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Monday, November 28, 2011

Paul Krugman: Things to Tax

New York Times op-ed, Things to Tax, by Paul Krugman (Princeton University):

Why should 1990s taxes be considered the outer limit of revenue collection? Think about it: The long-run budget outlook has darkened, which means that some hard choices must be made. Why should those choices only involve spending cuts? Why not also push some taxes above their levels in the 1990s?

Let me suggest two areas in which it would make a lot of sense to raise taxes in earnest, not just return them to pre-Bush levels: taxes on very high incomes and taxes on financial transactions.

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Comments

How about an excise tax on silly editorials?

Posted by: Jake | Nov 28, 2011 12:23:43 PM

Nah. He makes a valid point. Good or bad, the increased concentration of wealth means that its possible to raise significant sums of money without raising taxes on the middle class. It wasn't like that through the 70's. A financial transaction tax would probably lessen volatility in the stock markets.

Posted by: jim harper | Nov 28, 2011 6:53:24 PM

Progressive Thanksgiving Prayer: Blessing of the Taxes

This year's secular Thanksgiving prayer was written by the People's Economist Professor Kurgman, PhD,PhD,PhD.

Let me, Dear God, shift the paradigm on this Thanksgiving and blissfully give thanks for the gift of government, and thank the government for the gift of taxes. Bless my taxes, O God! Give me peace of mind as I rejoice in filling out forms and returning money to its rightful owner, the government. ...We need a strong government to take back from the rich few and generously give to the many! Lord my God, please put the brakes on commerce, remove all profits from the pigs who "produced" it, and turn it all over to those who deserve it. ...May your blessing rest on my Form 1040, dear Lord, and may my taxes well serve you and my fellow citizens! Amen.

Posted by: Woody | Nov 28, 2011 9:49:26 PM

I think Jim is long volatility. Narrowing the tax base even further will only increase fiscal volatility, as CA's experience shows: relying on taxing the proceeds from volatile capital gains (which is essentially where most of the offensive inequality comes from). Broadening the tax base to include essentially everything works for a while, but as Europe's fiscal crisis shows, at some point even this strategy runs out of people and money. A financial transaction tax (when not driving financial transactions offshore) may reduce trading volume, while most certainly increasing the price jumps between trades. I think that is an important factor in calculating the variance and skew of price returns.

Posted by: MG | Nov 29, 2011 6:44:13 AM

Contrary to many of the posters here stricken with apoplexy, Krugman's dual proposal is eminently sensible and should be implemented as soon as possible.

Posted by: Anonymous | Nov 29, 2011 6:56:38 AM

Maybe Krugman could pay tax on one of his three residences (per New Yorker).

Posted by: mike livingston | Nov 29, 2011 8:05:26 AM