President Barack Obama’s demands for tax increases as part of a deal on raising the debt ceiling are the worst option at the worst time, Michael Boskin, former chairman of the Council of Economic Advisers, says in a Wall Street Journal Op-Ed.
And he predicts that marginal tax rates will have to go up to rates of 70 and even 80 percent by the mid-century unless the nation cuts entitlement payments dramatically.
“Many Democrats demand no changes to Social Security and Medicare spending. But these programs are projected to run ever-growing deficits totaling tens of trillions of dollars in coming decades, primarily from rising real benefits per beneficiary,” writes Boskin, who chaired the council under President George H.W. Bush.
“To cover these projected deficits would require continually higher income and payroll taxes for Social Security and Medicare on all taxpayers that would drive the combined marginal tax rate on labor income to more than 70% by 2035 and 80% by 2050.”
Boskin, who now is an economics professor at Stanford University in California and a senior fellow at Stanford's Hoover Institution, says that would lead to “economic stagnation, socioeconomic ossification, and the loss of American global competitiveness and leadership.”
“There is only one solution to this growth-destroying, confiscatory tax-rate future: Control spending growth, especially of entitlements.”
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