Bush/McCain Economic Advisor Sez: Raise Taxes
Douglas Holtz-Eakin was Chief Economist for the Council of Economic Advisers from 2001-2002. He was Director of the Congressional Budget Office from 2003-2005. He was John McCain’s chief economic advisor during the presidential campaign.
In the WSJ, he says Obama “should call on Congress to pass a comprehensive reform of our income and payroll tax systems that would generate revenue sufficient to fund its spending desires in a pro-growth and fair fashion.”
I couldn’t agree more.
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I couldn’t agree more either. I don’t trust Eakin because he was out touting the sky is falling because of Social Security a few years ago. Arithmetic did not impress him.
ON the other hand:
a tiny tax raise in Social Security would make the program actuarily solvent forever. a not so tiny, but hardly unbearable raise in the income tax would pay down the debt.
i cannot think of any reason such tax raises would hurt anyone, even during a recession.
Tiny in the case of Social Security would be one tenth of one percent, starting effectively in 2026, and repeated each year for about ten years.
It might help the congress get its house in order if that tenth of a percent raise started this year, though it ought to be matched by an equivalent raise in the top bracket of income taxes. there are paradoxical consequences to this… but none of them actually harmful. while “fixing” social security would do terrible harm.
I hesitate to increase payroll/SS taxes because 1. they’re already so horribly regressive (only on earned income, and not paid for earnings above about $100K/year), and 2. our whole tax system is so non-progressive–at least above about $60K/year:
http://www.asymptosis.com/most-regressive-taxes-my-home-state.html
But a combination of a carbon tax (which unfortunately is non-progressive) and a much more progressive income tax would easily solve the budget problem and would quite likely increase long-term growth.