Tax increases aren't flexibility, they are impositions of force (taxes in general are, increases are extensions of that imposition of force). They follow from the idea that the government is so much smarter than us that it will do much better with our money than we will, which is a false idea.
Also whether we accept tax increases or not, they will at best be a miniscule part of dealing with the deficit problem. Deficits are way to large for any remotely reasonable tax increase to cover more than a tiny portion of bringing the budget in to balance (or even just bringing deficits down to manageable levels), esp. if its just "tax increases for the very rich" (not enough of them, they already pay the most, and they pay marginal rates high enough to make it hard to get much more out of them however much you increase the rates since the higher rates discourage economic activity and encourage tax avoidance and evasion)
As the link blog post I linked to earlier pointed out
"The overwhelming majority of Presidents Obama's budgeted deficit would remain even if he collected Clinton-era record revenue. By the end of his term, when the recession is projected to be long over, 80% of the deficit caused by President Obama spending plan would remain even if we assume Clinton-era record revenue.
This is not strange, since during the second Clinton term, federal spending as a share of GDP was 18.8%...
...Let us also be more generous to the left. Instead of assuming revenue for the highest presidential term, let's assume revenue for the record year. As pointed out previously this was the boom year 2000, where revenue was 20.6% thanks to unusually high capital gains and corporate profits.
This picture illustrates what would happen if Federal revenue as a share of GDP increased to the record high of the post-war period and remained there forever, and we continued at the currently projected levels of Federal expenditure.
super-economy.blogspot.com
We had much higher marginal rates in the past, and when we had those higher marginal rates federal taxation produced less revenue as a percentage of GDP (and much less in real dollars, and massively less in nominal dollars). As the marginal tax rates declined over the years federal revenue went up, as did the percentage of federal revenue grabbed from the rich. Its not that we are at the peak of the Laffer curve. A small tax increase would produce more revenue in the short run (unless it was focused on investment capital, or was perversely designed), and likely enough for the medium run as well. But we can't pull in all that much more in revenue, as a portion of the economy than we do now, over the long run. We have never been able to do this, whether the top marginal tax rate was 28% or 90%. If we need a lot more revenue (which we don't if we can restrain spending growth) than we are screwed, because we won't get it whatever tax laws we pass.
Edit - At least not by increasing top marginal rates. We could get more revenue by eliminating tax loopholes without raising rates, but that revenue won't be nearly enough to deal with the planned spending, we would still need to rely far more on imposing spending restraint than on tax increases. |
