Tags: taxes | middle-class | government | politics

Washington Post's Samuelson: Middle-Class Taxes Have to Rise to Cover Costs

Washington Post's Samuelson: Middle-Class Taxes Have to Rise to Cover Costs

By    |   Tuesday, 03 November 2015 06:00 AM

Americans who want a bigger government that helps to cover the cost of retiring baby boomers need to be prepared for a tax hike.

That’s the message from Washington Post columnist Robert Samuelson, who cites research from think tanks that have studied economic scenarios of tax rates.

“If middle-class Americans need or want bigger government, they will have to pay for it,” Samuelson says. “Sooner or later, a tax increase is coming their way. There is no tooth fairy.”

The nonpartisan Tax Foundation concluded that the tax plans from seven Republican candidates “lose gobs of tax revenue,” even when accounting for the possibility of improved economic output.

“The same can be said of Democrats’ faith in soaking the rich,” Samuelson says. “The trouble is that the math doesn’t match the rhetoric.”

The left-leaning Brookings Institution found that raising the top income tax rate to 50 percent from 39.6 percent would raise about $100 billion, not nearly enough to help shrink a budget deficit of $439 billion for fiscal 2015.

Even if that money were redistributed to the poorest fifth of Americans, the effect would be $2,650 a year, according to Brookings.

“Both parties have constructed rationales for avoiding middle-class tax increases, which would be highly unpopular,” Samuelson writes. “But the resulting tax policies don't come close to covering the real costs of government.”

The tax proposals by presidential candidates are part of a broader discussion on tax reform, including ways to make levies more competitive for American businesses, says economist Stephen Moore of Freedom Works.

“The U.S. corporate tax of 35 percent is now so much higher than the rate in the rest of the world that a Tax Foundation study has recently concluded that we could raise as much money with a rate of 20 to 25 percent,” Moore writes. “That's because more businesses would come here and start paying U.S. taxes instead of Irish, Chinese or Canadian taxes.”

Tax avoidance strategies have stirred political debate as major corporations pursue merger deals that allow them to move to a foreign country with lower taxes. Pfizer Inc., the biggest U.S. drugmaker, last week said a major motivation for a possible merger with Ireland-based Allergan Plc was a more competitive tax rate.

“If you can get the same revenue at a lower tax rate and create more jobs at the same time, why wouldn't we take that deal? The only answer is that the left gets some kind of weird psychic income from knocking down the rich even if it benefits no one,” Moore says.

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Americans who want a bigger government that helps to cover the cost of retiring baby boomers need to be prepared for a tax hike. That's the message from Washington Post columnist Robert Samuelson.
taxes, middle-class, government, politics
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2015-00-03
Tuesday, 03 November 2015 06:00 AM
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