Raise Taxes. But How Much?

Apr 19 2011 @ 5:51pm

Kevin Drum and Jonathan Cohn want to raise taxes significantly. Ross Douthat is uneasy. He argues that "given that the last few decades have seen (as liberals never tire of pointing out) a significant increase in inequality and wage stagnation in the middle class, those relatively low [tax] rates [on the middle class] seem like pretty sensible policy to me." His bottom line: 

I think that conservatives need to accept that taxes will probably go up somewhat relative to the post-World War II average, and I have my share of problems with the Ryan budget vision. But to take Uncle Sam’s bite of G.D.P. from 18 percent to 23 percent (and beyond!) is a big, big deal, and not just a “modest increase” as Kevin Drum would have it. And if we’re going to talk about the costs of the conservative vision (as we should), we need to talk seriously about the potential costs of the liberal vision as well.

I'm kind of in the middle here. Would 21 percent do? With real defense cuts, that's doable. With dramatic tax reform, it's more doable still. Without either, I'm not so sure. The sheer scale of our healthcare commitments (and the political and moral difficulty in scaling them back) makes the choices all bad. But I'm relieved that in the reality-based community – which, sadly excludes Republican orthodoxy right now – the question of how much, rather than whether, is now out there.