Wednesday, October 31, 2007

Obama vs the Bloggers II

Josh Marshall writes

10:07 PM ... This is more a policy point than a political point. But all sorts of people say that it gets harder to work on Social Security the longer we wait. I don't think that's true. If you raised the cap now, before there's even any drawing down on the Trust Fund, all it would do would be to subsidize upper income tax cuts. I know that requires some more explanation. I'll try to address it in a post tomorrow.

Robert Waldmann replies "huh". Raising the cap would be, among other things, an upper income tax increase (if it were raised enough). I would also be an upper middle income tax increase.

Marshall seems to be arguing that a better tax increase would be more progressive. I don't see why he thinks that we need a big deficit to enable congress to raise taxes on rich people. Has he noticed the bill introduced by Charles Rangel which is revenue neutral and hammers the rich ?

I think that separating the debate about tax progressivity from the debate about the total tax take would be great for Democrats. Roughly, I think the Democrats can cripple the Republican party for decades if they first find the money to fund health insurance for all and get the deficit down to a level they find tolerable and then cut taxes on the lower 99% and raise them on the top 1%. Extensive polling data suggest that revenue neutral increases in progressivity are likely to be hugely popular. Unfortunately, the Republicans can bamboozle people about what the Democrats are up to so long as part of what the Democrats are doing is increasing total tax revenue.

Many people were convinced that the (Bill) Clinton approach of balancing the budget with almost all of the cost born by the richest 1 or 2 % involved increasing their taxes.

The deficit (and increased spending) are both barriers to a clean undeniable soak the rich class war. I think that any tax increase supported by the majority of voters (like raising the cap) is a step towards the pale pink dawn of a progressive tax system.

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