Via Ezra Klein
Perhaps the most consequential argument happening in the Republican Party right now is whether a “tax increase” isanything that increases total government revenues, even if those revenues come from closing tax breaks, or whether it means raising marginal tax rates. If the former, there’s a deal to be struck on the deficit that pairs spending cuts with new revenues that come from cutting tax breaks and closing loopholes. If not, well, not. Grover Norquist has been leading the charge against this kind of deal. He says that closing loopholes and ending breaks is only acceptable if the new revenues are immediately plowed into further tax cuts. And today, in an important test vote, he lost. Big
One of the things I’ve noticed is that is gets very difficult to even have a normative opinion on these matters once you start thinking about them in a positive way. It seems almost inevitable to me that tax revenues in the United States will rise substantially over the medium term and so caring about it one way or the other seems pointless.
Its like caring about whether the sun will rise.
There are details to be worked out of course but the basic outline is there. I am betting on VAT, but think the GOP would do better to argue for expanding the payroll tax. Slight chance for a millionaire’s tax bracket and other soak the rich measures but I am doubtful at this point.
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Wednesday ~ June 15th, 2011 at 9:14 am
There Will Be Taxes, Ctd « Modeled Behavior | | The Money BooksThe Money Books
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Thursday ~ June 16th, 2011 at 7:52 am
jsamples
“Its like caring about whether the sun will rise.” I hear this from economists all the time. The profession as a whole has a lot tied up in becoming a physics for society. However, an extremely effective strategy would be to claim that your normative commitments have the same epistemological status as the sun rising in the morning. You don’t even need to argue your political agenda: it simply is and the other side should surrender. Here’s the problem for the rest of us: how can we tell when an economist is simply dressing up their normative commitments as facts and when they are telling how the world is, really? Keep in mind this question is answered in a world where the authority of everyone in authority has been increasingly questioned and doubted for four decades. Here’s one possible answer: does the economist in question ever identify facts that run counter to his normative commitments?
Sunday ~ June 19th, 2011 at 2:23 am
Joe Eagar
Yeah, I have noticed a change on the right on tax policy. Republican elites still have nightmares about Elder Bush’s tax hikes–and how Democrats took advantage of them. However, in the past six months or so a small measure of sanity has started to break out. They’ve realized, this time is really different. It is mathematically impossible for new revenue to be used to fund expanded federal spending.
More and more, the argument is over the level of federal spending (where it belongs) and not specific tax proposals; I think pretty much everyone agrees now that ‘starving the beast’ is implicitly a pro-spending viewpoint–it simply shifts spending into the tax code.