My Tax Burden, In Detail

[tongodeon]

Democrats are high taxing, high-spending liberals who raise taxes. Republicans cut taxes because they don't have a big government to pay for. That's the conventional wisdom, anyway. And every year around tax time, some people bitch about how much this President or that President spends on taxes. Recently the Tea Party Movement in particular are up

Comments

[tongodeon]

There's also an argument to be made that we have not yet seen what Obama can actually do with regard to raising taxes because he's only been in office a year, and in fact the current tax policies are a holdover from the Bush era. Perhaps Obama intends to raise taxes dramatically and has just not gotten around to it.

It is all but certain that this will happen. Now that the recession is "over", people who are good at math are shifting policy from away from stimulus and toward deficit reduction. Deficit spending is fine in the short term to get yourself out of a financial hole, but you don't want to run your economy on it long term.

Obama has put together a "nonpartisan deficit commission" so that someone can say what is politically impossible to admit otherwise: we need to start paying down the debt with a combination of cutting spending and increasing taxes.

So yes, I actually expect that taxes will increase dramatically since the math says they must under either party. I also expect that the teabaggers will focus on the tax-raising part and not the deficit-reducing part.

[mmcirvin]

What worries me is that Robert Reich keeps saying that it's too early to do this and we still need more deficit spending than Obama is willing to countenance, or else the economy is going to stay down for a very, very long time, probably long enough to sweep Republicans back into total control for another round of ruination.

And I think he might be right, just because of the example of the Great Depression. When the country had started to climb out of the deepest, early part, FDR started trying to cut the deficit and there was a nasty recession. And what really ended it was World War II--not because war has some magic vital power, but because it provided an excuse for deficit spending far beyond anything we can really imagine today, going by fraction of GDP (paid for in subsequent decades by high-end marginal tax rates really far beyond anything we can imagine today).

And yet it's absolutely true that stopping a stimulus program once it's started is a painful thing, with a disincentive to do it even though eventually it has to be done. Obama and the administration seem to have thought this through; it's just a question of whether they've got all the parameters right, or right enough.

[ikkyu2]

IMO: Inflation, the invisible tax, will do Obama's job for him, pace the appropriate fiscal policy, which shows every sign of being ready to be put into place at the appropriate time.

[tongodeon]

I'm not sure what the above sentence means. There seem to be three extra clauses and I'm not sure what they're modifying.

[ikkyu2]

He won't need to raise taxes. Price inflation will triple the GDP and triple people's incomes, hence tripling the amount of income tax collected, over 10 years. Meanwhile the size of the national debt remains intact. This was how the game was played in the 80's. It crippled net holders of Treasuries, which at the time was Japan, who had been playing a 'let's ship cheap exports to USA in exchange for massive Treasury holdings' game. We're about to pull the same stunt with China, which is what all this nuclear brinksmanship in various parts of the world is about. You'll recall that in the 80's the nuclear brinksmanship role was played by Russia. Same game, just the players are different.