Once and Future Taxes (New York Times says Obama needs to RAISE TAXES broadly)

New York Slimes ^ | 9/4/2009 | New York Times Editorial

[SeekAndFind]

So far, the Obama administration’s plan for dealing with the budget deficit — an estimated $9 trillion over a decade — is to not dig the hole any deeper. That’s an important first step. President Obama deserves credit for proposing ways to pay for his two big initiatives to date: health care reform and energy legislation. Reducing the growth in health care costs, in particular, is vital to curbing future deficits.

As for the hundreds of billions of dollars in economic stimulus, their impact on long-term deficits is marginal because the spending is temporary. More important, deficit spending is warranted in a recession because it eases the downturn and in so doing, averts even worse damage to the economy and the budget.

But, sooner than he may prefer, Mr. Obama will have to face up to what he has so far avoided: the need to raise taxes broadly to rein in deficits.

The deficits are not of his making. Some two-thirds of the $9 trillion shortfall resulted from policies that predate his administration; most of the rest is the cost of policies that both parties consider necessary, like continued relief from the alternative minimum tax.

But when he inherited the burden of the budget mess, Mr. Obama also inherited the responsibility to clean it up. Neither economic growth nor spending cuts will be enough to fix the projected shortfalls. Nor is there enough to be gained by confining tax increases only to families making more than $250,000 a year, a campaign promise that Mr. Obama still says he will keep.

Assuming the economy has begun to recover by 2010, next year would be the natural time to start raising taxes.

[KentTrappedInLiberalSeattle]

The deficits are not of his making.

[Williams]

Most Americans just don’t understand what the left is about.

What they are after is not good, they are extremists and kooks.

[Loyal Buckeye]

The New York Times makes the case for higher taxes over smaller less obtrusive government and blames prior presidents for the deficit and not Obama. A real shocker.

[xcamel]

A 100% gross revenue tax on newspapers...

[EGPWS]

I don't care I'll never make over $250,000. /s

It's only the rich who have to pay. MS/

[HChampagne]

The Slimes and the Washington Toast do not realize that more taxes equal less money for advertising.

[Obadiah]

This advice comes from a company that had to borrow $250 million from Mexican Carlos Slim at an eye popping 14% interest rate just to keep afloat! They should NOT be offering ANYBODY any financial or economic advice!

[kevinm13]

Q. Why does the federal government exist?

A (R). To provide essential services such as defense and intelligence, transportation support such as interstate highways and air travel.

A (D). To provide jobs for uneducated folks who couldn’t get jobs elsewhere, to have an excuse to tax people, to take from those who work in real jobs and give them to those who don’t work or work for government, to provide retirement, unemployment, healthcare and anything else the masses want.

[wny]

And when he rasies taxes, I’m sure his whores at the NYT will hammer him seeing how he said taxes woucn’t go up a “single dime”, you know....the same way they pounded Bush Sr. for reneging on his “read my lips, no new taxes” thing......

[crescen7]

NYT shows its own economic illiteracy.

Unfortunately for those that support big government; raising taxes does not always guarantee increased revenue. What these dim bulbs don’t understand, is a simple economic theory.

That is, optimal pricing. In setting the price for any good or service there is a price that maximizes revenue. At that “optimal” price any increase will reduce net revenue (from lower sales volume) and any decrease will also reduce net revenue (from reduce profit margins).

Taxes are the price of government. We’ve shown during three distinct periods that adjusting rates downward increased revenue to the Government (Kennedy, Reagan, Bush)

Once we did it by adjusting rates upward (Clinton).

It seems highly likely that we are very close to the “optimal” price point right now. That is, moving the rates in either direction are likely to have a negative impact on Government Revenues. This makes the increased taxes a totally ineffective weapon to combat this deficit.

It is far more likely that the “deficit” will be paid equally by all parties through the drastic decline in the value of every dollar, ie. inflation.

[Rashputin]

This is just the start of the horse hockey Hussein will say “forced” him to raise taxes. Who knows, maybe the Congress will twist his arm and not give him the health care bill he wants for us if he doesn't agree to raise taxes. You just know he doesn't want to do it. He PROMISED he wouldn't, so, if it happens it's all because those Hillary democrats and Bush republicans forced him to in such a way that he couldn't veto it. You can bet that, as another millionaire lawyer, he will feel your pain if he does get forced into raising taxes.

Regards

[unixfox]

Assuming the economy has begun to recover by 2010, next year would be the natural time to start raising taxes.

The "natural" time? IF the economy starts to improve, let's just shut it down again by taking more money.

FRIGGIN IDIOTS!

[domenad]

The higher taxes will be worth getting rid of him in 2012 rather than 2016.

[SeekAndFind]

It seems highly likely that we are very close to the “optimal” price point right now.

The interesting question to answer is this --- how do we know if we have reached the OPTIMAL price point? What factors do we consider to come to such a conclusion?

[AFPhys]

Hey, look: I’m very happy to USE THE NYSLIMES numbers here!

“two-thirds of the $9 trillion shortfall resulted from policies that predate his administration”

This means, correctly, that the previous 200+ years of this country rang up 6T$ in deficits.

This administration, in 8 years, has rung up an additional 3T$ in deficits... and that is NOT including the looming attempts to increase it another $1T with for ObamaCare and a MINIMUM of $1-3T looming for CapNTax- NEITHER of which will accomplish the stated objective and both of which will reduce the country’s productivity. If they are pushed through the Congress, this administration will have EQUALED in one year the combined deficits for the previous two hundred years.

It is about time that the NYSlimes admits that this administration has been monumentally poor stewards of the public’s money and the nation’s economy.

[Loyal Buckeye]

I like your thinking.

[AFPhys]

Thanks...I like my thinking, too... better than I like my proofreading sometimes!

Let me correct one line in #16:

This administration, in 8 years months, has rung up an additional 3T$ in deficits...

[SeekAndFind]

the same way they pounded Bush Sr. for reneging on his “read my lips, no new taxes” thing......

The problem with the Slimes is they themselves said that Obama was not going to raise taxes during the presidential campaign.

See here

After Denying Obama Would Raise Taxes During Campaign, NYT Calls for Increases

A long lead editorial in Friday's New York Times, "Once and Future Taxes," called on Barack Obama to accept the inevitable and raise taxes to fight the $9 trillion budget deficit. Does this mean Times editors and reporters will now apologize to John McCain for claiming that Obama would only raise taxes on "the rich"?

The Times made a full-throated call for a broad tax hike:

So far, the Obama administration's plan for dealing with the budget deficit -- an estimated $9 trillion over a decade -- is to not dig the hole any deeper. That's an important first step. President Obama deserves credit for proposing ways to pay for his two big initiatives to date: health care reform and energy legislation. Reducing the growth in health care costs, in particular, is vital to curbing future deficits....But, sooner than he may prefer, Mr. Obama will have to face up to what he has so far avoided: the need to raise taxes broadly to rein in deficits....Neither economic growth nor spending cuts will be enough to fix the projected shortfalls. Nor is there enough to be gained by confining tax increases only to families making more than $250,000 a year, a campaign promise that Mr. Obama still says he will keep.

During the campaign the Times consistently guarded Obama's vulnerable left flank on taxes, insisting Obama would not raise taxes on the middle-class, only "the wealthy," -- the wealthy as determined by the liberal New York Times, anyway.

Reporter Steven Greenhouse, October 31, 2008: "Independent analyses of the presidential candidates' tax proposals show that those who make less than $250,000 a year would not see their taxes raised under Senator Barack Obama's plans."

Reporter Jim Rutenberg, October 16, 2008: "Mr. Obama's plan would raise taxes on filers earning more than $250,000 a year, a category that includes some small businesses, but would cut taxes on households earning less than $200,000 a year."

An Oct. 16, 2008 editorial: "Mr. Obama would cut taxes for low- and moderate-income families and raise them for richer Americans."

Perhaps Obama's most vociferous defender was reporter Larry Rohter, who wrote on Sept. 30, 2008: "Under his plan, only individuals making $200,000 or more and families earning more than $250,000 a year, accounting for less than 2 percent of the population, would pay additional taxes, and more than 90 percent of the population would receive a tax break of some sort."

—Clay Waters is the director of Times Watch, an MRC project tracking the New York Times.

[crescen7]

how do we know if we have reached the OPTIMAL price point? What factors do we consider to come to such a conclusion?

There are numerous “models” - none are very good as predictors. Unfortunately, in Government, like business, the only real way is to change the price and then observe the corresponding change in revenue.

The assumption that we’re near optimal is based on observation of past tax cuts/increases.

Under Reagan, Congress cut taxes - Revenues increased (alot)
Under HW Bush, Congress raised taxes - Revenues - almost nuetral
Under Clinton, Congress raised taxes - Revenue increased
Under GW Bush, Congress cut taxes - Revenue increased

The other variable is the underlying economic conditions. Clintons tax increase was countered by a boom in technology which effectively made the “optimal” tax level higher.

When the expansion slowed, the “optimal” tax rate was lower, GWB acted correctly and adjusted rates downward - increasing revenues. Given the recent history of achieving a revenue increase from a small tax cut, and the not so distant history of a revenue increase from a tax hike - it’s not unreasonable to assume that we’re near an optimal tax level - with moves in either direction possibly lowering revenue.