Is it Time to Raise Taxes?

Is it time to raise taxes? Conventional ideology is that raising taxes during tough economic times hurts the economy and of course job growth. However, if you fail to raise taxes during good times, then you have nothing to fall back on during the tough times. We not only neglected to raise taxes over that last 10 years, we actually passed 2 enormous tax cuts, started two wars that are still costing us trillions, and passed Medicare Part D unfunded. Never mind the bailouts and the stimulus that were necessary to keep the country from sliding into an abyss, or the extension of the tax cuts, the fact is if we don’t have the courage to raise taxes in good times, and even cutting spending will not come close to touching the national debt, then the only alternative is to raise taxes during hard times.

Apparently several of the wised money people in the country agreed last fall but their advice was ignored in an election year.

Raise taxes now -- the elders of the economy say so
By Lex Haris, managing editor
August 10, 2010: 11:02 AM ET


NEW YORK (CNNMoney.com) -- First it was Greenspan. Now one by one, other elders of the economy are speaking out against deficits, and they're making the surprising argument for higher taxes.

Former Federal Reserve chairman Alan Greenspan was first and has taken the most extreme position, arguing that all of the Bush tax cuts of 2001 and 2003 should be allowed to expire.

Greenspan, no fan of big government and an initial backer of the Bush tax cuts, allows that higher taxes now could lead to slower economic growth, but has said that chipping away at the deficit is more important.

Joining him -- at varying degrees -- are David Stockman, former budget director in the Reagan White House, and former Treasury Secretaries Robert Rubin and Paul O'Neill.

The White House and most Democrats have argued for keeping the tax cuts in place for most households, but letting them expire for those earning more than $250,000, about 2% of the country.

Extending the tax cuts for everyone would cost the government $3.7 trillion over 10 years. Taxing the high-earners would get back about $700 billion of that.


David Stockman joins Greenspan at the far end, saying the nation can't afford to extend the tax cuts now. "You have to pay your bills. I say we can't afford the Bush tax cuts," Stockman told NPR this weekend.

On CNN's Fareed Zakaria GPS this weekend, Rubin who worked in the Clinton White House, and Paul O'Neill, who worked for George W. Bush, also talked about the need for higher taxes.

Rubin supports the White House position of extending cuts for most households, yet raising them on the wealthy. Simply, he worries about raising taxes too broadly while the economic recovery is still shaky.

That said, he is also a proponent of the estate tax, which expired this year, and is slated to return to 2001 levels -- a $1 million exemption and 55% top rate.

Said Rubin: "I would put an estate tax in place right now, immediately. I would increase the tax on the higher brackets."

How rich is rich?O'Neill said one reason he was fired as Treasury Secretary was his take on tax cuts: "I was strongly opposed to the Bush tax cuts in 2003. I didn't think we could afford another tax cut."

The issue now is not the Bush tax cuts, said O'Neill, who doesn't think the economy is in terrible shape. Rather, it's the need for fundamental tax reform, preferably one that is much simpler and emphasizes investment and growth over immediate consumption.

"If we let the Bush tax cuts expire, it's still the same stupid tax system."

 

The republicans kind of won the last election. I seem to remember them running on cutting the spending. That seems to have been the number 1 or number 2 priority on their slate. FWIW, there were more than a couple Dims who also agreed with them. Somehow, with those facts, I doubt this idiocy will get any further.

 

I sure wish that winning election made the opposition lay down and capitulate but as we've seen over that last 2 years, that ain't happening. They ran on creating jobs more than anything but they have sort of forgotten all that.

As far as the national debt goes, there is no way to bring it down by cutting spending and you know that. You can possibly dent it slightly and maybe make it not rise quite as fast but you'll never solve it without increasing revenue substantially. What is revenue? Taxes! If we can't raise them during good times and we can't raise them during bad times, aren't we pretty much guaranteeing a huge national debt? Maybe you can point out to me where we can cut 14 trillion dollars in spending out of the government.

Considering that the current budget proposal is 3.55 trillion for 2012 and half of that is deficit spending, we would have to cut every government expediture by 50% just to not increase the current debt. You really think the military is going to take that kind of hit, or seniors, or education, or Medicare, etc..?? And we'd have to do this just so that we don't add anymore this year alone. Now how in the world are spending cuts really going to solve anything? Raise taxes!

 

Moen, if you haven't already figured your taxes this year and if you wind up owing, please feel free to send any additional amount you'd like. For that matter, even if you're receiving a refund, please feel free to send it back. For your convenience, here's the address for your district:

Internal Revenue Service Center
Cincinnati, OH 45999-0010

 

I'm open to ideas on solving the national debt problem. Do you have one?

 

We have posted several which you have promptly pooh-poohed. Why bother to post them again.

 

Perhaps real solutions are just beyond this group. The numbers are known. The problem is well defined. The only viable solution is the one I have outlined. I see no one here able to refute it so I have to conclude that while it is unpopular it is still the only solution out there with any merit.

 

I just gave you one. Make sure you put a note attached to your check that you want the money to go to help pay down the national debt. Thank you!

 

Alternative methods of taxation need to be given serious consideration.

 

Exactly! Such as?

 

So your entire idea is to have ME pay off the national debt? And I used to think you were crazy.

 

Just so we're straight on this- I'm for an "instead of" system to replace our current system not an "in addition to" such as the VAT that Pelosi has been floating.
The FairTax needs to be given serious debate.

 

As long as either idea brings down the national debt, I have no problem with them. How do they do that?

 

Not at all. I simply encourage anyone, such as yourself, who doesn't mind paying more taxes to go ahead and do so. I can almost hear the debt clock slowing down as we speak. Cha-ching!

 

So you are saying that you DO mind paying more in taxes?

 

Our Dear Leaders of both parties just gave us the Great Tax Compromise. How can we possibly need a tax increase?

Taxes will have to go up (on everyone). And Medicare/Medicaid, Social Security, and Defense will have to have cuts. 50 or 100 billion of budget cuts might have made a huge difference during the last gov't shutdown in 1995 when the deficit was about 200 billion but it don't mean squat when the deficit is 1.4 trillion. Search your feelings, Luke, you know it to be true.

 

The mediclorian count is high with this one.

 

Did I say that? I believe you enjoy putting words in peoples' mouths. Please re-read my statements.

 

First of all, can we agree, with our tax system as it is, it is the producers who bear the majority of the burden?

 

State budget crisis looms over governors meeting - Yahoo! News

Democratic Illinois Gov. Pat Quinn was lambasted after signing a 66 percent temporary personal income tax increase and a separate corporate rate hike to help close a $15 billion budget gap. Among other Democrats following his lead: California Gov. Jerry Brown has promoted a package of temporary tax increases as a ballot measure for voters to consider; Connecticut Gov. Dan Malloy has proposed a budget that raises taxes on everything from personal income to haircuts, and Minnesota Gov. Mark Dayton is pushing $3.3 billion in new taxes, primarily by raising rates on top earners.


... and you want to raise taxes even MORE!?!?!? Unbelievable!!