In a time of prolonged financial difficulty and a mounting national debt, it’s entirely reasonable to ask wealthy Americans to pay slightly more in taxes, though their rates would remain relatively low, compared to decades past.
But in a stalemate with the White House, Republicans refuse to consider the idea. As America drives toward the “fiscal cliff,” some who served in the Clinton administration offer good, very good, ideas to reduce the deficit with additional revenue. They deserve a listen.
How long will the Republicans in the U.S. House continue to preach the same old sermon about keeping the Bush-era tax cuts for the wealthy, cutting spending (few specifics, of course), “restructuring” Medicare and Medicaid and limiting some tax deductions? Apparently, they’re prepared to stay in that pulpit forever.
Some who worked under President Bill Clinton, who delivered a budget surplus after eight years, have put forth ideas of merit and common sense.
They include: letting tax cuts for those with incomes over $422,000 expire, limiting deductions now enjoyed by high-income taxpayers, raising the top capital gains tax rate from 15 to 28 percent, which happens to be what it was from the Reagan administration through the 1990s.
Dividends, instead of being taxed at 15 percent, would count as regular income, bringing in more revenue. Itemized deductions for mortgage interest, perhaps the most popular deductions of them all, would be replaced with a credit intended to level the benefit.
This group, which includes Lawrence Summers and Robert Rubin, former Treasury secretaries, among other architects of the Clinton economic program, estimates that the very rich, those with $1 million or more in income, would see a 5 percent increase in tax liability.
These suggestions are about increasing fairness in the tax code while also making headway against the nation’s fiscal challenges, to the tune of an additional $1.8 trillion in revenue over the first decade.
Those at the upper end of the income scale have enjoyed lower tax rates in recent years than they had in the many decades previous. That has contributed to the $16 trillion debt that threatens the country’s economic stability and also the futures of younger generations and those not yet born.
The middle class, long without some of the tax advantages enjoyed by upper-income households, which can afford the expertise to produce the most favorable tax returns, has been burdened by a host of side effects from the Great Recession, from stagnant or decreasing incomes to more health care expense. They need their Bush tax cuts to stay in place.
Do they care?
But those who have prospered most, who have enjoyed the boom times that came before the reality of recession in 2008, can afford to do a fraction more to help the economy that helped build their coffers recover. Sadly, those who oppose any increase in tax rates seem to care more about sticking to their narrow-minded ideology than avoiding the cliff.
And they stick knowing that if no deal is reached, a law kicks in under which taxes will go up on everyone and federal programs will be dramatically cut, including defense. A second recession would be a real possibility, crippling to all parts of the economy, from small businesses to big ones.
This country has seen the damage done by partisan standoff. Congress should be a serious place, with serious men and women doing serious business.
If ever there were a time, as the cliff gets closer, to get down to that business, it is now. Those who designed what amounted to the last era of prosperity and surplus have given both sides on this debate another good starting point.