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Sunday, November 27, 2011

Paul Krugman, "Things to Tax": Let's Also Tax Silly New York Times Op-Eds

In his New York Times op-ed, "Things to Tax" (http://www.nytimes.com/2011/11/28/opinion/krugman-things-to-tax.html?ref=opinion), Paul Krugman demands higher taxes on the "super-elite" and on "financial transactions." Arguing that higher taxes on the "super-elite" can "raise enough money to matter," Krugman writes:

"[I]t wouldn’t be hard to devise taxes that would raise a significant amount of revenue from those super-high-income individuals.

For example, a recent report by the nonpartisan Tax Policy Center points out that before 1980 very-high-income individuals fell into tax brackets well above the 35 percent top rate that applies today. According to the center’s analysis, restoring those high-income brackets would have raised $78 billion in 2007, or more than half a percent of G.D.P. I’ve extrapolated that number using Congressional Budget Office projections, and what I get for the next decade is that high-income taxation could shave more than $1 trillion off the deficit.

. . . .

So raising taxes on the very rich could make a serious contribution to deficit reduction. Don’t believe anyone who claims otherwise."

Don't believe anyone except dear Uncle Paul? Well, I don't consider exceedingly wealthy persons to be "super-elite" or even "elite." I have nothing but pity for many of these people, who have lost sight of their humanity in their rapacious pursuit of wealth. In addition, I am not opposed to increasing their tax rates. However, as I have said in the past, increasing the taxes imposed upon the extremely wealthy is not -- notwithstanding what Krugman would have us believe -- going to make a dent in America's debt or deficit.

What isn't Krugman telling us? Paul doesn't say that US debt exceeds $15 trillion, and that under Obama, US debt has increased by $4 trillion. Krugman wants us to believe that reducing the debt by $1 trillion "for the next decade" is going to make a meaningful difference? Yeah, right.

Krugman also recommends taxing "financial transactions":

"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. In fact, there’s considerable evidence suggesting that too much trading is going on. Still, nobody is proposing a punitive tax.

. . . .

And here’s the thing: Because there are so many transactions, such a fee could yield several hundred billion dollars in revenue over the next decade. Again, this compares favorably with the savings from many of the harsh spending cuts being proposed in the name of fiscal responsibility."

Again, note that the several hundred billion dollars in tax revenue would occur "over the next decade." Meaningless? You bet! But apparently, Krugman wants a "punitive tax," such as that imposed on the sale of cigarettes. With US stock markets already in a tailspin, one can only wonder what the effect of Paul the Punisher's new tax on "financial transactions" would have.

Don't get me wrong: I am in favor of reinstating the Uptick Rule, which would hamper the predatory trading practices of hedge funds (see: http://jgcaesarea.blogspot.com/2011/08/paul-krugman-hijacked-crisis-paul-heres.html) and reduce the number of stock market trades. This could reinvigorate the economy, but would not entail additional taxes.

By now, I suppose you're wondering why I recommend taxing silly New York Times op-eds. Answer: Even though such a tax on these op-eds wouldn't raise much money, there are also too many of them.

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