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Tuesday, July 26, 2011

Isenbergh: Last Chance, America (To Raise Taxes -- Substantially, and Soon)

Joseph Isenbergh (Chicago) has posted Last Chance, America on SSRN. Here is the abstract:

This essay addresses the current fiscal situation of the U.S. economy – in particular the federal budget deficit and mounting public debt. The essay argues that the most urgent step to be taken is to raise federal taxes, despite the possible dampening effect on short-term growth (which can be palliated in other ways). Failure to raise taxes substantially, and soon, will greatly compound the harm to the U.S. economy from the profligate fiscal policies of the past decade.

http://taxprof.typepad.com/taxprof_blog/2011/07/isenbergh.html

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Comments

Do what I say or I'll take my ball and go home.

Posted by: mike livingston | Jul 26, 2011 3:33:38 AM

Why is it that the first, last, and only liberal solution to a problem is to raise taxes?

That is like trying to cure alcoholism by giving free booze to drunks.

Or am I missing something?

Posted by: Dr. K | Jul 26, 2011 5:05:54 AM

I read this twice thinking it must be a satirical piece.

"The essay argues that the most urgent step to be taken is to raise federal taxes, despite the possible dampening effect on short-term growth (which can be palliated in other ways)."

President Obabma has been attempting to palliate unemployment for the last two plus years. Hows that working out for you? Presumably increasing taxes will also increase tax collections (not always the case) and the increased tax collections will be devoted to deficit reduction. None of the increased taxes will go toward spending or palliation.

As Orwell said some ideas are just so stupid only an intellectual could believe them.

Posted by: Ed D | Jul 26, 2011 8:06:47 AM

That leaves two people, both from Chicago, saying that the debt ceiling increase requires higher taxes. The problem is the spending.

CNN: Obama still talking taxes - Gloria Borger says President Obama is the only one still talking about tax increases, and Sen. Reid's plan doesn't.

Posted by: Woody | Jul 26, 2011 10:20:31 AM

Reducing short term growth permanently reduces long term growth, that's how compounding works. Let's not reduce growth, its the best answer to all our problems.

Posted by: Yo Gabba Gabba | Jul 26, 2011 11:40:23 AM

The University of Chicago Law School. The gift that keeps on giving.

"I say we take off and nuke the site from orbit. It's the only way to be sure."

Posted by: Walter Sobchak | Jul 26, 2011 12:23:31 PM

The problem is 1) the Bush tax cuts that opened the Treasury to the wealthy and Obama and the Dems were too guttless to let lapse. 2) the lies fed by the Right that taxes are not the cost of Democracy but an evil to be resisted at all costs. That there is a free lunch and we all deserve it. Let someone else pay. And 3)The Republicans pandering to the far right to gain some sort of traction after the debacle of 2008. When you sell your soul to the devil you have to dance to his tune. The solution: find some guts, shelve the Tea Party idiots and get the moderate Reps and Dems together to craft a balanced plan of repealing the Bush Bonanza and cut spending across the board. Balance it like it was balanced before the Republicans were given the keys in 2000.

Posted by: George W | Jul 26, 2011 12:35:14 PM

Clinton era rates were hardly some insult to the workers of America, and spending isn't actually up - SHARE of spending compared to the overall GDP is up, but that's only because the overall GDP is down.

Taxes need to go up, fast, or the deficit will be a huge problem for decades to come. I don't understand why the math seems to confuse so many otherwise smart people. I'm not even a math person and it seems pretty clear.

Posted by: Liz | Jul 26, 2011 12:56:34 PM

Liz- Absolute spending is definitely up over the Bush/Obama years. By a lot.

Also, simple math lets you curb a deficit and reduce a debt by cutting spending, by increasing revenues or some combination of both. Neither the GOP or Democrats propose cutting spending, just the growth of spending. The Democrats are proposing to raise taxes a little, but not a material amount. Both parties want to borrow over $1,000,000,000,000 in FYE 2012.

Posted by: Yo Gabba Gabba | Jul 26, 2011 5:20:17 PM