Monday, April 16, 2018
Los Angeles Times op-ed: Tax Policy Is a Bore, Until They Take Your Social Security and Medicare Away, by Edward D. Kleinbard (USC):
Procrastinators race to the post office on Tax Day to postmark their tax returns or file for extensions. Sensible people use Tax Day as a time to consider their financial picture for the year ahead. But this April, in light of how Congress radically rewrote our tax obligations for 2018 onward, Tax Day might also profitably serve as an occasion for citizens to contemplate the tax health of the nation.
This checkup requires examining both taxes and government spending. We quickly see that budget deficits — how much spending exceeds revenues — are extremely large and growing at a disturbing rate. The nonpartisan Congressional Budget Office estimates that the 2019 deficit will be just shy of $1 trillion. That is a roughly 50% jump in the deficit from its 2017 level — extraordinary, considering we're in good economic times.
Tax cuts do not pay for themselves — not the Trump tax cuts, nor in any other case in modern U.S. practice. So we face only two possible courses of action: Either we tax ourselves more, or we dismantle the social safety net (in particular, Social Security, Medicare and Medicaid) that protects Americans from destitution or disability. Which is the right direction for our country to pursue? ...
There is no law of economics that says record-low tax revenues are the prerequisite to a thriving economy. What we actually need, like it or not, are more tax revenues to fulfill our promises to support our fellow citizens. To do so does not require any radical ideas or bankrupting the middle class. We can raise several trillion dollars of new revenue over the next decade with some straightforward moves. ...
Tax policy is a bore, until they come to take your Social Security and Medicare away. Yes, our federal budget deficit trajectory is unsustainable, but the reason is not profligate or unexpected social spending. Tax Day is as good as any other to reflect soberly on the price our country will pay for systematically undertaxing itself.