It's becoming a habit. The New York Times' chief economics writer David Leonhardt once again [1]
called for higher taxes in his column on the front page of Wednesday's
Times, especially on "the rich," in the name of deficit reduction (and
also because, hey all civilized countries do it). Wednesday A1, "Do-Nothing Congress as a Cure [2]."
It's as if tax increases were a mere technicality in any deficit-reduction plan. In reality, finding a way to raise taxes may well be the central political problem facing the United States.
As countries become richer, their citizens tend to want more public services, be it a strong military or a decent safety net in retirement. This country is no exception. Yet our political culture is an exception. It has made most tax increases, even to pay for benefits people want, unthinkable.
This is where the Bush tax cuts come in. They have created a way for inertia to be fiscally responsible.
They are scheduled to expire on Dec. 31 of next year, not long after the 2012 election. If Republicans win the White House and both houses of Congress, they will probably extend all the tax cuts, come what may for the deficit. If Mr. Obama wins re-election and Democrats control Congress, they are likely to extend the cuts on income below $250,000.
Leonhardt
labors under the liberal assumption that earnings are something
"received" by wealthy people, as opposed to being earned through hard
work or creative ambition.
If Mr. Obama wins re-election, he could simply refuse to sign any budget-busting tax cut for the rich - who, after all, have received much larger pretax raises than any other income group in recent years and have also had their tax rates fall more. Republicans, for their part, could again refuse to pass any partial extension.
And just like that, on Jan. 1, 2013, the Clinton-era tax rates would return.
This change, by itself, would solve about 75 percent of the deficit problem over the next five years. The rest could come from spending cuts, both for social programs and the military.
- Clay Waters is director of Times Watch [3]. You can follow him on Twitter [4].