As president-elect Obama continues to move rapidly to designate team members and deal with the various aspects of our current economic recession, it is time for Americans to consider carefully the various tax proposals he has put forward. Which should be put into place, which delayed, which reconsidered?
CCH has put together a good overview of the various proposals that the Obama team has supported. it's available for download here: Download CCH. 120508. Tax-Brief_web_TADS
There have been suggestions of late that any "increase" in taxes--Obama's proposal to let the Bush tax cuts die for those above about $200,000--should be delayed because of the recession. Any further tax burden, the idea goes, might increase the difficulties of coming out of a recession. In fact, Obama suggested that would be his policy as far back as early September. See this post on the Huffington Post.
I don't think I agree. I still think that most Americans who are making more than $150,000 are well off and could carry a slightly heavier tax burden, perhaps especially in times of economic distress. With more tax revenues, the government could pay for even larger public infrastructure projects or could extend more significant assistance to low-income taxpayers, thus helping rather than hurting the economy.
Robert Frank agrees: Why Wait to Repeal Tax Cuts for the Rich?, New York Times, Dec. 7, 2008. Frank points out that it is unlikely that letting taxes go back to the 2001 level for high-income Americans will have a negative impact on the economy. The main effect, in fact, would be a good one--they would have a little less left to bequeath to their heirs in the future.
With few exceptions, high-income taxpayers earn substantially more during their lifetimes than they spend, generally bequeathing the surplus to heirs or charities. If these taxpayers faced slightly higher rates, they would have ample resources to maintain their current lifestyles, so most would keep spending as before. The only consequence would be that, years from now, they would leave smaller bequests. Id.
Couldn't disagree with you more.
1. Those making over 150k already pay a substantially higher tax.
2. To assume you know everyone making over 150k is well off and can pay more is nonsense. You have no way of knowing their personal circumstance. Regional differences make a huge impact on how far 150k goes. There is also a big difference in a family making 150k and someone making 150 million, yet the tax proposal is the same.
3. Perhaps most importantly, it is not your business or right to decide how to spend someone else's money. We have gotten so used to the government taking our money before we even see the check, we forget it is first ours.
Posted by: Kate | December 17, 2008 at 06:28 AM
Kate, I couldn't disagree with you more.
The upper 20% in this country probably do not now pay a full share of the tax burden. Not everyone is in the same circumstances, but tax has to be a "rough justice" system. If average families are making do on less than $50,000 a year, then it is fairly safe to say that those making three times that much or more are more able to bear the burden of taxes.
Now, I'd be very supportive of a proposal to increase the marginal rate on multimillionaires--maybe the rate should go up at least 1% for every $500,000 in additional income (without a capital gains preference).
Your point 3 is truly problematic. We only have what we have because we are part of a sustainable economy with a system of stable relationships. We have to each contribute to make that possible, and that is what taxes do. In a real sense, the government is entitled to a share of whatever we earn, else we wouldn't be able to earn it in the first place.
And it is most emphatically everybody's business what a reasonable rate of taxation is. Imagine living in an anarchic land where there was no public infrastructure, no safety nets, no educational opportunities for the poor--we'd have poor houses contrasted with manicured estates of the wealthy. No thanks. That isn't America.
Posted by: LindaMBeale | December 17, 2008 at 01:06 PM