11 December 2011

Magical Tax Bargain

Kids Prefer Cheese | Angus | Infra-marginal garbage

If we want to sock it to these "most fortunate Americans", by all means let's do. But let's not think that the fact that it's a marginal tax rate increase means that it will have an attenuated effect on their future economic activity.

PS: another bogus argument is to refer to the proposed increase as a "modest 3.25 percent surcharge". It's a 3.25 percentage point increase. If the current top rate is 35%, then the proposal is actually a 9.3% surcharge.

Hey Treasury department: Do what you want to do. Just stop lying about what it is you are doing!
If I had a genie granting me wishes — check check; scratch that. If I had a genie who drove very hard bargains but still did magical things for me, I would accept a deal in which public policy became less pleasing to me, but it was always discussed in a way I found to be forthright and rational. So, in Angus' example, I wouldn't so much mind a world with higher tax rates, but in which the arguments for high rates could not do things like ignore the difference between percentage points and percentages, or ignore incentives.

(Actually, screw genies. If there was an actual political deal on the table in which I paid more of my dollars in taxes but did so under a dead-simple consumption tax system so that I would never have to fill out a 1040 or hear someone bitch about "fair shares" again I would take that in a heartbeat.)

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