Economist Paul Krugman says Washington should be raising taxes, not cutting them.
"When I listen to current discussions of the federal budget, the message I hear sounds like this: We're in crisis!" Krugman writes in The New York Times. "We must take drastic action immediately! And we must keep taxes low, if not actually cut them further!"
"You have to wonder: If things are that serious, shouldn't we be raising taxes, not cutting them?"
From the tone of much budget discussion, you might think that we were groaning under crushing, unprecedented levels of taxation, says Krugman.
“The reality is that effective federal tax rates at every level of income have fallen significantly over the past 30 years, especially at the top,” Krugman says. “And, over all, U.S. taxes are much lower as a percentage of national income than taxes in most other wealthy nations.”
Krugman says the budget proposal made by Rep. Paul Ryan, R-Wis., begins by warning that “a major debt crisis is inevitable” unless we confront the deficit. “It then calls, not for tax increases, but for tax cuts, with taxes on the wealthy falling to their lowest level since 1931,” he says.
Krugman believes that President Barack Obama’s proposal is a lot better. “At least it calls for raising taxes on high incomes back to Clinton-era levels,” he says.
“But it preserves the rest of the Bush tax cuts — cuts that were originally sold as a way to dispose of a large budget surplus,” he said.
“And, as a result, it still relies heavily on spending cuts, even as it falls short of actually balancing the budget.”
ABC News reports that Republican lawmakers trying to sell the Ryan proposal to their constituents are facing anger and confusion, especially about what the adoption of that proposal would mean to Medicare.
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