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Jan 11, 201306:05 AMLeft Business Brain

with Tom Breuer

The Tax Monster

(page 2 of 2)

We can also look to the experience of the rest of the world. While the eurozone crisis has prompted critics to say that Europe’s social democracies are too sclerotic and economically naive to prosper, you’d be hard-pressed to blame social democracy for what’s happened over there.

Yes, Europe’s situation is a mess, but not all countries are affected equally. Among the nations whose fiscal houses are in relatively good shape are Germany and Sweden – countries with tax rates that would make your average American conservative’s eyes bleed. (It’s also telling that Sweden currently does not use the euro.)

So just as Finland proves that unionized teachers do not doom an education system, and just as the experience of the rest of the industrialized world proves that universal coverage doesn’t turn one’s health care system into an expensive mess (in fact, it does the opposite), Germany and Sweden prove that there’s nothing magical about low taxes on the wealthy.

One thing that Europe does prove, however, is that austerity can stifle an economy. Limiting the spending power of the poor and middle class in order to preserve historically low tax rates for the rich is not just unfair, it’s unwise. If this economy is going to thrive in the future, we need to take a much broader view of the world and its history. Thankfully, the American people are starting to catch on. 

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Jan 13, 2013 11:19 am
 Posted by  econprof123

It's a great shame that when it comes to tax policy we leave out any thoughts of economic reality, especially when we discuss tax RATES. Tax rates are the price of taxes. When the go up we try harder to avoid them. The UK thought they could raise rates on those earning more than $1 million a year from 40% to 50%. The following year the tax REVENUE from the millionaires dropped almost 50%. An true economist would tackle the tax problem by trying to find the tax policy that would produce the most income. For example, if we gave every man, woman and child a standard deduction of say, $15,000, then subtracted that from the tax filer's gross income (from ALL sources of income), then pay a graduated tax on the remainder, we could have a simplier and more evenly distributed tax burden. And we could raise tax revenues by changing the marginal rates. There would be few incentives to find loopholes to avoid taxes. But when politicians talk taxes, they invariably give tax breaks to their constituents - mortgage deductions, lower taxes on capital gains, etc., etc. So when President Obama declares that the tax RATE on the rich is going "UP" he's just playing with words. For example, the tax on inherited wealth was supposed to expire. If he allowed it to expire the tax on inherited wealth would have been 55% on assets exceeding $1 million. Instead, the inherited wealth will be taxes at 40% of assets exceeding $5 million, instead of 35%. And he called this an "increase" in the inheritance tax! High tax rates with thousands of loopholes merely camouflages any real tax reform. Obama's tax rate increase allows him a bumper stick slogan but will not do much to raise tax revenue.

Feb 4, 2013 08:44 am
 Posted by  Anonymous

Funny how the article in IB mentioned how great the tax increases in the past were for our economy but failed to mention how much lower government spending was.

If Obama gets his increased revenue throu taxation, how much of that will go towards the deficit? My guess, none.

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About This Blog

Tom Breuer, IB Web editor, has spent much of his life trying to explain his leftward leanings. As the sixth of seven children from a predominantly Republican family, he's used to being surrounded and ganged up on, so he welcomes comments from conservatives. He is the co-author of three political humor books, including Sweet Jesus, I Hate Bill O'Reilly. Find him on Twitter .

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