Saturday, October 31, 2015

NY Times Editorial: Republican tax plans won't work

Regardless of the "fantastical" claims by Republican Presidential candidates, plans like the proposed tithe (from Carson) and tax cuts for the rich (from the rest) will simply blow a hole in the federal budget and necessitate gigantic cuts in Medicare and Social Security. The NY Times Editorial Board concludes:

All of these candidates deny fiscal reality. In the next 10 years, revenues will need to increase by 40 percent simply to keep federal spending even, per capita, with inflation and population growth. Additional revenues will be needed to pay for health care for the elderly, transportation systems and other obligations, as well as for newer challenges, including climate change. And interest on the national debt will surely rise because interest rates have nowhere to go but up.

In light of these needs, taxes have to go up. The reality is that income tax increases can be prudently imposed only on the wealthy at this point, because only they have had meaningful income gains in recent decades.

The Democratic candidates have acknowledged this and have called for high-end tax increases, while keeping proposed tax cuts targeted on low- or middle-income Americans. They have also called for new taxes on financial transactions. Most important, their tax plans are part of broader economic proposals to raise wages, including support for a higher minimum wage, unions, expanded profit-sharing and employee ownership.

Responsible policy for the near term demands tax increases on individuals and sectors that can bear them. There is no room or rationale for across-the-board tax cuts, no matter what the Republican candidates say.

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