Krugman: It’s time to go BIG… on taxes

posted at 10:05 am on November 28, 2011 by Jazz Shaw

The super committee is dead. Long live the substandard committees.

Just because the “big deal” didn’t happen as a result of the recent, marginally extra-constitutional shenanigans, that doesn’t mean that Congress doesn’t still have to come up with a plan. And the “go big” theme is far from dead among the chattering class. In fact, New York Times economist Paul Krugman has once again demonstrated the benefits of a classical education and come up with yet another path to prosperity. In this version, he seems to have abandoned the idea of going back to Clinton era tax rates for the wealthy. That won’t be able to fix the problem, as many conservatives have already noted.

The answer? We’ll just really tax the heck out of them!

The supercommittee was a superdud — and we should be glad. Nonetheless, at some point we’ll have to rein in budget deficits. And when we do, here’s a thought: How about making increased revenue an important part of the deal?

And I don’t just mean a return to Clinton-era tax rates. Why should 1990s taxes be considered the outer limit of revenue collection? Think about it: The long-run budget outlook has darkened, which means that some hard choices must be made. Why should those choices only involve spending cuts? Why not also push some taxes above their levels in the 1990s?

Strangely, Krugman goes a long way toward defeating his own argument a few paragraphs later, noting that under his staggeringly optimistic estimate, a truly massive marginal tax rate on those earning more than $2M per year could shave “as much as” $100B per year off of the deficit. I’m not saying that $100B is anything to sneeze at, but it’s still a relatively paltry fly swatter with which to attack the current deficit monster. And while I’m one of the unpopular people who admit that any sort of salable final deal will likely require some significant revenues in addition to bringing down spending dramatically, it’s hard to imagine picking a worse target for the federal government’s wrath.

But yet again, as Noel Sheppard notes, the bigger picture requires a focus on something different. Also known as… it’s the spending, stupid.

As I’ve noted many times in the past, if we had only grown our total expenditures at the rate of inflation since 2007, we would have had a $413 billion deficit in the just-ended fiscal year 2011. This would be even lower in the current year given projections of $2.9 trillion in unified tax receipts.

When you consider that total unified outlays in 2007 – before the Democrats took over Congress! – were $2.7 trillion, and that they rose to a staggering $3.8 trillion in just four years or 41 percent, it’s just absurd to blame our fiscal woes on revenues.

But we’ve grown accustomed to this in the past couple of years, especially from arithmetically-challenged Nobel laureates like Krugman.

Some lessons apparently take a very long time to learn. But with luck, we’re getting there.

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I agree, BIG, as in a much greater tax base.

OldEnglish on November 28, 2011 at 10:08 AM

NYT subscriptions should be taxed 10,000%.

Kataklysmic on November 28, 2011 at 10:08 AM

Is this what the space aliens want?

HondaV65 on November 28, 2011 at 10:09 AM

You first, Paul.

listens2glenn on November 28, 2011 at 10:12 AM

I agree … a high tax on all money going to Mexico.

stenwin77 on November 28, 2011 at 10:13 AM

So, people are unemployed, underemployed, businesses are hurting and their solution is to wring more money out of them?

Blake on November 28, 2011 at 10:14 AM

If you want increased revenue, unshackle the economy. Keep tax rates low, make the tax code simpler (so business & individuals aren’t spending $ trying to comply with/avoid taxes) and get rid of onerous regulations.

To grow revenue, grow the economy. Why is that so hard to understand?

rbj on November 28, 2011 at 10:15 AM

Always remember: this stunning genius was an adviser for Enron.

ZK on November 28, 2011 at 10:17 AM

Let’s do it! Super high taxes can only mean one thing … JOBS!!!!!

Everyone knows large and small businesses alike are just waiting to hire, they only need the incentive of super duper high taxes to start. I mean c’mon … who doesn’t know that crushing taxes creates jobs?

darwin on November 28, 2011 at 10:17 AM

Let me type this slowly, so that even Paul Krugman can understand this:

The

Rich

Don’t

Have

The

Kind

Of

Money

To

Pay

For

Liberal

Spending

Ambitions!

Bill Whittle had a good video illustrating that taking the richest people in the country, shooting them in the head, and taking all their wealth, as well as plundering the Fortune 500′s assets, will get us through ONE year of spending. ONE YEAR. And leaving nothing for the next year’s spending.

Sekhmet on November 28, 2011 at 10:20 AM

Krug, just in case no one told you, I am here to help. If all the money earned by those earning over 200,000 a year were taxed at 100%, the sum stolen would not even make a dent in our debt. It might tweak the deficit, but then what?

There will be no more to steal.

Oh wait! Will you steal 401-K’s? Peoples savings?

Damn you’re about as dumb as a box of rocks.

dogsoldier on November 28, 2011 at 10:20 AM

Why should 1990s taxes be considered the outer limit of revenue collection?

Because the Feral Government actually brought in more money than it spent a couple of times in the 1990′s. It’s empirical evidence that it can in fact be done – with less spending.

forest on November 28, 2011 at 10:20 AM

NYT subscriptions should be taxed 10,000%.

Kataklysmic on November 28, 2011 at 10:08 AM

I agree … a high tax on all money going to Mexico.

stenwin77 on November 28, 2011 at 10:13 AM

How about 100% capital gains tax on members of congress?
Or a tax on labor unions?

zmdavid on November 28, 2011 at 10:21 AM

I was watching Fox News Sunday last night, and heard Dick Durbin drool all over himself describing the need to get the wealthy to pay their “fair share.” I thought of that while reading this post, and it occurred to me: liberals don’t care about the deficit, they don’t care about the possibility of Greek-style insolvency, they don’t even really care about actually raising more tax revenue. Instead, they seem to be monomaniacally focused on just one thing: soaking the rich. Nothing else seems to matter.

If this country re-elects Obama and his soak-the-rich fanatics, it will be confirmation that we are a nation of masochists.

Athanasius on November 28, 2011 at 10:22 AM

I would be pumped to get up every morning to go to work if I knew the government was taking 3/4 of my paycheck.

Think of all the good things that can come out of a super high tax rate. Many people would lose weight. Making mortgage payments would outweigh tasty food. Settling for beans and crackers every night is a dieters dream!

Car sales would necessarily plummet, as well as gas sales. People would get plenty of exercise walking around looking for junk to sell to pay the skyrocketing eletcric bill too.

Tax us Obama!!!!!

darwin on November 28, 2011 at 10:22 AM

Tax scraggly assed beards

Wade on November 28, 2011 at 10:23 AM

Forget the race card that’s passe.The Democrats have the “rich” card to play now.

sandee on November 28, 2011 at 10:24 AM

I’m willing to pay slightly higher taxes (a couple percent), if and only if we cut spending, pass laws to prevent congress from overspending and reform all the big entitlements. I think most people feel the same way. Let Congress show us that it is serious about righting the ship and we’ll become serious about sending money to the government to reduce the debt. Right now higher taxes only mean pouring money into a giant pit that does nothing to get us out of this mess.

ReaganWasRight on November 28, 2011 at 10:24 AM

Where’s Ed?

conservative pilgrim on November 28, 2011 at 10:27 AM

Who is the target audience for this drivel?

Dr Evil on November 28, 2011 at 10:28 AM

One possible favorable side-effect of all this tax talk — it will force the other side to do the math and see that we have a spending problem (primarily) after all.

After all the rounds of “let’s try X — whoops, not enough, try X-prime” you’re going to get some folks saying “whoa, they have to be that high?”

DrSteve on November 28, 2011 at 10:31 AM

Just wondering out of sheer curiosity more than anything else, but other than the man himself, does anyone out there really pay any attention, much less give a damn, to what this assclown Krugman has to say about anything?

pilamaye on November 28, 2011 at 10:33 AM

Would it be impolite if I identified Mr. Krugman as an idiot?

oldleprechaun on November 28, 2011 at 10:36 AM

These big tax proposals seems like he’s compensating for something.

Oil Can on November 28, 2011 at 10:36 AM

REPORT: Senate Moves To Allow Military To Arrest Americans Without Charge Or Trial…Drudge Report

Zcat on November 28, 2011 at 10:36 AM

Nobel Prize tax … 98% … We’ll just really tax the heck out of them!

J_Crater on November 28, 2011 at 10:41 AM

REPORT: Senate Moves To Allow Military To Arrest Americans Without Charge Or Trial…Drudge Report

Zcat on November 28, 2011 at 10:36 AM

The article is from Prison Planet….it says they are going to vote on the bill that doesn’t mean they passed the bill.

Dr Evil on November 28, 2011 at 10:46 AM

Giving rat faced bastards with traumatic brain damage a bad name every where.

Speakup on November 28, 2011 at 10:48 AM

Fine.

Let’s start with incredibly rich untaxed universities with billions of dollars in assets, like Princeton.

Realist on November 28, 2011 at 10:50 AM

Where’s Ed?

conservative pilgrim on November 28, 2011 at 10:27 AM

On a well deserved vacation this week. Hopefully one that is unplugged.

rbj on November 28, 2011 at 10:50 AM

Where’s Ed?

conservative pilgrim on November 28, 2011 at 10:27 AM

Time off for good behavior…

Fallon on November 28, 2011 at 10:50 AM

Where’s Ed?

conservative pilgrim on November 28, 2011 at 10:27 AM

Time off for good behavior…

Fallon on November 28, 2011 at 10:50 AM

Comment of the Day™

Steve Eggleston on November 28, 2011 at 10:58 AM

The article is from Prison Planet….it says they are going to vote on the bill that doesn’t mean they passed the bill.

Dr Evil

It’s also on Drudge Report. Did you see the congressmen who wrote the bill, as well as, supporting the bill? Of course it will pass!

Zcat on November 28, 2011 at 10:58 AM

Even if you could pay off the deficit with higher taxes, Congress would spend it all before the ink was dry on the new tax tables.

Socratease on November 28, 2011 at 11:03 AM

He can’t possibly believe his own crap. What he has been doing for a long tie is trying to take the ownership of every progressive position and making it even more radical. It’s a cynical way, in his mind, to make himself more popular, but he is just moving further and further into the stupid-a** clown category.

Igor R. on November 28, 2011 at 11:08 AM

On Tuesday, the Bureau of Economic Analysis cut their estimate of growth in the third quarter ending September from 2.5% to 2%. Then on Wednesday, the Federal Reserve rocked financial markets by forcing America’s 31 largest U.S. banks to “stress test” balance sheets to determine their capability to withstand an 8% drop in the economy; which would cause home prices to plunge by 21%, and unemployment rate to jump to 13%.

OMG

J_Crater on November 28, 2011 at 11:11 AM

Let’s tax idiocy!!!

This would put an end to Krugman columns.

landlines on November 28, 2011 at 11:14 AM

Why should those choices only involve spending cuts?

Because Krugman, the federal government’s spending is wildly out of control and must be severely cut back if we are ever going to restore any semblance of fiscal sanity or constitutional government. For too many years now, the federal government has been spending enormous sums of money it does not have on programs it is not constitutionally authorized to establish, creating an ever-growing population of dependents, and making annual tallies of multi-billion-dollar waste and fraud standard fare in these government programs.

That’s why.

AZCoyote on November 28, 2011 at 11:14 AM

Right now, the only Krugman could do to help the debt is to volunteer his sorry butt for a PPV where we watch him being clubbed silly by MF Global customers with frozen tunas.

I’d pay good money to watch that.

CPT. Charles on November 28, 2011 at 11:15 AM

Here’s a revenue idea – an 80% estate tax on all assets inherited by someone who marries an older, unattractive person strictly due to their wealth. We can call it the Anna Nicole Smith/John Kerry Revenue Act of 2012!

Steve B on November 28, 2011 at 11:18 AM

When all you have is a Hammer & Sickle, everything looks like it needs taxed.

29Victor on November 28, 2011 at 11:18 AM

Time off for good behavior…
Fallon on November 28, 2011 at 10:50 AM

Comment of the Day™
Steve Eggleston on November 28, 2011 at 10:58 AM

Haha. Indeed! Ed is definitely the rowdiest of the HA writing crew.

/do I really need a sarc tag?

conservative pilgrim on November 28, 2011 at 11:20 AM

I almost wish this administration would hire this guy as their finance czar and put his principles into practice…just so the world will finally see him for what he is. A bumbling nincompoop.

scalleywag on November 28, 2011 at 11:26 AM

I don’t want to be rude, but … Krugman is one strange guy. The eyes. The nervousness. And I was going to say, the hate towards those who disagree with you, but, that just de rigueur for liberals. Not strange.

Paul-Cincy on November 28, 2011 at 11:38 AM

Unless you are looking at taxes simply as emotional salve (e.g. tax people you don’t like just to punish them because you don’t like them in order to make you feel better) then there is really no point. You can’t raise enough money from taxes to make a difference. We are talking about needed to double income taxes across the board for everyone in order to make any difference.

crosspatch on November 28, 2011 at 11:44 AM

Krugman is what the NYT thinks is an “intellectual”. It is time to rethink NYT being considered the paper of record.

jeffn21 on November 28, 2011 at 11:46 AM

Cornel West. Van Jones. Paul Krugman. What is it with Princeton?

Steve B on November 28, 2011 at 11:52 AM

Often Wrong Krugman strikes again. The man just, plain never gets it right.

The revenue side of the government’s income statement looks fine. Revenues have been growing steadily. Federal spending topped $1 trillion for the first time fewer than 10 years ago. Now it’s close to $4 trillion.

The current deficits are the result of insane growth in spending, and will only be solved by equivalent decreases in spending.

This matches 100% of real-world experience. Nations all over Europe have been justifying tax increases for decades by citing the need for fiscal responsibility — and then matched each new revenue stream with a new spending project. Same here in the US; every time Congress gets a windfall, it spends it.

No deficit will ever be solved by increasing taxes. Not ever. Not in this universe.

philwynk on November 28, 2011 at 11:53 AM

Let’s tax idiocy!!!

This would put an end to Krugman columns.

landlines on November 28, 2011 at 11:14 AM

Well, maybe not — I can’t imagine him shutting up in any case — but Krugman’s tax alone just might solve the entire deficit in one shot.

philwynk on November 28, 2011 at 11:55 AM

I agree … a high tax on all money going to Mexico.

stenwin77 on November 28, 2011 at 10:13 AM

Concur. A 100% tax, to be recaimed when you FILE YOUR INCOME TAXES THE NEXT YEAR…

Khun Joe on November 28, 2011 at 12:04 PM

For some reason I envision that Krugman is certifiably nuts.

Something like he sits naked and sweaty in his office and his chair is his Nobel Memorial Prize in Economic Science statue that has been liberally covered in Vaseline with lots of skin-rash causing chili pepper bits in it.
On every wall in his office I imagine is either a mirror or blown-up newspaper headline from one of his columns plastered in a helter-skelter fashion on all the walls, “Krugman Wins Nobel Prize!”, “Things to Tax”, “Obama the Greatest President Ever!” Maybe 3-5 inches thick in places of layer after layer of old, glued on headlines.
He replaces his computer key boards daily from smashing his forehead on them after reading a commentary that disagrees with him, “NO!No!No!You’re Wrong! I have the Nobel! I write for the Enn Y TIMES!!! Raise Taxes, RAISE TAXES!!!”
Showing on the nine Televisions going in his office are videos of himself on TV talk shows running in re-run loops over and over on each set. No sound. Krugman stands in front of the sets bouncing up and down like rabid monkey from Borneo mouthing the words live; he jumps from one TV to the next, perfectly syncing his words live with each show. His voice is modulating rapidly from the high pitch of Western Screech Owl going through early menopause to Lurch-from-the-Addams-Family-show low.
And then he does his hourly spin of the world globe while puling at his hair while chanting maniacally over and over, “Why won’t they listen to me? Why won’t they listen to me??!!?”
And for some reason I think Paul’s hobbies include coming up with anagrams in every language of the world for the words “RAISE TAXES” and crocheting the words “Keynesian Economics” from strands of 2-day old ground beef.
But then having a Nobel Prize and working for the NY Times gives management some latitude in anyone questioning a “tax,tax,tax!!!” columnist’s sanity and his liberal viewpoint.

albill on November 28, 2011 at 12:04 PM

Bo Bo da clown !

Hummer53 on November 28, 2011 at 12:12 PM

Let’s start by taxing the crumbs in his beard.

Ward Cleaver on November 28, 2011 at 12:20 PM

Why should those choices only involve spending cuts? Why not also push some taxes above their levels in the 1990s?

1. There have been no actual cuts proposed. Merely reductions in the increase. And probably not even reduced enough to keep spending level even accounting for inflation. Repeat: There are no cuts!
2. The more Congress takes in, the more their spending increases geometrically.

Starve the beast. It’s the only way.

MassVictim on November 28, 2011 at 12:23 PM

Lets tax NYT journalists!

tinkerthinker on November 28, 2011 at 12:57 PM

Time to start taxing that 47% portion that pays no taxes now.

TAX THE POOR.

Krugman and the Demonrats want to tax the poor.

orbitalair on November 28, 2011 at 12:59 PM

As I’ve noted many times in the past, if we had only grown our total expenditures at the rate of inflation since 2007, we would have had a $413 billion deficit in the just-ended fiscal year 2011. This would be even lower in the current year given projections of $2.9 trillion in unified tax receipts.

Point missed. Badly. Government spending adds to GDP whereas the borrowing does not subtract from it. GDP is a newsmaking political gauge of economic activity. A 10% drop in GDP is equated to a depression. The insane government spending under Obama (and some under Bush) has been to one end – to hide a Depression beneath a mountain of new federal debt.

Each taxpayer is on the hook for around $120,000 in federal debt alone. It won’t be paid off. Ever. Add to that the political reality that until all the poor are taken care of, all the elderly secure, all the lame walk, all the kids get college educations – until people get from government everything promised to them – there will be no serious talk of a ballanced budget. All we’d hear is “You’re ballancing the budget on the backs of (fill in the blank with whatever pet program has not succeeded with the money it’s been given, so of course it needs MORE). So that $120,000 will only increase.

That’s why the only argument in DC is whether to stay the course and add $9.2 trillion in debt over the next ten years, or get busy with a plan to add $8 Trillion ($1.2 Trillion reduction). The best our Congress could come up with is a $23 Trillion debt by 2022 by cutting that $1.2 Trillion. They will, of course, defend that $23 Trillion when the day comes by comparing it to the size of GDP, whose number we already know is padded by government borrowing and spending of Trillions each year.

They have fooled people into thinking our $15 Trillion in debt would be $1.2 Trillion less if the supercommittee had succeeded. Mass delusion seems to be the only way to engage the population these days.

Total debt in America stands at around $53 Trillion. That comes to about $400,000 per taxpayer. It will never be paid off. Not only does the taxpayer have to retire the public debts, but has to work to retire his own debts while spending into the economy so the private sector can retire its debts.

It will never be paid off. There will never be a ballanced budget. When the credit markets refuse to play along, we’ll print our own scrip. We’ll be trading food for oil in ten years, completely bypassing worthless currency. We’ll require nations that want to eat to buy oil to trade with us, because we won’t be able to buy with either cash or credit.

shuzilla on November 28, 2011 at 1:10 PM

I actually agree with one thing that he wrote:

And then there’s the idea of taxing financial transactions, which have exploded in recent decades. The economic value of all this trading is dubious at best.

.
Goldman Sachs is doing high frequency trading and front-running clients trades to make more commissions and more trading volume incentives from the exchange. This tax might dial GS back a little bit.
.
Otherwise, it’s just more weasel words from the chief weasel.

ExpressoBold on November 28, 2011 at 1:28 PM

Why does anyone even pay attention to this idiot? He jumped the shark long ago.

Patrap on November 28, 2011 at 1:31 PM

Folks, you’re living in the past. Once upon a time America was a middle-class nation, in which the super-elite’s income was no big deal.

Yeah. Folks like J.P.Morgan, Andrew Carnegie, John D. Rockefeller never existed and those efforts to breakup Standard Oil were meaningless and vindictive.

J_Crater on November 28, 2011 at 2:27 PM

Is this what the space aliens want?

HondaV65 on November 28, 2011 at 10:09 AM

Ha!

It’s dangerous to try to find method within madness :) Sometimes it might be better to just stamp QUACK and have done.

What’s astonishing is the inability to just be wrong. It’s like walking around a campus and hearing, over and over again, “Yeah, but that wasn’t real communism.”

Axe on November 28, 2011 at 4:08 PM

I actually agree with one thing that he wrote:

And then there’s the idea of taxing financial transactions, which have exploded in recent decades. The economic value of all this trading is dubious at best.

ExpressoBold on November 28, 2011 at 1:28 PM

No no no — that’s because of all the guys like me, and affordable brokerage fees, and online brokerage accounts, etc. Unless you agree to a capitalization threshold? Otherwise, this is going to slam the door on a lot of [the wrong] people.

Axe on November 28, 2011 at 4:17 PM

Unless you agree to a capitalization threshold? Otherwise, this is going to slam the door on a lot of [the wrong] people.

Axe on November 28, 2011 at 4:17 PM

.
I’d even agree to a minimum number of transactions per day to be excleded from the tax – say, your first 1,000 transactions per day are non taxed. That should give you an idea of how many transactions/day Goldman and the other brokerages are running.
,
You don’t do 1,000 transactions/day, do you?

ExpressoBold on November 28, 2011 at 5:19 PM

You don’t do 1,000 transactions/day, do you?

ExpressoBold on November 28, 2011 at 5:19 PM

Nah. I’m good. I’ll sign.

Wait. I think Barney Frank walked off with my pen.

Hey! Where’s the desk?

Axe on November 28, 2011 at 5:25 PM

Krugman puts the ug in Ugh!

Lawrence on November 28, 2011 at 5:48 PM

I hate krugman

would love to see him hanging from a rope and watch me throw the knife into the woods

Sonosam on November 28, 2011 at 7:03 PM

And while I’m one of the unpopular people who admit that any sort of salable final deal will likely require some significant revenues

It’s the spending stupid.

Tim_CA on November 28, 2011 at 8:59 PM

Where’s Ed?

conservative pilgrim on November 28, 2011 at 10:27 AM

Sure Jazz is a bit of an idiot…..but you don’t have to tell on him!!

Tim_CA on November 28, 2011 at 9:01 PM