America’s Coming Tax Increase

[Back2Good]

Well, at least the author isn't shy about Democrats being explicit in wanting higher taxes - Then again, it is the WSJ, a paper which concerns itself with economic and fiscal facts, not cults of personality.  What do you think the first paper Warren Buffet reads in the morning with his breakfast is, before going to work managing his portfolio?

Wall Street Journal op-ed:  America’s Coming Tax Increase , by Edward P. Lazear (Stanford):

    The debt held by the public has approximately doubled since President Obama took office and is now equal to 74% of gross domestic product. It is true that with the right policy mix, economic growth—stuck at just over 2% during the Obama “recovery” (note by b2g: Love the quotes around "recovery"...Remember the "Summer of Recovery?"  I do, I laughed then and I laugh now when I see Obama being credited with any "recovery") —will help close federal deficits and pay down the debt. At the end of World War II, for example, the debt-to-GDP ratio was at 104% and shrank to a low of 23% by 1974. But letting growth or future belt-tightening close the gap is the exception, not the rule. More often, higher taxes are the result.

    The Democrats are explicit in wanting higher taxes, with Hillary Clinton pushing for a 4% surcharge on incomes over $5 million, higher capital gains taxes, and capped deductions. Bernie Sanders would raise the top marginal income-tax rate to 54.2%, tax capital gains and dividends as ordinary income and expand the estate tax. On the Republican side, Mr. Trump, Ted Cruz and John Kasich have outlined plans that reduce taxes, at least for now. The Trump plan lowers personal and corporate rates, the latter to 15%. The Cruz plan taxes all personal income (above a minimum) at 10% and replaces business taxation with a 16% tax on net business sales. Mr. Kasich would lower personal and business taxes and allow full expensing of capital expenditures.

    According to recent analysis by the Tax Foundation, the Republican plans produce positive and the Democratic plans produce negative economic growth. True, the Democratic plans produce additional revenue, but not lower deficits given their spending aspirations. ...

    Even without the additional spending proposed by Mrs. Clinton and Mr. Sanders, more projected spending in the future will likely lead to calls for ever-higher taxes. Without more budget discipline, America may be headed toward a European-style VAT tax and ever-larger government.

    For more, see Joseph Bankman (Stanford) & Paul L. Caron (Pepperdine), California Dreamin': Tax Scholarship in a Time of Fiscal Crisis, 48 U.C. Davis L. Rev. 405 (2014):

    This essay makes three claims about the current state of tax law and academic tax scholarship in America: (1) the federal budget imbalance, caused by the failure of both political parties to raise the tax revenues needed to fund the nation’s spending priorities, is unsustainable and threatens our nation’s future; (2) tax scholars need to shift our focus from technocratic work to systemic solutions to the existential threat posed by this fiscal gap; and (3) California’s response to its seemingly intractable budget problems provides a template for resolving the federal budget stalemate in Washington, D.C.

    Two years ago, both California and the nation were imperiled by long-term, structural, budget imbalances. California has reduced that peril by raising (already high) personal tax rates on the wealthy. The political success of that approach suggests that at the national level, Americans might be willing to support higher rates to maintain government services and move toward fiscal solvency.

    The fiscal crisis highlights a problem with the dominant conception of legal tax scholarship. Under that conception, scholarship is (or should be) apolitical and confined to subjects about which the writer can demonstrate mastery. Unfortunately, the most pressing problem in the field is inescapably political and requires the scholar to address some issues about which no one can master. If we hew to a restrictive definition of scholarship, we limit our voice on a subject about which we have much to say.

[Grandote]

“Of all tyrannies a tyranny sincerely exercised for the good of its victims may be the most oppressive. It may be better to live under robber barons than under omnipotent moral busybodies. The robber baron’s cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end for they do so with the approval of their own conscience.”—C.S. Lewis