I hope that the CBO figures factored out the capital gains revenue bubble from all those who cashed out their investments in preparation for the higher capital gains and dividend tax rates which took effect January 1, 2013 and were blessed by Congress the following day. We do need more revenue, especially for Social Security. The benefit needs to go up so that the premiums on parts B and D can go up as well. The best way to do that is to fund the employer contribution with a consumption tax rather than a payroll tax - which puts to rest the question of the cap. The employer contribution should be equalized - which ends the need for those lovely little bend points in the benefit formula. The cap should be lowered on the employee contribution side, so that higher benefits are not paid, with a floor as well so the EITC is no longer needed - if wages are too low - raise the minimum wage, not the subsidy. Indeed, consumption taxes should be high enough to cover discretionary military and civil spending in the homeland, say with a receipt visible VAT, and entitlements covered by a net businesses receipts tax (which allows offsets for the child tax credit, personal retirement accounts holding employer voting stock (Henry Aaron hates that idea - but we need the new ideas now) etc. The gem of this is the high income surtax - you can decide whether to go with the top 20% as Michael Graetz does or some smaller swatch of the rich - however the goal is to have the tax (which also hits distributions from the sale of estate assets as well as dividends) is to fund all overseas military and civil operations, net interest payments - no more rollover, and debt reduction - both for the Social Security Trust Fund and general debt shrinkage. Of course, if a deficit is needed, it would be in this account (like for a war or a depression or to cover VAT shortfalls). Why fund deployments? Because the other option is to borrow to fund them - its been our history. Why fund net interest is obvious - if the wealthy taxpayers realize that only they are paying for this, they will want to pay it and the debt down faster for a lower long term tax obligation. No one will fund Grover Norquist because it would not be in their interest to do so.
Posted on: Thu, 04 Sep 2014 08:11:51 +0000
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