(11-25-2009 10:34 AM)Owl75 Wrote: I certainly took the no tax increases below $250k to be regarding the federal income tax, not what the Republicans used to call "user fees" like the gasoline tax. But then I did not study that part of the debate much (at all).
I have agreed, since Perot suggested it in the 1990s, that increased gasoline taxes would be good for the USA, despite the regressive effect.
I don't think Obama was ever pressed for many details--not by McCain, not by the other democrats, and certainly not by the media. So I think "no tax increases" means whatever Obama wants to spin it to mean. That won't help the people who have less money to spend than they anticipated, but c'est la vie.
I do agree that gasoline taxes should be raised. The impact can be mitigated by at least partially offsetting it with tax cuts elsewhere.
As for regressive effect, there's an interesting article on pages 78-79 of this week's Economist, and an accompanying editorial up front, indicating that Europe's tax systems are much less progessive than ours, and suggesting that we are probably going to have to go to a less progressive/more regressive tax system if we want to see any economic growth.
Greg Mankiw's blog from a couple of days ago references a David Brooks column that talks about the tradeoff between equality and vitality, and suggests that we may be choking off our vitality to achieve equality. That's where Europe found itself in the 70s and 80s (which were pretty miserable times to be in Europe) and they ultimately hit on the VAT (highly regressive) and flatter, less progressive income taxes as the way out, hence the trend noted in the Economist article.
I like what I call the 15-15-15 approach that the former Iron Countries have pretty much all landed on, in some form of another. 15% business profits tax (on all forms of business, proprietorship, partnership, corporation), 15% payroll tax (like our social security but with no cap), 15% consumption tax (VAT/GST/"fair tax"), and no personal income tax (no 1040, no April 15). We could include a 30% Boortz-Linder prefund to mitigate the regressive impact, and that package would have balanced the pre-TARP/pre-bailout/pre-"stimulus" budget. This approach has been modeled and predicted to add 1-2% to annual economic growth over the current structure (the eastern European countries adopted it for that reason), as opposed to Obama's platform which has been modeled to reduce annual economic growth by 1-2%. For that kind of vitality differential, I think we can live with the equality consequences.
On top of that structure, I would put substantially higher excise taxes on every activity with undesirable social consequences--oil, tobacco, alcohol--and would set those taxes at levels sufficient to recover the social costs. I would also include marijuana, which I would legalize, but I'm not holding my breath there.
Perot had a lot of good ideas. He saw problems that we still aren't addressing. Hence the mess we are in, which will only get worse until we do address those issues.
