Here is the dialogue, as I imagine it, between the two policy wonks —
the Moderate Obama and the Liberal Obama — struggling for control of the
president’s soul. ...
MOD: According to the Tax Policy Center, if we cap itemized deductions at $50,000 and keep tax rates as they are today, we’d raise $749 billion in tax revenue over 10 years. And 96.2 percent of the extra revenue would come from the top fifth of taxpayers, with 79.9 percent from the top 1 percent.
LIB: I have a couple of concerns about that.
LIB: First, if you limit deductions, people in high-tax
states will be hit particularly hard, because state and local taxes are
MOD: Isn’t that fair? I don’t see why states and towns
that choose to have very high taxes should be subsidized by everyone
LIB: These states generally have liberal agendas, which
I want to encourage, not penalize. And many of them, like New York and
California, vote Democratic. After they helped us win such a great
victory, I don’t think we should be asking our allies to bear a
disproportionate share of the burden....
LIB: We can both broaden the base and raise the top tax
rates. The economist Peter Diamond, whom we tried to appoint to the
Federal Reserve, has calculations suggesting that the top tax rate should be 73 percent. That is close to the 75 percent rate that President Hollande of France is now pursuing.
MOD: Are you nuts? I don’t want to become France.
LIB: We don’t have to go that far, but we can go higher than where we are now. California just created a new tax rate
for married couples earning more than $1 million a year and singles
earning more than $500,000. Maybe the federal government should do the