Ever since the anti-tax Tea Party became a Republican kingmaker, the idea of raising taxes has been political poison in Washington. But when you look at the broadest measure of the U.S. tax rate — total federal revenues as a share of the nation's gross domestic product — "federal taxes are at their lowest level in more than 60 years," says former Reagan adviser Bruce Bartlett in The New York Times. Republicans are still fighting hard to bring taxes down. Should we be talking about nudging them higher instead?
Raising taxes wouldn't hurt: Taxes are low, says Mark Thoma at Economist's View, and, despite what you might have heard, raising taxes on the rich won't "have much if any effect on economic growth or employment." Anyone "worried about confidence eroding due to the deficit" should want taxes to go up. We should ditch these historically low rates once the economy is on more "solid footing."
"'Are taxes in the U.S. high or low'"
Actually, hiking taxes on the rich will damage the economy: The "soak-the-rich lobby" isn't talking about a slight adjustment upward, says Stephen Moore at The Wall Street Journal. They're talking about ending the Bush-era tax cuts for the wealthy, and adding a 3 percent surtax on income above $1 million, which could send the combined top federal and state income tax rate to 62 percent. That would send us back in time to pre-Reagan, Jimmy Carter-era rates, and put America at a huge competitive disadvantage with our economic rivals.
"A 62-percent top tax rate?"
Reform the system instead of fiddling with rates: As Bartlett points out in the Times, thanks to our loophole-friendly system, tax rates have "very little to do with what actually gets paid in taxes," says Doug Mataconis at Outside the Beltway. We could increase revenue by "reforming the tax code to make it simpler," making it easier for people to comply, and eliminating deductions and "tax dodges that serve no economic benefit." Of course, "any talk of reform that might increase revenue is verboten in the GOP. Which means we'll just sit here doing nothing, again."
"Federal taxes at lowest rate since 1950"