Paul L. Caron

Monday, October 15, 2012

WSJ: Schumer to Tax Reform: Drop Dead

Wall Street Journal editorial:  Schumer to Tax Reform: Drop Dead:

The polls say voters want more bipartisanship, and one possibility in 2013 is tax reform that trades lower rates for fewer loopholes. Well, so much for that. The man who wants to be the next leader of the Senate Democrats has declared that this "old-style of tax reform is obsolete."

The antireformer is Chuck Schumer, the Senator from Wall Street, er, New York, who averred at the National Press Club last week that his party will have nothing to do with tax reform of the kind that Ronald Reagan negotiated with Democrats in 1986, or that the Simpson-Bowles deficit commission proposed in 2010, or that the Gang of Six Senators have been working on. It's Chuck's way or no way. ...

Mr. Schumer says the only way to reform is to broaden the tax base and raise tax rates. If you're wondering how this differs from a plain vanilla tax increase, good question. ... Mr. Schumer's real agenda is betrayed by his other reason for opposing tax reform—income inequality. The affluent simply make too much money, so they must have more of it taken away and redistributed by . . . Mr. Schumer. ...

Mr. Schumer's speech is best understood as a political marker no matter who wins re-election. If Mitt Romney wins, Mr. Schumer will browbeat any Democrat who even thinks about supporting a Simpson-Bowles-Reagan-style reform. If President Obama wins, the Senator will fight the kind of tax deal that House Speaker John Boehner has said he wants as part of a grand budget compromise. Who's the real partisan obstructionist?

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Ohio got it right: The upper middle class is very vulnerable to losing their deductions at the moment. Something like 24% of the AGI in this country is accounted for by the upper middle-class $100K to $250K per year. Those guys used to be the backbone of the Republican party, but now the GOP is run by the Teapartiers and the real moneybags. The upper middle class may count as "the middle class" when the Dems talk, but mostly they vote Republican. If Governor Romney is elected, and maybe even if he isn't, there is going to be a push to limit their deductions to pay for the tax cuts to the wealthy. I don't see the dems complaining about it very much.

Greg: How did the deficits happen? The three main causes of the deficits are, in order, 1. Reduced tax receipts caused by the recession. 2. The Bush tax cuts. 3. The unfunded wars.

Posted by: jimharper | Oct 16, 2012 11:59:23 AM

Does anybody think we will ever pay back that 16 trillion?

I’ll bet if the federal government had to pay credit card interest rates it would get someone’s attention. Let’s see, 19% on 16 trillion, that would be 3 trillion dollars we’d pay each year just to pay interest on the mortgage. Considering we currently take in about 2,6 trillion each year. Try just 6% interest, that would come to, whoops, 1 trillion each year for interest alone, leaving 1.6 trillion to pay for 3.6 trillion in annual federal government spending.

Gee, how did this happen. Well, we ought to be able to blame somebody. No, no need to blame anybody, just call the canary who dropped dead a liar. That amuses me. Hey, canary, there was plenty of oxygen, you just held your breath too long.

Posted by: greg | Oct 16, 2012 5:06:11 AM

Chucky (the Senator from Wall Street [and Stamford]) loves raising marginal rates on ordinary income, 'cuz his cronies make their money on the carry.

Posted by: OhioTaxGuy | Oct 15, 2012 11:31:28 AM