A Little Tax Hike Can Go a Long Way
Posted at 10:15 a.m. on Dec. 24, 2012
Tyler Cowen lays out a proposal to raise income tax rates for every income level at least a little bit in order to “send the right message to voters, while minimizing the macroeconomic fallout.”
“When it comes to income tax rates, we could raise them for virtually everyone, to send a clear message that the current fiscal situation is unsustainable… The deal also stipulates that both the president and Congress must publicly acknowledge that current plans for government spending can’t be financed unless taxes on most or all income groups climb further yet, and by some hefty amount.”
“Think of this stance as a first step toward the explicit pairing of spending and taxes, toward a goal of more responsible fiscal decisions. Although taxes would go up for now, this could lead to a smaller, more effective government than our current mismatch of taxes and spending would produce.”
