Sunday, April 19, 2009

There He Goes Again

Matthew Yglesias argues, again, for increasing the taxes of the non-rich. I don't actually find an argument in his post.

Last time I wrote this, I linked to Klein and just mentioned Yglesias. I got a link from Klein. I didn't mean to leave Yglesias out.

Your argument contradicts itself. If the bulk of the money is coming from the wealthiest why would it be impossible to get all of the needed money from the wealthiest ?

You admit only two possibilities. The Obama proposal and increasing the effective tax rate on the median household. You must see that this is an invalid argument. The Obama proposal isn't the only possible proposal which involves no tax increases for the less rich 95%.

You say not enough money can be raised by taxing only the rich. You don't present or link to any calculation whatsoever. What is the basis for this assertion (which you have made repeatedly). The only hint of evidence I have found in this blog is a reference to Europe which is, of course, perfect, and has higher taxes on the median family than the US does. The argument is that if Europe can't raise enought money from the rich then neither can the USA, since, of course, the fraction of national income going to the very rich is the same in the USA and Europe.

I think that you are fascinated by the argument that, if the revenues are reasonably well spent, increased taxes including increased taxes on the non rich would be better than the Obama proposal. This argument omits two interesting issues. What policy is optimal and what is the best policy which is poliitically feasible. That is, I think, it omits every consideration which has any useful role in the policy debate.

You never argue that your proposal is the best policy which implies it is better than any policy which includes tax increases only for the rich. You assert that not enough money can be raised by taxing the rich, but you provide no evidence whatsoever for that assertion. I'd consider that a bit of a gap.

More importantly, you absolutely ignore politics. It might be politically impossible to raise the optimal revenue taxing only the rich, but all the evidence suggests it is politically much easier to get a given revenue from the rich alone than from a broader set of families. For example, Obama was elected President. Also polls reliable show majority support for higher taxes on the wealthy.

It seems to me that you are arguing "sure my proposal is not optimal and, yes, it is extremely unpopular, but it is still best because it's what they do in Europe."


Vance Maverick said...

Agreed. What do you make of Lane Kenworthy's argument, lately presented at Crooked Timber, that tax rates are not the locus of progressivity that matters for reducing inequality?

Robert said...

The post above is my long answer to your question.

The short answer is that, only if you assume that 12 countries describe the limits of the possible, can you draw Kenworthy's conclusion.