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Krugman begins: "The supercommittee was a superdud - and we should be glad. Nonetheless, at some point we'll have to rein in budget deficits. And when we do, here's a thought: How about making increased revenue an important part of the deal?"

Portrait, New York Times columnist Paul Krugman, 06/15/09. (photo: Fred R. Conrad/NYT)
Portrait, New York Times columnist Paul Krugman, 06/15/09. (photo: Fred R. Conrad/NYT)

Things to Tax

By Paul Krugman, The New York Times

28 November 11

The supercommittee was a superdud - and we should be glad. Nonetheless, at some point we'll have to rein in budget deficits. And when we do, here's a thought: How about making increased revenue an important part of the deal?

And I don't just mean a return to Clinton-era tax rates. Why should 1990s taxes be considered the outer limit of revenue collection? Think about it: The long-run budget outlook has darkened, which means that some hard choices must be made. Why should those choices only involve spending cuts? Why not also push some taxes above their levels in the 1990s?

Let me suggest two areas in which it would make a lot of sense to raise taxes in earnest, not just return them to pre-Bush levels: taxes on very high incomes and taxes on financial transactions.

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+16 # LessSaid 2011-11-28 11:10
Okay Krugman, 80% of the 99% might agree with you, but we would have to have a revolution to get it done.
+23 # Reductio Ad Absurdum 2011-11-28 12:14
Then let's have a revolution — the sooner the better.
+10 # BradFromSalem 2011-11-28 13:18
The Revolution is not being televised.

Support Occupy. Refute the lies that are being televised. Read 1 Occupy article a day. Occupy if and when you can. Donate food, supplies, money.

The Revolution will not be televised, it IS being Occupied.

Gil Scot Heron
(Thank You and Rest in Peace)
+1 # tishado 2011-11-28 19:58
Quoting LessSaid:
Okay Krugman, 80% of the 99% might agree with you, but we would have to have a revolution to get it done.

Really? Krugman is talking about mild, moderate tax reform. A revolution is a complete overturning of society. You can argue a revolution is necessary, but you have modest changes in tax policy without a revolution. Let's reserve the idea of a revolution for the really big changes, like guaranteeing that everyone will be taken care of, peace, and social justice.
0 # RLF 2011-11-30 07:41
Seems to me that a revolution is the only way we will change the money in politics problem.
+4 # BradFromSalem 2011-11-28 12:13
Since most would agree that the 90's were a prosperous era, I think the Clinton tax rates are a good place to start. We should include a provision that adjusts those rates and brackets based on the current state of the economy.
In bad times, we need more brackets and a steep top bracket. The bottom bracket that pays no income tax is determined by the cost of living. Which also is the basis for the minimum wage. In good times, the rates flatten out until the economy starts to swing the other way.
Over time the rates will settle into a state of equilibrium. User fees, transaction and sin taxes would be minimal, a tool of fine tuning the economy.
Then, we turn to cutting back on expenses. We can prioritize cuts based on the asshole rule (cutting a retiree's medical care is being an asshole).
The way DC is cutting now is assholes in front. First cuts violate the asshole rule because "that is where the money is". Raising taxes is the equivalent to the plague to the Grover Fraternity. All commonsense and human decency are thrown out the window, because persons that cannot perform 4th grade math, and who flunked (or never took) Macro economics 101 are making economic decisions. They base their policy on what their great grandpa did. By the way, Grandpa only got to the 3rd grade and running a household is not macro economics.
+5 # AndreM5 2011-11-28 12:34
Why a revolution? The vast majority agree we need to eliminate ulimited corporate campaign contributions. Difficult but the electorate are ready for that.
0 # CandH 2011-11-28 12:39
Come on Krugman. Get a spine. You still believe that TBTF is okay?

How about we REGULATE financial transactions FIRST, BEFORE we decide that financial transactions should be taxed, cause we might want to actually kill derivatives once we see what the hell they are doing to our sovereign economies? That way, we'll actually KNOW what there is in the kitty of financial transactions too (ie black market derivatives are completely unregulated and hidden from the 99% view, and accounting fraud, including the auditing corps, are widespread Enronesque rampant--how ya gonna tax all that, that is totally made up/hidden sh*t at the moment?

And what of the offshoring of corp revenues, including the MICs, the pharma/medicalI Cs, banks/insurance s, techs, etc etc etc? CUT THE TAX LOOPHOLES/OFFSH ORING FOR ALL CORPS! AND THE INDIVIDUAL 1% TOO!

(Krugman...take off the shackles NOW...)
0 # BradFromSalem 2011-11-28 13:11
The subject was taxation.

I tend to agree that taxation is frequently an over stated force in changing the behavior of people or corporations. And, as you point out it may have the exact opposite of the desired effect.

Nonetheless, regulation is the major component of bringing about equality in our financial system, but only a piece of the puzzle plaguing the country's financial problems.
+1 # Texas Aggie 2011-11-28 14:34
You missed the point. There is nothing stopping anyone from regulating transactions. Taxing them is a whole different story. Remember that it was financial incentives, not legal requirements, that got some of the air pollution straightened out.
+5 # BradFromSalem 2011-11-28 16:10

Not sure if your comment is directed to me, but you do bring up a point that needs clarification.

Generally, tax breaks are intended as a financial incentive. Conversely, taxes when levied against a "sin" such as smoking and drinking are intended to work as a disincentive.

Correct me if I am wrong, but the strength of the financial incentives that helped reduce air pollution was fines for non compliance with regulations. These are not the same as taxes. It is a very valuable tool for enforcing regulation.

All it takes is one corp. to go bankrupt paying a fine to bring about full compliance! (Boy would I LOVE to see that in Banking)
0 # RLF 2011-11-30 07:54
How about loss of protection of executive personal income from being pulled into any fraud at a bank. That way the CEO would make sure everything is in order to protect his big bucks!
0 # CandH 2011-11-28 19:24
No, I covered taxation. You missed it.

Yes, there is nothing stopping anyone from regulating transactions, except Congress, the President, and Krugman (and all others that emphasize specific concentration on taxation of "whatever," versus any discussion of regulation of "it all.")

These aren't mutually exclusive arguments. They are pivotal and critical to actually GET TAX REVENUE from said transactions. You missed that.
+7 # mwd870 2011-11-28 12:45
Taxes on financial transactions and the very wealthy are rational suggestions. Congress also needs to address real reform of the tax code. In addition, tax the billions (or is it trillions?) given to the banks by the Fed. Secretly.

Cut military spending; otherwise I don't want to hear about spending cuts until the money given to the big banks is recouped in some way.
+10 # capnDave 2011-11-28 13:14
How to save Social Security and Medicare. It is so simple.
Get rid of the "ceiling". Make the rich pay the same rate
as the poor. The Republicans will fight it, of course, but
get the issue out there. How much of the voting public
is aware of its inequity.
+4 # LessSaid 2011-11-28 14:35
Having a "ceiling" is purely a giveaway to the rich. They want to be rewarded for making more money and want those punished who make less. It's a system of favoritism and unfairness.
0 # RLF 2011-11-30 07:56
The self employed pay at a higher rate than corporate employes...that needs to change.
0 # Granny Weatherwax 2011-11-28 14:28
Reducing the deficit is obviously the right thing to do, but there might be unintended effects in that the government deficit is compensated by incurring debt, i.e. issuing government paper that gets resold by the Fed to the major banks who can then use it as reserve, extending credit based on it.
One consequence of decreasing the government debt would therefore be that the available monetary base would shrink, which is not good for the economy.
However I am not advocating for going deeper into debt, of course. The whole SNAFU comes from the fact that the government bonds incur interests while the money lent by the major banks through the (private) Fed does not.
Since the currency is debased (i.e. no gold standard, it is floating) the problem's solution starts with the govt issuing its own US notes instead of borrowing at intrest to print Federal Reserve Notes backed bu the US govt fiat.
Borrowing one's own fiat at interest is, well, stupid.
As William Jennings Bryan said 100+ years ago: the banks pretend that issuing paper money is their turf and the governement should get out of the banking business, while he claims that issuing any money is government business and the banks should get out of the governing business.
+2 # Texas Aggie 2011-11-28 14:31
The argument that taxing the ultrarich more than the common people won't generate enough income to matter kind of falls down when you look at it, even if it were true.

Taxing me anything won't even make a dent in the deficit so why should I be taxed? Tax everyone else instead.

If that argument makes sense to you, then you must be one of the ultrarich.
+1 # Pufferly 2011-11-28 16:36
We have an ultra-progressi ve running against a Blue Dog.
Taxes? Yes, the rich, corporations not paying, financial transactions and CONSUMPTION, but not wages of workers. Tax consumption of those things that are killing us.
+5 # Rick Levy 2011-11-28 18:22
Krugman's suggestion boils down to just one word: Fairness.
0 # Charles3000 2011-11-30 08:07
A progressive tax on high incomes is a morally acceptable method of providing stability to an economy by way of negative feedback and negative feedback is needed to stabilize any system. It worked half a century ago here in the USA. The capitalist "purists" extol positive feedback to "grow" an economy and it does work however without any countering negative feedback, positive feedback invariably results in an unstable system characterized by oscillations or "ups and downs". An example of a morally unacceptable negative feedback that would obviously have the effect of stabilizing an economy is having unemployment wages paid at a higher rate then average employment wages. The unemployed with greater incomes and more time to spend the income would buy, increase demand and thereby stimulate production and an increase in employment thereby bringing the system into balance. Therefore a good message is that a high progressive tax is needed to bring stability to the economic system. The position can be proven by history and on paper using well established control theory.

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