Dave's Verse

Reading yet another post on the fiscal curb and the deficit "problem" got me thinking about what both sides want. This whole issue is ridiculous. It was created by Republicans in the House to make Obama look bad and to get lower taxes. Up until now I've agreed with Obama's preference to raise marginal tax rates on income at 250k and up. The problem in these fiscal curb negotiations is that Republicans really, really don't want that. If there is one thing they are consistent about, it's that they want to lower taxes on the rich. So how do we get a deal given these constraints? Obama wants to raise taxes on the rich in order to help lower the deficit. But I don't care about the deficit right now. So even though I'd like to raise taxes on the rich in principle, I'm willing to give that up. I'm not sure if Obama is willing to give that up for things like extension of unemployment benefits or extension of a payroll tax holiday. But I would. If he ...

With the "fiscal curb" (it's not a cliff) being the big topic in DC we are talking a lot about taxes. We always talk a lot about taxes, at least Republicans do. They are important. But they are overhyped, especially if you are talking about economic growth. Matt Yglesias explains : The case against returning to the kind of 90 percent marginal income tax rates that we had in the 1950s seems pretty ironclad to me—the 1950s tax code raised way less money than the 1990s tax code (90 percent tax rates are a great stimulus to tax avoidance strategies) so what would the point be? But there's no doubt that tax rates that high were compatible with robust economic growth. This is a somewhat embarassing fact for people who put a lot of emphasis on low marginal tax rates as a key to growth. ... The argument here, which certainly makes sense, is that the postwar US economy grew fast not because of high tax rates but despite them. But Lindsey locates the true cause of the rapid...