Tuesday, April 19, 2011

Deductive Reasoning

I've stated several times here that economics is not my forté. In such matters, I tend to defer to others whose credentials seem substantial and undeniable. For example, Nobel prizes endow Stiglitz and Krugman with a certain je ne sais quoi for me, myself being more of a je ne sais pas kind of guy.

I don't speak French.

So, anyhow, the above displays come from this article in the Sunday Times Magazine. The author, David Leonhardt, is a respected economics reporter who just won a Pulitzer; so, despite the fact that he went to Yale (which I assume means he couldn't get into Amherst or Harvard), it's food for thought when he says:

If there is one big-ticket budget item on which Democrats and Republicans should be able to find common ground, it’s tax breaks. Each of the various bipartisan deficit panels has called for a big reduction, saying such breaks — exemptions, deductions, credits and other loopholes — are inefficient and unaffordable. All told, they cost the federal government about $1.2 trillion in lost revenue last year. As it happens, the budget deficit was $1.3 trillion.

Why else is getting rid of tax breaks a good idea? For one, economists say many of them slow growth by forcing individuals and businesses to waste time complying with the tax code. A tax code with lower rates and fewer loopholes would almost surely be more efficient. Meanwhile, from a political perspective, some Republicans who oppose just about any tax increase think cutting tax breaks is an acceptable way for the government to refill its coffers.

Complexity and importance. A prescription for getting nowhere, most likely.

But it's a start. Nevertheless, from my below-ground-level view, tax rates on the wealthy need to be back where they were when we last had a balanced budget, no matter what is done about deductions. Lowering those rates even further, as the Rs propose, is insanity (definition: doing something for which there's no basis in historical fact, their claims to the contrary being no more salient than their claims about global warming or the age of the earth.) Maybe the definition of "wealth" could be addressed, and the higher rates made to cut in at family incomes somewhere higher than $250K. But raised they must be if the future is a priority.

Yeah. Right. Like that'll happen.

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