Tuesday, January 29, 2013
Edward McCaffery (USC) presents Bifurcation Blues: The Problems of Leaving Redistribution Aside at NYU today as part of its Colloquium Series on Tax Policy and Public Finance convened by Daniel Shaviro (NYU) and William Gale (Tax Policy Center; visiting at NYU):
Update: Dan Shaviro blogs the workshop here.
In short and in sum, the strategy of bifurcation, so elegant and attractive in theory, has been a disaster for advocates of greater redistribution in practice. Now it seems as if the redistributive ship has sailed. Politicians faced with a status quo largely of their own making – illustrating the importance of agenda setting and timing in politics7 – now joined and encouraged by the media and many academics, are considering more changes that will not add much if at all to furthering the goal of economic equality, and certainly will not address wealth inequality. Fiscal policy in times of crisis tends to pit the middle class against the poor, with middle-class tax increases – such as the national-level consumption or valueadded tax (“VAT”) that seems to be slouching ever closer towards us – being needed to save entitlement and other spending programs that help all, including the poor. The changes get scored or perceived as “progressive” because the middle class has more economic resources than the poor. Meantime, the rich get left off the hook – and the really rich stay off it altogether.
If we are serious about changing this situation – and there comes a time when we might just have to admit that we are not serious about doing so – it is time to change the way we do things, fiscally, beginning with the way we think about things. We need a cure for the bifurcation blues.