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Monday, April 25, 2011

Shared Sacrifice

Every budget concept to the left of Atilla the Hun Paul Ryan has as one of it's supposed good points the idea of shared sacrifice.  I am sick to the teeth of talk about shared sacrifice.  Here's Krugman.

The point is that we aren’t that heavily taxed, either by historical standards or in comparison with other nations. So if you’re truly horrified by the budget deficit, why not propose tax increases as part of the solution? 

Wait, there’s more. The core of the Ryan proposal is a plan to privatize and defund Medicare. Yet this would do nothing to reduce the deficit over the next 10 years, which is why all the near-term deficit reduction comes from brutal reductions in aid to the needy and unspecified cuts in discretionary spending. Tax increases, by contrast, can be fast-acting remedies for red ink. 

And that’s why the only major budget proposal out there offering a plausible path to balancing the budget is the one that includes significant tax increases: the “People’s Budget” from the Congressional Progressive Caucus, which — unlike the Ryan plan, which was just right-wing orthodoxy with an added dose of magical thinking — is genuinely courageous because it calls for shared sacrifice.

No, God damn it!  This is half-assed courage, at best.  I don't mean to disparage the Progressive Caucus, nor gainsay their plan, which is both reasonable and moderate.  But reasonable and moderate is not the same as courageous.  Nor is it particularly progressive.  Here are the revenue details.

Individual Income Tax Policies

• Allow the Bush-era tax cuts to expire at the end of 2012, but extend marriage relief, credits, and
incentives for children, families, and education
• Immediately rescind the upper-income tax cuts in December’s tax deal
• Index the AMT for inflation for a decade (the AMT patch is fully paid for)
• Schakowsky millionaire tax rates proposal (adding 45%, 46%, 47%, 48%, and 49% top rates)
• Tax all capital gains and qualified dividends as ordinary income
• Progressive estate tax (Sanders’ estate tax, repeal of Kyl-Lincoln)
• Limit the rate at which itemized deductions can reduce tax liability to 28%  for high earners
• Replace the tax exclusion for interest on state and local bonds with a subsidy for the issuer

Corporate Tax Reform

• Tax U.S. corporate foreign income as it is earned
• Eliminate corporate welfare for oil, gas, and coal companies
• Enact a financial crisis responsibility fee
• Financial speculation tax (derivatives, foreign exchange)
• Reinstate Superfund taxes

OK - in the corporate tax reform list, I do see some courage expressed.  But on the Personal income tax side, it's pretty damned weak tea.

A courageous plan would go back AT LEAST to the marginal rates we had in Reagan's first term.  As things stand now, there is little progressivity, and far too little revenue taken in.  I'm not saying we necessarily need to go back to 26 brackets, but some number up around a dozen can certainly be justified, as can a top marginal rate in the 60% range.

The main reason I've had it with shared sacrifice is that from at least the median income level on down, we've been doing our part for the last 40 years.  The great stagnation has resulted from large and continuously growing wealth disparity and the misallocation of economic resources that this dislocation has enabled.  To a large extent, all this results from the Reagan-era tax code changes.

Far from being the John Galt-like heroes of a vibrant capitalism, the wealthy elite are leaches who devote a great deal of time, effort and resources to squashing what little is left of the middle class.  You can see this playing out in Florida, New Jersey, Michigan, Ohio, and Wisconsin.

For anything close to shared sacrifice to occur, the wealthy will have to make up for 4 decades of taking it all.  A truly courageous plan would have that as its primary goal.

1 comment:

Jerry Critter said...

Shared Sacrifice to republicans means the bottom 95% sacrifice and the top 5% get to share the sacrifice.