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Saving Private Billionaire

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This, I've come to understand, with the help of two very interesting and apt articles -- here and here.

I've written several times now today on this issue of Republicans' stonecold refusal to consider hiking top marginal tax rates -- or rather simply allowing them to move back to the Clinton era rates as current law stipulates -- even as they claim to be (and maybe even are) willing to raise additional net federal tax revenue and focus the increased tax bite on high income earners.

I engaged in a conversation today with a very knowledgable libertarian who is pushing the cutting deductions approach -- a point I'll come back to in a moment. But as I noted earlier, even if you can find some of the money through curbing deductions, why all the complexity? Why all the crazed effort? If you really want to raise revenue and focus it on the people with the most income and wealth, My God, what's easier than just a modest hike on the highest bracket? Especially when ... this is actually the current law. It's easy to pass since you don't have to pass it. Not only is the most straightforward and effective approach. It's already the law.

Beyond denial and demand to defuse another hostage crisis -- now with congressional Republicans insisting that Democrats need to ransom them from Grover Norquist with some cockamamie plan to cut your hair with something other than a scissor -- what we now seem to have is an effort to stand up the upper middle class, the wealthy and even the super wealthy as what Billmon calls a "human shields" to protect the fantastically wealthy (Mitt Romney) and even the phantasmagorically wealthy (Sheldon Adelson).

But back to my brief exchange with the knowledgable libertarian. Just why are we going to all these lengths to avoid a modest hike in the highest tax bracket which would merely take us back to the status quo of the 1990s? His argument went thus: Eventually we're going to have to raise the highest marginal rate. But it's going to take a few years of fiscal reality to get the country's finances in order. 2013 is just going to be the first installment. (This is certainly true.) There are going to be a couple more at least. If we let the top bracket go from 35% to 39.6% now we're going to come back to this well at least a couple more times. And if we do, the top rate will get hiked a couple more times and end up being higher than 50% by the end of the process.

In other words, let's avoid touching rates as late into the process as possible because then we'll be able to keep them as low as possible. If you believe on principle in keeping marginal rates as low as possible, there's a certain strategic logic to this, though given everything we've seen over recent years I do not find it credible that we're going to see the top rate even approaching, let alone exceeding 50%.

So again, how do we angle this to keep the truly, magnificently wealthy as whole as possible?

Speaking for myself, I'd always like to keep tax rates as low as possible. Not just on principle. Despite what some folks say about feeling patriotic when they cut the check, I find it painful. So my rates as low as possible, your rates as low as possible ... so long as we can pay for the country's critical needs and not drown in debt. By that measure we undoubtedly need more revenue and sound economics and simple fairness come together in saying we should start at the very top in getting those extra dollars.

So, again, just raise the rates. Unless you were hanging out in Bosnia or Rwanda, the 90s just weren't that bad.