Rerun the 1986 bipartisan tax reform. In exchange for plugging loopholes, the top rate was brought down to 28%, with capital gains taxed as ordinary income.
Just for Schlitz and giggles, I asked Claude AI how much more money Uncle Sam could bring in if we made the income tax code Laffer-optimal to maximize revenue without negative economic impact. This entailed, among other things, raising the cap gains tax a percent or two and the top income bracket rate well into the 40s.
Claude said that this would get another $400-600B in revenue. Only problem is, is the deficit is pushing $2T. So this would only cover about a fifth to a third of the deficit. And we still haven't paid a nickel of the national debt. So budget cuts will still have to ensue to some extent. Unless we can find another source of revenue, perhaps a VAT.
I'm libertarianish and right of center (love your Substack!) but tax cuts right now make zero sense.
The budget deficit is running two trillion a year; it’s a cancer eating away at our economy. The deficit forces the Fed into the inflation vs. interest rates balancing act and it also sets off a row of monetary dominoes that distorts exchange rates and drives our trade deficits.
If liberals want to “own” MAGA, they need a credible plan to balance the budget. Business as usual handing out money to buy votes won’t cut it. And by the way, taxing just the on percent doesn’t get you there.
All else being equal, do you think raising the tax on a corporation will increase or decrease the prices it charges its customers? Will it increase or decrease the wages it pays its workers?
I think that higher corporate tax brings down equity valuations and reduces economic and consequently political power of the wealthy. Tax can be structured in many ways and I believe there is a way to make inflation-neutral tax regime. Income tax in itself is not inflationary because selling for cost creates zero obligation.
Another good alternative to the recent proposals might be to radically simplify the tax code in a progressive way. Replace all the current deductions, and some of the credits as well, with a zero-percent bracket that applies to everyone. Raise rates at the top (that much Van Hollen gets right) to fund a larger EITC and CTC.
Maybe we could even pair a big cut in middle- and working-class income taxes with higher fuel taxes to fund infrastructure. The Highway Trust Fund is chronically short of money - if a policy that put more money into it still led to a net decrease in most people's tax burdens, it would go over much better than just raising the gasoline tax by itself.
I've never understood (except for the politics of it) why we haven't raised the gas tax for a host of Pigouvian and infrastructure-improvement reasons.
I do disagree that it should be used for the general budget, though. Although it could fund various transportation needs in the general budget.
Exactly, we should raise the gasoline and diesel taxes to replenish the Highway Trust Fund. Same thing with the fuel taxes that go into the Airport and Airway Trust Fund.
Rerun the 1986 bipartisan tax reform. In exchange for plugging loopholes, the top rate was brought down to 28%, with capital gains taxed as ordinary income.
Just for Schlitz and giggles, I asked Claude AI how much more money Uncle Sam could bring in if we made the income tax code Laffer-optimal to maximize revenue without negative economic impact. This entailed, among other things, raising the cap gains tax a percent or two and the top income bracket rate well into the 40s.
Claude said that this would get another $400-600B in revenue. Only problem is, is the deficit is pushing $2T. So this would only cover about a fifth to a third of the deficit. And we still haven't paid a nickel of the national debt. So budget cuts will still have to ensue to some extent. Unless we can find another source of revenue, perhaps a VAT.
I'm libertarianish and right of center (love your Substack!) but tax cuts right now make zero sense.
The budget deficit is running two trillion a year; it’s a cancer eating away at our economy. The deficit forces the Fed into the inflation vs. interest rates balancing act and it also sets off a row of monetary dominoes that distorts exchange rates and drives our trade deficits.
If liberals want to “own” MAGA, they need a credible plan to balance the budget. Business as usual handing out money to buy votes won’t cut it. And by the way, taxing just the on percent doesn’t get you there.
Bring back taxing corporations - it is a proper way to tax wealth without taxing the consumer!
All else being equal, do you think raising the tax on a corporation will increase or decrease the prices it charges its customers? Will it increase or decrease the wages it pays its workers?
I think that higher corporate tax brings down equity valuations and reduces economic and consequently political power of the wealthy. Tax can be structured in many ways and I believe there is a way to make inflation-neutral tax regime. Income tax in itself is not inflationary because selling for cost creates zero obligation.
Another good alternative to the recent proposals might be to radically simplify the tax code in a progressive way. Replace all the current deductions, and some of the credits as well, with a zero-percent bracket that applies to everyone. Raise rates at the top (that much Van Hollen gets right) to fund a larger EITC and CTC.
https://nonprogdem.substack.com/p/one-big-beautiful-deduction
Maybe we could even pair a big cut in middle- and working-class income taxes with higher fuel taxes to fund infrastructure. The Highway Trust Fund is chronically short of money - if a policy that put more money into it still led to a net decrease in most people's tax burdens, it would go over much better than just raising the gasoline tax by itself.
I've never understood (except for the politics of it) why we haven't raised the gas tax for a host of Pigouvian and infrastructure-improvement reasons.
I do disagree that it should be used for the general budget, though. Although it could fund various transportation needs in the general budget.
Exactly, we should raise the gasoline and diesel taxes to replenish the Highway Trust Fund. Same thing with the fuel taxes that go into the Airport and Airway Trust Fund.