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« How a few inches changed the Star Wars universe. . . . | Main | Reminiscing about Oklahoma City »

April 15, 2010

Comments

Matthew Lewis

We chatted a bit about this, but I figured I would add a couple thoughts, considering I blogged about this, as well. (Of course, I took the default liberal position.)

There are a couple things. Yes, in order to deal with the deficit, we should raise taxes on more than just the folks making 250k+. However, we should also do things that make the tax code make sense. As Yuan pointed out, loopholes abound, especially for the wealthy. In recent years, the effective tax rate on the top 1% has dropped while their share of the nation's income has skyrocketed. (In picture form.)

A flat tax, as advocated my many, would be highly regressive. The only way to make it close to flat in reality would be punitive taxes on capital gains and inheritance. The top rate may be 38%, but the capital gains rate is 15%, if memory serves. And top earners get far more from capital gains than wages. It's the suckers like me who make 99% of their income from wages who have to worry about income tax rates.

The whole situation would be a lot less murky if Congress would stop legislating through the tax code instead of actually creating programs with set budget levels.

Tung Yin

Well, apart from the problem with Yuan's accusing me of knowingly lying, which I think is incorrect, focusing on whether the wealthier receive more tax breaks through deductions and the like misses the point. Unlike the argument regarding other non-income federal taxes (and state income/sales taxes), which Darrelplant raises and which I think are relevant to the debate, whether the wealthy can deduct more of their income doesn't speak to whether the poor pay any federal income tax. Yuan's argument would be the relevant if the question were what Matthew raises, that being, if we're thinking about where to get more money via income tax, what should we go? And if that's the question, then I wouldn't dispute that there's very little you can squeeze from the poor.

But this is not an either/or situation. The skin argument is whether everyone should understood and feel *some* personal impact when taxes are raised to fund some new program. Presumably, one can be in favor of that yet also favor an increase that's progressive. Maybe at the very bottom end of the income curve, the tax increase (or rather, decrease in income tax credit/refund) is only $1. That's still skin in the game.

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