Who Should Pay for Deficit Reduction?

http://economistsview.typepad.com/economistsview/2012/01/who-should-pay-for-deficit-reduction.html

Sunday, January 22, 2012

Richard Green makes an argument for progressive taxes:

The banal moderateness of Thomas Friedman, by Richard Green: In his paean to conventional wisdom this morning, the ever so serious Mr Friedman writes:

Second, I want to vote for a candidate who is committed to reforming taxes, and cutting spending, in a fair way. The rich must pay more, but everyone has to pay something. We are all in this together.

But how over the past decades have we all been in this together? In 2007, those in the bottom quintile had the same income they had in 1998, and a bump of little more than 11 percent since 1969; those in the top five percent have seen incomes rise by 74 percent since then.

[...] [see above link for graph]

Sure, if everyone had benefitted from the policies of the past 40 years, then everyone should sacrifice now.

But for the time being, lets begin by asking for sacrifice from those with the means to do so.

When we measure who pays for bringing the long-run deficit under control, we should remember that deficit reduction is likely to include both cuts to spending and tax increases. We should also remember the complaint from the wealthy that most of the benefits of government spending go to lower income classes. According to this argument, the cost of reducing the budget deficit through cuts to government spending -- and Republicans will push for this option as much as they can -- will fall mainly on the less fortunate.

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