Paul Krugman offers two modest proposals on taming the budget with some strategic tax increases:
* An increased bite on the super wealthy, a range he defines as making more than $2 million a year. He’d take it to pre-1980 rates, sufficient to produce $1 trillion over 10 years, while raising eligibility age for Medicare to 67 would save the government an eighth that amount. (And save nothing for the country as a whole because it would drive people into more expensive private insurance or force huge amounts of unpaid charity care for emergencies.)
* A small fee on financial transactions.
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.
But wouldn’t such a tax hurt economic growth? As I said, the evidence suggests not — if anything, it suggests that to the extent that taxing financial transactions reduces the volume of wheeling and dealing, that would be a good thing.
This all DOA in the Republican House, at a minimum. There, the focus is all on ending government pensions, ending Medicare and ending Social Security. Oh, and don’t forget more tax breaks for the so-called “job creators” — many of them actually nothing but wealthy coupon clippers enjoying tiny tax burdens on capital gains and dividends flowing from inherited wealth.