Tax receipts are on pace to drop 18 percent this year, the biggest single-year decline since the Great Depression, while the federal deficit balloons to a record $1.8 trillion. Other figures in an Associated Press analysis underscore the recession's impact: Individual income tax receipts are down 22 percent from a year ago. Corporate income taxes are down 57 percent. Social Security tax receipts could drop for only the second time since 1940, and Medicare taxes are on pace to drop for only the third time ever. The last time the government's revenues were this bleak, the year was 1932 in the midst of the Depression.
The same story quotes Eugene Steuerle - a former Treasury Department official in the Reagan administration who is now vice president of the Peter G. Peterson Foundation:
Our tax system is already inadequate to support the promises our government has made ... This just adds to the problem.
While it is true that Federal fiscal policy needs to regain long-term fiscal sanity, which was basically ignored during the Bush43 years, lamenting the fact that tax revenues have declined during the current recession strikes me as Hoover economics. Short-term stimulus with a credible commitment to long-term fiscal sanity seems to be what the current Administration is striving for – and that makes sense to this deficit hawk.
I still don't buy that raising marginal tax rates now, not later, will tank any recovery.
ReplyDeleteThere are other factors far more important to the size and duration of any recovery.
But by starting an important process of paying our bills, beginning immediately, will have a real positive impact on markets.
I agree totally. According to all the data I can find, there has never been any time in history since 1913 (I didn't look before that) that an increased tax rate on high marginal incomes has produced a dip or recession in the GDP. NOT ONCE.
ReplyDeleteIn 1993 the Democratic Congress increased the rates on higher incomes and the result was a steady growing economy in spite of the Greenspan increase in interest rates in 1994.
I have to disagree.
ReplyDeleteFirst, any taxes raised will not go to paying off the debt - which will never be repaid - but will go to expanding government.
I know this sounds like a conservative argument, but I am not a conservative. Rather, I would point out the trillions which have been wasted on military operations over the past 7 decades - most recently in Iraq and Afghanistan, where military expenditures rose 13 percent in the last quarter.
Your lack of courage in facing this issue is telling.
Second, the more we are taxed, the longer we have to work to offset those taxes. The chief result of increased taxes AND increased public debt is the subjection of millions of working families to ungodly long hours of work which are neither materially necessary, nor conducive to the social well-being.
Third, any increase in taxes on businesses, the wealthy, or others ultimately get passed on to ordinary working families. It is the one part of our economy where trickle down actually works.
For these reason, I think progressive should join conservatives in "starving the beast" - as they put it - by opposing any increase in taxes. We should call their bluff, and see who hollers "Uncle!" first. Once it becomes clear that income taxes are insufficient to make good on treasury notes, I do believe conservative will see the light...