Krugman has it all figured out: Tax the Rich
Yes, Paul Krugman has a novel idea that no one has previously thought of … we can get out of this mess we’ve spent ourselves into by taxing the rich.
And by the way, income inequality now makes that both feasible and acceptable:
About those high incomes: In my last column I suggested that the very rich, who have had huge income gains over the last 30 years, should pay more in taxes. I got many responses from readers, with a common theme being that this was silly, that even confiscatory taxes on the wealthy couldn’t possibly raise enough money to matter.
Folks, you’re living in the past. Once upon a time America was a middle-class nation, in which the super-elite’s income was no big deal. But that was another country.
The I.R.S. reports that in 2007, that is, before the economic crisis, the top 0.1 percent of taxpayers — roughly speaking, people with annual incomes over $2 million — had a combined income of more than a trillion dollars. That’s a lot of money, and it wouldn’t be hard to devise taxes that would raise a significant amount of revenue from those super-high-income individuals.
Because you know, “super-high-income individuals” don’t deserve to keep the money they earned, because, well, we’ve gotten ourselves in this awful mess and we need someone to bail us out.
And they have a lot of money, by gosh. A lot of money. So “it wouldn’t be hard to devise taxes” that would take most of it on the marginal side. Because again, we should have first claim when we get ourselves in trouble. Besides, they have more than enough money and they should pay their “fair share”.
A couple of reminders. Despite what Krugman says, taxing the top 0.1% isn’t going to make a significant difference. And even if it did, it would only make that sort of difference once. The next year, that money would be much less available. Which would probably mean what?
Well “rich” would have to be redefined, wouldn’t it? Maybe then it would be the top 1%, because we all know they have more money than they need and they should pay their fair share, right?
As a reminder, the Adjusted Gross Income necessary to be considered a one-percenter is a ‘rich’ $343,927. And this particular percentage of tax payers are indeed shirking their fair share. After all, they only pay 36.73% of all income tax collected now. Surely we can kick that up to, oh I don’t know, at least 50%. And, of course “we” can, certainly. For a short time, that will indeed bring in more revenue. But, again, once the marginal rate goes up those being stuck with the tax bill will go to work finding ways to minimize that hit. And, they will.
Which means those top 5% suddenly become vulnerable, etc.
A short version of the Krugman solution can be found working so well in Europe right now. And E21 does a good job of reminding us of Krugman’s unadulterated enthusiasm for the social welfare states to be found there. E21 also does a great job of eviscerating Krugman’s arguments concerning Europe’s problems:
Paul Krugman insists that the European debt crisis has nothing to do with excessive government spending. The problem, to him, is a failed monetary experiment that deprives nations like Greece and Italy of the ability to print money to inflate away excessive debts. The need to create an alternative understanding for the origins of the debt crisis is only natural given the extent to which the current crisis has tarnished the statist ideology that Krugman generally follows. But his basic claims are nonsensical, as is Krugman’s citation of Sweden and Germany as economic role models. While these economies have performed relatively well through the crisis, it was because they abandoned Krugman’s preferred economics and moved in a more market-oriented direction long-ago.
He was wrong about Europe and he’s wrong about taxes. He’s become an economic joke but just doesn’t know it yet. He’s a one-trick pony who, much like the global warming alarmists, ignores the fact that what he continues to claim is viable and necessary is constantly and consistently being trashed by reality.
The only good news is he remains a source of entertainment. It’s sort of like a game. You wonder how long he can go before reality actually grabs him by the scruff of the neck and makes him recognize the error of his ways (my bet? Never happens). And, as a bit of side fun, you wonder how long the NY Times will continue to let Krugman push his reality challenged agenda forward before they finally (and, of course “reluctantly”) can him (see first bet – they haven’t a clue).