the world up into just three categories, a small number of very rich, the poor, and the middle class. But of course there are relevant gradations among the “middle class” as well. So, for example, while I agree net taxes may need to be raised on more than the top 1% or 5%, I’m not at all convinced yet they need to be raised on more than, say, the top 15-20%.

3. Daddy Love Says:
   June 17th, 2009 at 12:41 pm

   What’s not being said (even by you, and believe me I’m a fan), is that financing our current obligations requires raising taxes. Why people think that magical ponies appear when taxes are lowered, and that spending and taxation are somehow completely unrelated just staggers me. I complained when Nixon went into deifict (although I could not yet vote), I complained when Reagan and the Demcoratic Congress completely took leave of their senses in the ’80s, I applauded when GHW Bush raised taxes to pay for what we buy (but wished he would shut up about the capital gains tax already), and I crowed when Clinton and the Democrats stepped up at the cost of their majority to do the right thing and balance the budget and pay down deficit.

   For the last eight years I’ve just been saying “What the fuck?” What kind of idiot thinks that these things don’t matter? What kind of idiot thinks that things are free?

   And thought it may not sound like it, I have a lot of faith that Obama is trying to just tamp down the crises a bit right now and that at some point he will use his formidable political skills to defang the simple-mided Republican tax cut rhetoric and persuade people to believe again in the simple proposition that we should pay for what we buy.

4. stick Says:
   June 17th, 2009 at 12:48 pm

   Credit where credit is due: Nice job, MY. Although, I agree with DTM about the three categories.

5. Njorl Says:
   June 17th, 2009 at 12:51 pm

   If you’re looking for a cowardly way to raise taxes on the middle class you do it with inflation. Push more of their income into higher tax brackets. Inflation would also ease much of the debtload that the middle class aquired buying houses they can’t afford. In essence, it’s a tax on the middle class, but they are subsidized in paying it by bankers.

   It would also hit the poor, but you can boost max income before tax. That way, you lower somebody’s taxes, but raise more tax revenue.

   It won’t boost tax revenues from the rich though.

6. DTM Says:
   June 17th, 2009 at 12:51 pm

   What’s not being said (even by you, and believe me I’m a fan), is that financing our current obligations requires raising taxes.

   Absolutely. In fact, as you imply, our PAST obligations require raising taxes, at least for the medium term: once we get out of the current down cycle, we will need to raise taxes to pay off not just the cyclical debt we accumulated, but also a good chunk of the structural debt passed down under Reagan, Bush, and Bush.

7. DTM Says:
   June 17th, 2009 at 1:13 pm

   Inflation does tax the rich as well, since they are the aforementioned “bankers” (more generally, net lenders).

   That said, from some recent models it appears likely that inflation has more distributional impact through monetary transactions than through the balance between borrowers and lenders, so inflation is likely to end up as a regressive consumption tax. Accordingly, at least holding politics aside, I’d prefer a progressive consumption tax over an inflation tax.

8. mike Says:
   June 17th, 2009 at 1:19 pm

   Maybe a Cross-Promotion tag would be more appropriate than the Self-Indulgence tag.

   No, I think arguing for higher taxes on the middle class to pay for things that make rich people on the east coast feel better about themselves is pretty self-indulgent.

9. Max424 Says:
   June 17th, 2009 at 1:21 pm

   How much revenue would a National Bank bring in? How big is the untapped profit potential of taking over the black market in gambling, prostitution and drugs? $200 billion? $500 billion? $1 trillion? There is plenty of money out there, but Republicans refuse to allow us to grab it.

   By my calculations, in my lifetime, the US Government should be a minimum of $5 trillion dollars in the black. That is with Super-Medicare for everybody, 70,000 kilometers of bike paths, and bullet trains connecting every Tom, Dick, and Harry township. Our problem should be “how do we spend all this goddamn money we got!”

   But, alas, we allow the Federal Government, supposed monster that it is, to be systematically stripped of its assets by private industry and goaded into throwing big money at foreign adventures like a newbie ex-con in a whorehouse.

10. Nick Says:
    June 17th, 2009 at 1:30 pm

    How about cutting defense spending?

11. DTM Says:
    June 17th, 2009 at 1:31 pm

    How much revenue would a National Bank bring in?

    Any net income a “national bank” owned by the federal government brought in would have to come from the customers, namely the U.S. populace. And it is very likely this would end up a regressive source of funding.

12. tsg Says:
    June 17th, 2009 at 1:40 pm

    No mention of cutting military spending. Ugh.

13. chris Says:
    June 17th, 2009 at 1:51 pm

    Ironically, right below the article is a link exhorting the reader to “Support independent media with a tax-deductible donation.” (Of course, one big problem with donations is free riding – the problem taxes were invented to solve.)

14. DTM Says:
    June 17th, 2009 at 1:52 pm

    Matt wasn’t laying out an entire budget proposal, and he has discussed cutting military spending many times in the past. And the thing is, the amount of military spending that could plausibly be cut won’t be sufficient on its own to close the budget gap that Matt described.

15. chris Says:
    June 17th, 2009 at 1:55 pm

    @11: Surely no more regressive than what the banking industry already brings in from the same customers, and keeps for itself? Logically, it seems that a national bank would be equivalent, revenue-wise, to a 100% tax on the profits of banks. (Assuming no change in actual bank operations, which is the tricky part.)

16. James Robertson Says:
    June 17th, 2009 at 2:01 pm

    Good luck with that, since any higher taxes are going to be needed to pay down the absurd dead that the Dems and Obama are wracking up. We won’t have any options about better services; it’s all going to be about paying down. Because it looks like China isn’t interested in doing it anymore.

17. argusx Says:
    June 17th, 2009 at 2:02 pm

    This is why CA is in so much trouble. Everyone wants to spend and have lots of “free stuff” and great programs, but everyone wants someone else to pay for it. Good luck – raising taxes except on the 1-2% (which still may get a bunch of money) will ensure that the Republicans are back in a few years.

18. IKe Says:
    June 17th, 2009 at 2:21 pm

    There’s two options, abort the progressive agenda, or lie to the people about how much it costs

    nobody’s going along with tax hikes on middle class folks…thats how you get your ass voted out of office

19. Sam M Says:
    June 17th, 2009 at 2:51 pm

    “But starting in the late 1970s, political entrepreneurs on the right helped launch a broad “tax revolt” that completely changed the public’s view of taxation. Before, higher taxes were a price that one might or might not want to pay in order to finance an expenditure. ”

    Uh… what?

    I mean, America has a pretty strong tradition of strong, even violent resistance to taxation. Crafty right-wing operative might have built on that inclination, but they hardly invented it.

    After all, George Washington did not quell the Whisky Rebellion by extolling the way that taxation brings about a more equitable distribution of wealth. Nor did he promise better health care. He quelled it by raising an army and crushing people.

    To say that prior to the 1970s, “the American public” reacted to higher taxes by saying, “Oh well, I guess we have to pay for some expenditures” seems demonstrably false.

20. Bryant Woods Says:
    June 17th, 2009 at 3:29 pm

    Not that one has to look far to find right wing hypocrisy, but one of the most blatant examples is the “burdening our children with debt” whine. If we don’t want to do that, we simply need to have the good sense and courage to ask a little more from the most comfortable people who have ever lived on the planet.

21. low-tech cyclist Says:
    June 17th, 2009 at 3:36 pm

    Why not save the climate and health care at the same time, by using a healthy chunk of the revenues from auctioning off carbon permits under cap-and-trade to pay for universal health care?

22. DTM Says:
    June 17th, 2009 at 3:50 pm

    Surely no more regressive than what the banking industry already brings in from the same customers, and keeps for itself? Logically, it seems that a national bank would be equivalent, revenue-wise, to a 100% tax on the profits of banks. (Assuming no change in actual bank operations, which is the tricky part.)

    Tricky indeed. A “national bank” with access to cheap government capital would likely become a monopoly. Monopoly pricing would lead to deadweight loss and a transfer of consumer surplus into profits.

23. JD Says:
    June 17th, 2009 at 4:55 pm

    As a conservative I tend to view both taxes and spending as prima facie bad choices, meaning that it is the burden is on supporters of these things to explain why they are needed to a relatively high degree.

    That said, I do agree that if you are going to spend a truckload of money on health care, it would be nice to pay for it with something other than more debt, which means more taxes. So in the case that new expensive health care programs are put into effect, which seems very likely if not certain, then I would support new taxes to pay for them. Actually, my prefered policy in general would be reduced or stagnant spending combined with reasonably severe tax hikes across the board until we pay back the national debt. So I am pleased to see Democrats proposing policies that might have at least a neutral defict impact, even though I dislike the level of spending. And I agree that given the cost these will have to be taxes on everyone, not just 1% of the population.

    As an aside, I think that taxes should always be increased across the board and not just on some people. It is to easy for people to get on board for taking other people’s money and spending it. Across the board increases/cuts distribute the burden better which I think gets more fair results. This does not mean you cannot have a progessive tax structure, just that any given hike that ONLY hits certain people feels wrong to me.

24. JD Says:
    June 17th, 2009 at 5:01 pm

    Not that one has to look far to find right wing hypocrisy, but one of the most blatant examples is the “burdening our children with debt” whine. If we don’t want to do that, we simply need to have the good sense and courage to ask a little more from the most comfortable people who have ever lived on the planet.

    You are correct that one solution to national debt is higher taxes, and given the severity of the debt it is one that should be pursued. But that is no argument at all that Republicans are wrong to complain about large amount of new spending. New spending is something adds to the debt, so from a debt point of view new spending is just as bad as cutting taxes. Except that our history has shown that it is easier to raise taxes than to cut existing programs, as no matter how bad a program is the people who benefit from it will complain about it being cut far more than everyone else complains about the waste. So, since new spending adds to the debt and will continue to do so for long periods of time fighting new spending can be fairly viewed as doing more to help fight the debt then opposing new taxes does to hurt it.

25. judd Says:
    June 17th, 2009 at 5:52 pm

    Overreach! MY thinks that the populace of the US is now much more progressive than say, 4 years ago. It may be a little more left but not as much as he thinks. Obama arguably won on a tax cut for everyone who makes under $250,000, if that campaign promise is broken, it’s one and done for Obama.

26. Greg Says:
    June 17th, 2009 at 6:59 pm

    Sorry, Matt, but if you’re going to pay for Obama’s ideas and the requisite congressional bribes to get them passed, raising taxes on the middle or the poor won’t do shit other than destroy any middle we have left.

    You’re going to need either to borrow way more from the ChiComs or to use a wealth tax to clawback the shit that’s been looted over the last 10, hell, the last 25 years.

    Good luck getting that past Congress.

27. Njorl Says:
    June 17th, 2009 at 8:08 pm

    You’re going to need either to borrow way more from the ChiComs or to use a wealth tax to clawback the shit that’s been looted over the last 10, hell, the last 25 years.

    When it comes to funding measures with broad public benefit, a tax on a broad base is fine. But a huge chunk of our debt has been incurred by raiding the Social Security trust fund in order to offer the extremely wealthy very large tax cuts. When the time comes to pay that money back, it should come almost entirely from the very wealthiest taxpayers. That time is coming in aboutseven years.

28. Max424 Says:
    June 18th, 2009 at 2:44 am

    DTM

    The US customer has to bank somewhere DTM. Lately, like forever, they have been forced to do their banking at places that have systematically robbed them of trillions.

    I see a nice self replicating cycle. Money in, money out. Save some, borrow some. An entrepreneurs delight.

    Plus, nobody gets hurt, a lot of people benefit, and the US government doesn’t have to default and lay prostrate to world, which is important where I come from. We work together as a team. America!

29. Steve Sailer Says:
    June 18th, 2009 at 4:36 am

    Perhaps you should have published this article _before_ the election, when Candidate Obama was promising to magically cut the taxes of the vast majority of Americans?

30. yoyo Says:
    June 18th, 2009 at 8:34 am

    Lots of handwaving, no actual evidence. the top 10% get almost half the income in this country. That certainly can’t support a government that doesn’t break 20% of gdp! lets raise taxes on people in the middle.

31. DTM Says:
    June 18th, 2009 at 11:43 am

    The US customer has to bank somewhere DTM.

    This is somewhat true, although total banking activity isn’t a fixed quantity.

    And the result of monopoly pricing is output reduction, hence the deadweight loss. In banking, this loss would fall disproportionately on poorer people.