The big ‘breakthrough’ of the day is the apparent willingness to put ‘revenue’ on the table in on-going tax, budget, fiscal cliff, whatever-the-new-name-is-today discussion. But only one caveat: they’re now willing to raise revenue, just not raise rates. This is silly.There is some argument we should also have tax simplification — both for fairness and efficiency reasons — fewer loopholes and deductions and so forth. But if the country needs more tax revenue we have a way to do that: raise rates. It’s the simplest and most efficient way to go about it.
Indeed, to the extent we’re legitimately worried that additional taxes will cut short or blunt the recovery, you want to focus those taxes on the highest earners because that’s where consumer demand will be affected least.
In order to have tax increases without raising taxes, Republicans are coming up with all sorts of bizarre, inefficient and hilarious proposals — like using existing rates for some people but apply them to the first dollar earned, something that doesn’t make any sense on basic economic principles or even fairness grounds. In other words, taking the chronic misunderstanding which so many people have about how marginal rates work, which make the system sound stupid and unfair, and making that the actual law.
We’ve been doing this for a century. When you want to efficiently raise revenues, you raise rates. A major simplification of the structure, rooting out all the miscellaneous loopholes and special interest deductions, is probably also a good idea. But that’s for fairness and efficiency. Not what you do if the federal coffers simply need more money.
Usually when people say they’re willing to raise revenues but want to do it by closing loopholes, they’re BSing you. And that’s most of what we’re hearing today. But I think we’re at the point where some of the Republicans making these arguments have gotten themselves so wrapped up in a ball of anti-tax verbiage that they may actually be ready to accept some bizarre Rube Goldberg approach to deduction caps which would raise something like the same amount of revenue as tax rate hikes. And that may be possible.
But at the end of the day, just clean your clothes. If you’ve got some weird hangup about doing the laundry you could keep buying new clothes after each wearing. Or you could use more perfume. Or you could socialize only with people with no noses. But at end of the day, just f’ing clean your clothes. And the same way, just raise the rates.
Anything else is just people in denial or bargaining from people who need to quickly move through all five stages and get to acceptance. Or a fight they need to have with Grover Norquist. Whatever the problem is, get into therapy, get over it and don’t inflict it on the rest of the country or the nation’s finances.
This is especially so since President Obama holds all the cards on the Bush rates. Just let them expire. Once they do, if Republicans really want to take it that far, come back on January 3rd with the new Obama Middle Class Tax Cut bill. The House can pass it or not.
But more than anything else, stop the nonsense. That’s for the couch.