Welcome Bruce Bartlett (Economix), and Host James K. Galbraith (Professor, University of Texas, Austin)

[As a courtesy to our guests, please keep comments to the book and be respectful of dissenting opinions.  Please take other conversations to a previous thread. - bev]

The Benefit and The Burden: Tax Reform-Why We Need It and What It Will Take

I’m delighted to welcome Bruce Bartlett to Firedoglake Book Salon.

Bruce’s new book, The Benefit and the Burden is an extended essay on taxes and tax reform. It provides a breezy survey of the central issues of tax policy, with excursions into history and international comparison, and a keen eye on the political angles and how they’ve been played by both parties in recent years.

The Benefit and the Burden begins with a short history of American taxation and a description of the core issues in the definition of income. It follows with some discussion of the principal economic arguments that have flowed around the relationship between taxes, growth and fairness, and then proceeds to examine the issues surrounding preferences in our tax code – for housing, for charitable contributions, for capital gains, and the problem of taxing corporate profits. It ends with a discussion of reform proposals, and Bruce makes his case for a VAT to close the revenue gap and fund the government that we will need, among other things, to support an increasingly elderly population.

The book is not a partisan tract. Bruce has become well-known – and highly respected – for the rare trait of not-singing to any ideological choir. Open-minded readers of all persuasions will learn from this book, whether they are persuaded by the program, or not.

On a personal note, Bruce and I first met in 1981 – possibly the very end of 1980 – when I was the (much too young) newly-installed staff director of the Joint Economic Committee, under Representative Henry Reuss of Wisconsin, and he was the (equally young) deputy director, appointed by Senator Roger Jepsen of Iowa.

Ideologically, we were opposites. I was a committed Keynesian; Bruce was a supply-sider who had helped to draft Jack Kemp’s tax cut plan and was the author of a newly-published book, Reaganomics.

There was a certain amount of mutual suspicion at first. And yet, for two years we worked together, in a spirit of fair play and open debate. We helped the Joint Economic Committee to achieve a remarkable moment in its history, not through fatuous bipartisanship, but through spirited combat, carried out in hearings, studies and reports. It was great fun, and Bruce and I have been friends ever since.

Bruce left the JEC to work in the White House under President Reagan, and served in the Treasury under President George H.W. Bush. In the mid 2000s, he managed to get himself fired from the conservative National Center for Policy Analysis for writing Impostor, a magnificent tract on the non-conservatism of George W. Bush. In writing that book, he exhibited the true bravery of an independent spirit.

Recently Bruce has achieved a wide readership through regular postings at The New York Times and at The Fiscal Times, where he writes most frequently on taxes and tax reform. In that capacity, he has honed the skills on display in this fine small book.

I am therefore very pleased to note that Bruce and I have known each other for 31 years, and that – on this my 60th birthday, it’s my privilege to celebrate by hosting the Firedoglake Book Salon on his new book.

Bruce, welcome.

205 Responses to “FDL Book Salon Welcomes Bruce Bartlett, The Benefit and The Burden: Tax Reform-Why We Need It and What It Will Take”

BevW January 29th, 2012 at 1:52 pm

Bruce, James, Welcome back to the Lake.

James, thank you for Hosting today’s Book Salon – and Happy Birthday!

dakine01 January 29th, 2012 at 2:00 pm

Good afternoon Bruce and James and welcome back to FDL this afternoon

Bruce I have not had a chance to read your book but I do try to read your Economix posts and appreciate the insights and rational thinking you display in them.

First question (based on the intro), do you still consider yourself a “supply-sider?”

Secondly, given the formal identification of income for tax purposes as “Earned” and “Unearned,” why shouldn’t Unearned income be taxed at a rate equal to or higher than Earned, especially given how much emphasis the American supposed ideal places on hard work?

Bruce Bartlett January 29th, 2012 at 2:01 pm

Thank you.

James K. Galbraith January 29th, 2012 at 2:02 pm

OK, that’s quick off-the-starting-block. Bruce, it’s all yours.

Bruce Bartlett January 29th, 2012 at 2:02 pm
In response to dakine01 @ 2

The distinction between earned and unearned income is really a practical one. For example, capital gains are only taxed when realized. Therefore the taxpayer decides when and whether to be taxed. This is important for tax and economic policy.

Bruce Bartlett January 29th, 2012 at 2:03 pm

Jamie, I thought you would enjoy my chapter on how other countries tax themselves. Did you?

James K. Galbraith January 29th, 2012 at 2:03 pm

Let me add a twist to the first part of dakine01′s question. One of the key tenets of supply-side economics was that individuals respond to changes in their tax rates. Yet you present a lot of evidence here that most individuals do not even know what their tax rate is! How can this be squared with the supply-side theory?

DWBartoo January 29th, 2012 at 2:05 pm

Thank you, Bruce and James, for joining us.

DW

Bruce Bartlett January 29th, 2012 at 2:05 pm

Most people don’t know their tax rate. Even high income people. Just this morning James Stewart had a column in the NYT going through his own taxes. It was a revelation to him.

eCAHNomics January 29th, 2012 at 2:05 pm

If corps are people, why don’t they pay taxes. (Trick Q; the A obviously is bc corps are rich people.)

James K. Galbraith January 29th, 2012 at 2:06 pm

I did enjoy that chapter. The basic observation — other (rich) countries have higher taxes but less progressivity than the US — is a sharp one.

But the comparison also raises some questions about your favorable view of European systems, which I’ll come to.

eCAHNomics January 29th, 2012 at 2:06 pm

Why are western economies still on supply side jags when the obvious problem with them is too much supply and not enough demand.

Bruce Bartlett January 29th, 2012 at 2:06 pm

I cite some poll data showing that most people grossly overestimate their tax bracket. This suggests that the economic cost of raising rates is nonexistent because people presumably are already behaving as if they are in a higher bracket than they are.

James K. Galbraith January 29th, 2012 at 2:07 pm

So, if high-income people don’t know their tax rate, doesn’t it follow that reducing it to encourage “work, saving and investment” will not work?

DWBartoo January 29th, 2012 at 2:07 pm
In response to eCAHNomics @ 10

Glad you made it to the Salon, eCAHN, it looks as if it shall be … “interesting”.

;~DW

BevW January 29th, 2012 at 2:08 pm

As a technical note,
there is a “Reply” button in the lower right hand of each comment. Pressing the “Reply” will pre-fill the commenter name and number you are replying to and helps for everyone in following the conversation.

Bruce Bartlett January 29th, 2012 at 2:08 pm

One of the few fundamental areas of tax theory that the right and left generally agree upon–Jamie may be an exception–is that corporations shouldn’t be taxed separately. The corporate and individual tax systems should be fully integrated.

James K. Galbraith January 29th, 2012 at 2:08 pm

(The answer came before the question on that one…)

eCAHNomics January 29th, 2012 at 2:09 pm

How can any country be less tax progressive than the U.S. when you include SS, MC, user fees, sales taxes, etc. Do VATs truly generate proportionally more revenue abroad than all the regressive taxes do in the U.S.?

James K. Galbraith January 29th, 2012 at 2:10 pm
In response to eCAHNomics @ 19

Well, that’s a good question. Bruce?

Scarecrow January 29th, 2012 at 2:10 pm

Welcome to Bruce Bartlett and James Galbraith, and happy birthday! I want to echo Jamie’s mention of Bruce’s reputation for being scrupulously honest, non-partisan in his analysis. The book’s a treasure of useful history, well documented tables and facts, and highly readable — just like his posts at the NYT.

So — if you tell the truth, you’re in trouble. Bruce, what’s been the reaction to both your NYT posts and the book among your previously colleagues? I hope they’re listening.

Kelly Canfield January 29th, 2012 at 2:10 pm

…the rare trait of not-singing to any ideological choir. Open-minded readers of all persuasions will learn from this book, whether they are persuaded by the program, or not.

A completely true statement. I read this book and hardly have disputes with 80% of it, learned a lot, and have some clarifying questions to ask.

For a quick ref for FDL readers, this interview Mr. Bartlett did on Tweety’s show (Hardball) let’s you know a small bit from where he’s coming from.

DWBartoo January 29th, 2012 at 2:10 pm

So, you are going to insist upon being rational, are you, Jamie?

Isn’t that quite un-dismal?

Next, you’ll opt for being reasonable … and who knows where that might lead?

;~DW

Bruce Bartlett January 29th, 2012 at 2:10 pm

I think the effects of taxation on the economy tend to be grossly over estimated by people like Larry Kudlow. But they are not nonexistent. I think we could easily raise the capital gains tax back to 20 and the top rate to Clinton-era levels at no economic cost. But it would be a bad idea to go back to Eisenhower-era tax rates.

eCAHNomics January 29th, 2012 at 2:11 pm
In response to DWBartoo @ 15

About to head off. My blood pressure is rising.

DWBartoo January 29th, 2012 at 2:12 pm
In response to eCAHNomics @ 25

If ya can manage to stay, then ‘twould be much appreciated, in some quarters, at least, eCAHN.

DW

Bruce Bartlett January 29th, 2012 at 2:12 pm
In response to eCAHNomics @ 19

Progressivity is a function of steepness of the tax schedule. In European countries people thend to hit the top rate at a relatively low level of income, making the effective tax schedule fairly flat. But that applies primarily to labor income. There, as here, capital income is taxed much more lightly.

Kelly Canfield January 29th, 2012 at 2:13 pm

Bruce – Did Orrin Hatch respond to where you quote him about tax expenditures and you call it “complete nonsense” ?

James K. Galbraith January 29th, 2012 at 2:13 pm
In response to Bruce Bartlett @ 24

OK, but why, exactly? Is it because we cannot reproduce the (insular) social conditions of the Eisenhower era? Or because the economy was in some sense less efficient than it is today?

DWBartoo January 29th, 2012 at 2:13 pm
In response to Bruce Bartlett @ 24

“Bad”, you say, how so Bruce, and “bad” for whom, specifically?

DW

Bruce Bartlett January 29th, 2012 at 2:14 pm
In response to Scarecrow @ 21

My former colleague scrupulously ignore everything I write. Like Andrew Sullivan, I am banned from Fox News and the Wall Street Journal.

Bruce Bartlett January 29th, 2012 at 2:15 pm
In response to Kelly Canfield @ 28

Hatch has banned me from testifying at the Senate Finance Committee. That should tell you something.

Scarecrow January 29th, 2012 at 2:15 pm

The book has a rather thorough critique of the various Bush tax cuts and how little they did to meet the claims — higher GDP, employment, deficits etc — the GOP has made about them. As Bruce lays them out, they seem fairly convincing, and yet they don’t seem to be sinking in to the public discussion and certainly not on the GOP side. I’d be interested in having both Bruce and Jamie weigh on on why that is so and what, if anything can be done to change the debate.

Bruce Bartlett January 29th, 2012 at 2:16 pm

International capital and labor mobility limits tax policy today in a way that it didn’t in the 1950s.

James K. Galbraith January 29th, 2012 at 2:16 pm
In response to Bruce Bartlett @ 31

(Gosh, really? Even I get on Fox occasionally. I thought that must mean they took everybody…)

DWBartoo January 29th, 2012 at 2:16 pm
In response to Bruce Bartlett @ 31

First “they” ban you, then “they” attack you … and then you are ignored.

There are worse fates, Bruce, as you might well imagine.

DW

Bruce Bartlett January 29th, 2012 at 2:17 pm
In response to DWBartoo @ 30

We want to discourage rich people from wasting their time figuring out how to save on taxes through tax shelters. It’s better if they spend their time trying to make more money.

James K. Galbraith January 29th, 2012 at 2:17 pm
In response to Bruce Bartlett @ 34

Yes, I agree with that. Capital controls were a critical element in the early post-war years, in making the system work effectively.

Bruce Bartlett January 29th, 2012 at 2:18 pm

A reporter whose name would be familiar told me recently that when he worked at the Journal he was prohibited from quoting me.

DWBartoo January 29th, 2012 at 2:18 pm
In response to Bruce Bartlett @ 32

That we need a better class of crim … uh Senators?

DW

DWBartoo January 29th, 2012 at 2:19 pm
In response to Bruce Bartlett @ 37

Does the notion of “enough” enter into this discussion, Bruce?

And WHY do we want the rich to earn more?

How much “more” does Bill Gates, for example, really “need” to control?

DW

Bruce Bartlett January 29th, 2012 at 2:20 pm

Last summer the Finance Committee staff asked me to testify but then called back to cancel my appearance because the Republicans objected–Hatch is the ranking member. I was astonished because I thought Democrats controlled the committee. Jamie and I never blocked each others witnesses at the JEC.

James K. Galbraith January 29th, 2012 at 2:20 pm

Let me pop a question with a political angle. You’ve written that the tax policies proposed in the latest State of the Union were a disappointment. Can you explain why you feel that way?

Bruce Bartlett January 29th, 2012 at 2:21 pm

We need the rich to earn more so they will pay more taxes and save the rest of us from paying more.

Kelly Canfield January 29th, 2012 at 2:21 pm
In response to Scarecrow @ 33

Yes the book does – including the Regan tax cuts too.

Bruce, you essentially make mincemeat out of the “Laffer Curve” and to echo Scarecrow’s question, why isn’t that truly known?

James K. Galbraith January 29th, 2012 at 2:21 pm
In response to Bruce Bartlett @ 42

Absolutely true, we didn’t. In fact our members rather enjoyed mixing it up with the witnesses from the other side.

marymccurnin January 29th, 2012 at 2:22 pm

I have often wondered why if you take your social security at 62, you can only earn around $17,000 a year in earned income before SS is taxed. But there is no tax at all on your social security if the income is unearned. Seems this is designed to hurt poor people.

Scarecrow January 29th, 2012 at 2:22 pm
In response to Bruce Bartlett @ 31

Being banned by that crowd is an honor. I suspect we can arrange to have you and that Galbraith fellow do alternative posts on economics here at Firedoglake. They only pretend to ignore us.

I assume you’re familiar with the various economic advisers for the Mitt and Newt campaigns. Glenn Hubbard et al vs so-called “supply siders.” Do you see any of your analysis (or views generally) reflected in their official statements? By the candidates (who don’t always listen to their economists)?

Bruce Bartlett January 29th, 2012 at 2:23 pm

Substantively I think we need tax reform, not more tax gimmicks such as those Obama proposed for veterans, clean energy, manufacturing et al. Politically, I think tax reform is the best way for him to counter Republicans’ tax cuts. Embarrass them by demanding that they put pay-fors on the table.

Bruce Bartlett January 29th, 2012 at 2:24 pm
In response to Kelly Canfield @ 45

It’s tough to counter people who care nothing about truth and will say anything to gain a political advantage. The media refuses to help.

Bruce Bartlett January 29th, 2012 at 2:24 pm
In response to marymccurnin @ 47

You misunderstand how it works. You aren’t taxed, you lose benefits.

James K. Galbraith January 29th, 2012 at 2:24 pm

(Totally irrelevant digression: there was a day, I remember vividly, when the witnesses were Dornbusch, Paulus, Brünner and (I think) Eckstein. The chairman, one Reuss, began the hearing in German, until the stenographer made him stop.)

Bruce Bartlett January 29th, 2012 at 2:25 pm

Jamie and I agree too much these days.

Bruce Bartlett January 29th, 2012 at 2:26 pm

I remember that. I also remember the day you got a picture of the Nobel Pize winners on page one of the NYT and were disappointed that you didn’t get a story–until the Republicans staff congratulated you.

marymccurnin January 29th, 2012 at 2:27 pm
In response to Bruce Bartlett @ 51

Is there a functional difference?

And why is unearned income not treated the same?

DWBartoo January 29th, 2012 at 2:27 pm
In response to marymccurnin @ 47

Now, marymccurnin, this is NOT a reality-based discussion … if the poor had better lobbyists, then they would fare far better in the clinches or in the trenches.

A profoundly reasonable question you imply, btw. But it is not really about taxes. The allocation of necessary resources is off-topic, one imagines … although it is germaine to economics in a theoretical fashion.

DW

Bruce Bartlett January 29th, 2012 at 2:28 pm

Among other things, the congressional hearing process has deteriorated very badly from the days when Jamie and I worked in Congress. Our old committee doesn’t do much of anything these days.

James K. Galbraith January 29th, 2012 at 2:28 pm
In response to Bruce Bartlett @ 54

Yes, the moment you came out into the hall to offer congratulations I realized — if you got a picture and a caption, you didn’t need a story. A milestone in my political education.

Bruce Bartlett January 29th, 2012 at 2:30 pm

Different things upon which taxes can be levied have different elasticities. Economic theory says we should tax most heavily those things least able to escape taxation and tax most lightly those things most able to escape taxation. It’s not fair, but that’s a reality.

Bruce Bartlett January 29th, 2012 at 2:31 pm

One of the problems with our system is that the spending side of policy is not integrated with the tax side. It would be better to deal with some of the distributional consequences of tax policy on the spending side. But we can’t really do that.

Bruce Bartlett January 29th, 2012 at 2:33 pm

That’s basically what they do in Europe. We clutter up the tax code with de facto spending programs like the EITC and then delude ourselves that it is a tax cut.

Scarecrow January 29th, 2012 at 2:33 pm
In response to Bruce Bartlett @ 53

“Jaime and I agree too much these days.”

That may be the most hopeful statement I’ve heard in months.

Towards the end, Bruce you raise what seems a fundamental issue: “what so far is lacking in the tax reform effort . . . is a compelling reason to enact any actual reforms . . .” and yet that’s the focus, and we hear innumerable politicians insist that they favor tax reforms.

Are they sincere? Why are they saying this? And how would you summarize that “compelling reason,” if there is one? Does correcting “inequality” play a role here? Or is it just closing the gap between spending and revenues?

James K. Galbraith January 29th, 2012 at 2:33 pm
In response to Bruce Bartlett @ 59

And that’s the basic argument for a VAT, I suppose.

Reagan’s Treasury Department looked very hard at a VAT in 1984, and came out against; favoring instead the approach that was eventually enacted in 1986. Were they wrong at the time, or do you think the situation has now changed in a fundamental way since then?

DWBartoo January 29th, 2012 at 2:33 pm
In response to Bruce Bartlett @ 57

Congress as a whole doesn’t do much of anything these days, “oversight” is quite passe, Bruce. But then, I rather imagine that you are more aware than most economists appear to be regarding the consquence of today’s “hands-off-the-table approach of the political class. Aiding and abbetting is more the “style” today, lucrative dysfunction prevails.

DW

Bruce Bartlett January 29th, 2012 at 2:35 pm

For me, the main problem is that the tax system directs investment out of areas that would be dictated by economic fundamentals. This reduces growth and imposes a large “dead weight” cost on the economy over and above the tax burden. Tax reform could theoretically reduce the dead weight cost without reducing revenue. That’s worth doing.

spocko January 29th, 2012 at 2:36 pm

Can we talk about Mitt’s tax return? Now, Mitt is a person, just like a giant corporation, so why shouldn’t he, if he wanted to, replicate some of the same techniques used by GE to only avoid paying taxes in the US and get credits?
(For example more deals like the 100 million dollar gift to his sons.)

If Mitt was corporation it would be his fiduciary responsibility to pay as little taxes as possible, right? Could the only reason that Mitt is even paying 13.9 percent because he is running for President? Isn’t him paying any taxes a perception game cooked up by PricewaterhouseCoopers to make him look good to voters vs look good to his actual bottom line?

Bruce Bartlett January 29th, 2012 at 2:36 pm

I think Treasury was wrong and it’s too bad. I have never been able to find out exactly where that came from. The guy who led the Treasury tax reform effort was Gene Steuerle, who is not anti-VAT.

Bruce Bartlett January 29th, 2012 at 2:38 pm
In response to spocko @ 66

The big problem I have with Mitt’s taxes is the extent to which he benefits from the “carried interest” rule, which is completely indefensible.

James K. Galbraith January 29th, 2012 at 2:38 pm
In response to Bruce Bartlett @ 65

I think this response points to the key way in which you remain a conservative. You retain your confidence that there are “economic fundamentals,” toward which the system would gravitate if left alone. I confess I’ve never been persuaded of that. Which is not to say that I have any particular faith in alternative mechanisms.

perris January 29th, 2012 at 2:38 pm
In response to eCAHNomics @ 19

such a good question, sorry I’m late to this thread

I have always said the wealthy do NOT really want a “true” flat tax, one that takes into consideration regressive taxes, if that happened they would be paying more then double in taxes what they pay now

realistically, if there were a method of equalizing regressive taxes it would be great marketing tool, instead of wanting a “progressive tax code” we would want “an equalized tax code”///far better for the talking circuit when you frame something that way

DWBartoo January 29th, 2012 at 2:38 pm
In response to Bruce Bartlett @ 65

You speak of “economic fundamentals”, Bruce, might you elaborate a wee bit?

Presumably you speak of some fundamental economic truths or laws, and I am most eager to learn what you consider that such might be.

DW

Bruce Bartlett January 29th, 2012 at 2:39 pm

Keep in mind that Mitt made most of his investments when the capgains rate was either 20% or 28%. Clearly he was not inhibited by it.

Bruce Bartlett January 29th, 2012 at 2:41 pm

I still consider myself to be a conservative. But an old fashioned one that doesn’t exist any more. My philosophy is consistent with conservative intellectuals who are unknown to today’s conservatives: Edmund Burke, Peter Vierick, Russell Kirk, Michael Oakschott et al.

DWBartoo January 29th, 2012 at 2:41 pm

When have we honestly “tested” or examined such “alternatives”, Jamie.

Again, I am most eager to hear some elaborastion.

DW

Scarecrow January 29th, 2012 at 2:41 pm
In response to Bruce Bartlett @ 24

You state above that it would be a mistake to go back to Eisenhower-era tax rates. Why is that? How were those rates different, and in what ways were they a mistake?

Bruce Bartlett January 29th, 2012 at 2:42 pm
In response to perris @ 70

I don’t understand the question.

DWBartoo January 29th, 2012 at 2:42 pm
In response to Bruce Bartlett @ 73

As may be, however WHAT, specifically, are those “fundamentals” to which you refer, Bruce?

DW

Bruce Bartlett January 29th, 2012 at 2:43 pm
In response to Scarecrow @ 75

I already said that I think that the international mobility of capital and labor is much greater today than it was in the 1950s and constrains domestic tax policies to a large extent.

Bruce Bartlett January 29th, 2012 at 2:44 pm
In response to DWBartoo @ 77

The fundamentals are simply the way taxes affect the basic sources of growth: productivity, investment, saving, education, entrepreneurship etc.

James K. Galbraith January 29th, 2012 at 2:45 pm

Let me put the question another way, to nudge you toward some specifics. If the main reason for tax reform is to reduce “distortions,” what do you think the economic effects of putting health insurance into the tax base would be? Wouldn’t that push us pretty quickly toward a single-payer approach as the only viable alternative? So you’d end up with more government, rather than less — though overall with a more efficient system?

Bruce Bartlett January 29th, 2012 at 2:45 pm

One area where I disagree with conservatives–and probably Jamie as well–is that I think the deficit matters. It’s essentially negative saving.

dakine01 January 29th, 2012 at 2:46 pm
In response to Bruce Bartlett @ 78

I think most would agree that capital is more international and mobile than it was in the ’50s but how is labor so?

Scarecrow January 29th, 2012 at 2:46 pm
In response to Bruce Bartlett @ 65

If you’re concerned about the losses from misdirected investment due to tax policies, where do externalities fit in? e.g., at one point a few years back Congress was considering a carbon tax, and then to make that politically acceptable to the GOP, it became cap n’ trade — the market-based trading system that was eventually rejected.

Does a carbon tax make sense in your framework? And does it meet your criterion wrt to elasticity/making sure people can’t get out of it?

James K. Galbraith January 29th, 2012 at 2:47 pm
In response to Bruce Bartlett @ 81

I’ll come back to that, but I’d like to get your thoughts on health, and then on housing…

spocko January 29th, 2012 at 2:47 pm
In response to Bruce Bartlett @ 68

I had a conversation with a budding tax attorney yesterday. He was talking about how to structure income for a global firm. He explained how great it was to find a country with a 3% tax rate.

He said that if only the US tax rate was more reasonable, (like 25%) more companies would pay it.

I asked, “Really? Do you really think that the companies will be satisfied by 25% and not keep looking for 3% or less? To keep looking for countries paying THEM instead of having to pay?”

He said he hadn’t thought about that.

I asked, “Does a company get any benefit out of taxes? Should it ever have to pay for those benefits?”

He didn’t answer because he was just focused on the puzzle, “How do I maximize shareholder value? What kind of Tax, lobbying, financing tricks can I figure out to win the system for my boss, the corporation.”

My point is, and I do have one, is that once you are “in the system” and accept the purpose of corporations to always maximize shareholder value, you are always going to look at the minimizing of taxes as your goal, any other societal considerations AREN’T YOUR PROBLEM.

That is a problem for someone else, like government, who might want to do something together that requires taxes. Asking corporations to deny their charters is asking them to do something they don’t want to do and they will fight you every step of the way. If I believe that taxes are good and necessary I’m not holding a corporate view, I’m holding a “persons” view that corporations are not allowed to have.

perris January 29th, 2012 at 2:47 pm
In response to Bruce Bartlett @ 76

not a question bruce, that was an observation, a flat tax could actually be more progressive then a progressive tax code IF we found a method for flattening what are now regressive taxes

first some history, the very reason a progressive tax code was created was not to tax the wealthy more it was because the less fortunate were paying far more by percentage then the wealthy, regressive taxes are what needs to be fixed, the only method to date is a progressive income tax

for instance

my friend took a job in manhatten, the toll (useage tax) is more then 5 dollars each way, ten dollars a day, if he makes 500 a week he is paying ten percent in that tax alone, a person making 5000 is paying one percent

same thing with sales taxes, gas taxes, etc, if we found a method for flattening current regressive taxes we could actually have a true flat tax that would wind up more progressive then what is now called a progressive tax code

Bruce Bartlett January 29th, 2012 at 2:48 pm

I have grown more sympathetic to a single payer system as I grow older, but not for liberal reasons. I think it may be the only way to restrain costs. The single most important fact about our health system is that we pay almost twice as much more it as a share of GDP than other countries and obviously we don’t have twice as better health.

masaccio January 29th, 2012 at 2:48 pm

I thought the idea of supply side was to encourage production, by giving advantages to investment of capital, and low income tax rates to the very rich. That pre-supposes that there is a deficit of capital, and a need to give advantages to the very rich to encourage them to take the risks of investment.

As far as I can see, there is no deficiency of capital, in fact there is too much of it in the hands of the hyper-rich and nations (China, e.g.) all of it seeking safe returns, not a place to invest.

At the same time there is little consumer demand, in part because too many people have too much debt and little future prospect of income, especially the young college grads. The American Bar Association reports that the average law school grad has close to $100,000 in student debt.

Doesn’t that tell us to end favorable treatment both for capital and for the income of the rich?

DWBartoo January 29th, 2012 at 2:48 pm
In response to Bruce Bartlett @ 79

Yes. However, I am asking you to elaborate simply that we might better understand your reasoning. Merely retreating to jargon is hardly sufficent and of little honest use, Bruce. I want to know how YOU see these things, how YOU understand the connections amd implications.

DW

Bruce Bartlett January 29th, 2012 at 2:49 pm
In response to Scarecrow @ 83

Since we have to raise revenue, obviously it’s better if we tax bad stuff than good stuff.

Jane Hamsher January 29th, 2012 at 2:49 pm

Hey Bruce, thanks for being here. Long time since we met at CSPAN.

I keep hearing that the Obama WH would like to enact VAT, but don’t think they can. What is it that would appeal to their economic worldview?

Thanks so much for hosting today, Jamie. Good to see you too.

Bruce Bartlett January 29th, 2012 at 2:49 pm
In response to spocko @ 85

Keep in mind that the US is the only country that taxes its corporations on income earned abroad.

masaccio January 29th, 2012 at 2:50 pm
In response to Bruce Bartlett @ 65

Could you give a couple of examples of this:

the main problem is that the tax system directs investment out of areas that would be dictated by economic fundamentals.

DWBartoo January 29th, 2012 at 2:51 pm
In response to masaccio @ 88

If there is no “effective” demand, masaccio, then there is, by definition, no demand “problem”.

DW

Kelly Canfield January 29th, 2012 at 2:51 pm
In response to Bruce Bartlett @ 87

I was astonished to learn from your book that the health care tax expenditures are the largest.

I had always thought the mortgage exemption was from my small view of the world.

Could you elaborate on your writings in the book about the top 3 tax expenditures?

James K. Galbraith January 29th, 2012 at 2:51 pm

Right. Let’s suppose now that we abolished the mortgage interest deduction. Would that not lead to a new wave of mortgage defaults, especially at the high end — and perhaps even more serious problems for the banking system?

(I’m not saying whether this would be a bad or a good thing — just asking your view of the consequences.)

Jane Hamsher January 29th, 2012 at 2:51 pm

Is it okay to start singing “Jamie Galbraith for Comptroller of the Currency” again?

An oldie but a goodie.

perris January 29th, 2012 at 2:52 pm

I think this response points to the key way in which you remain a conservative. You retain your confidence that there are “economic fundamentals,” toward which the system would gravitate if left alone. I confess I’ve never been persuaded of that. Which is not to say that I have any particular faith in alternative mechanisms.

that’s a laughable position, unless you are talking about the “economic fundamentals” were an economic system devolves into a robber baron economy, those are the only fundamentals an economy will gravitate towards when left alone

Bruce Bartlett January 29th, 2012 at 2:52 pm
In response to masaccio @ 88

We are in a unique position economically at this moment for cyclical reasons. Under current circumstances, we need a bigger deficit and more government spending, especially on infrastructure. But over the long term, we want more private saving to finance private investment.

Bruce Bartlett January 29th, 2012 at 2:52 pm
In response to Jane Hamsher @ 91

I see no evidence whatsoever that Obama favors a VAT. I really have no idea what his tax philosophy is.

Bruce Bartlett January 29th, 2012 at 2:54 pm

When discussing tax reform, we always have to differentiate between what would have been better policy in the first place or theoretically from the problem of getting from here to there.

James K. Galbraith January 29th, 2012 at 2:54 pm

Ah, but didn’t he dismay you with the SOTU proposals? Care to elaborate on that?

perris January 29th, 2012 at 2:55 pm
In response to Bruce Bartlett @ 87

I have grown more sympathetic to a single payer system as I grow older, but not for liberal reasons. I think it may be the only way to restrain costs. The single most important fact about our health system is that we pay almost twice as much more it as a share of GDP than other countries and obviously we don’t have twice as better health.

how many steps can you take dancing on the tip of a needle bruce, your reasons for single payer ARE liberal reasons, those ARE the reasons most liberals stand for single payer…while I applaude you finally comming around to the fundamentals of a liberal health care system, I am annoyed by your denying the simple fact, the liberals have it right and you agree with them

anyway, off to diner

Bruce Bartlett January 29th, 2012 at 2:55 pm

I think I already answered that above.

James K. Galbraith January 29th, 2012 at 2:55 pm

Right again. But I’ve always taken the position that problems of getting from here to there have to be taken most seriously. I have a feeling that you have a more ruthless view on that.

Bruce Bartlett January 29th, 2012 at 2:56 pm
In response to perris @ 103

Liberals mostly talk about universal coverage when they talk about single payer. They seldom ever say it will reduce costs.

masaccio January 29th, 2012 at 2:56 pm
In response to Bruce Bartlett @ 87

That is precisely the reason progressives support single-payer. It restrains growth in the cost of health insurance.

It most certainly is not an effort to make government bigger.

Bruce Bartlett January 29th, 2012 at 2:57 pm

I have become less enamored with fundamental reforms of any kind as I get older. I am happy if we can make things better and avoid making them worse.

James K. Galbraith January 29th, 2012 at 2:58 pm

So, in that case, if you could abolish the mortgage interest deduction tomorrow, would you do it?

Bruce Bartlett January 29th, 2012 at 2:58 pm
In response to masaccio @ 107

That is a message that never got out in 2009, that’s for sure.

Bruce Bartlett January 29th, 2012 at 2:59 pm

If I could wave my magic wand, yes.

perris January 29th, 2012 at 2:59 pm

don’t know what liberals you are talking about, whenever in a political discussion with a liberal about health care, cost savings is the fist thing brought to the conversation.

the added benefit of universal coverage is the bonus

you are clearly having your discussions about liberal health care with conservatives rather then with liberals

DWBartoo January 29th, 2012 at 2:59 pm
In response to Bruce Bartlett @ 99

If we do no deal wisely (and decisively soon) with the short term, as the first part of yourm comment recognizes, then the long term will be VERY bleak indeed, Bruce.

Why do you imagine that there is no real enthusiasm for rebuilding the infrastructure in Washington, at least so far as may be decerned outside the Beltway?

DW

Bruce Bartlett January 29th, 2012 at 3:00 pm

The poor don’t own houses and the vast bulk of the mortgage interest deduction goes to those with high incomes. It would be a far better way to soak the rich than raising statutory rates.

perris January 29th, 2012 at 3:01 pm

it is a conservative media, why would they allow that message?

or are you under the also mistaken notion that the conservative corporate owned and directed media is “liberal”…another myth just like the one they promote about “liberal health care”

I’m being to contentous and will leave for dinner, thanks for the saloon bruce

Bruce Bartlett January 29th, 2012 at 3:01 pm
In response to DWBartoo @ 113

For the same reason we can’t fix any other problem in Washington: one of our two major political parties is nuts. Republicans used to love infrastructure, now they hate it.

DWBartoo January 29th, 2012 at 3:02 pm

You should visit here more often, Bruce, although most here wouold not term themselves “liberals”, as the term is maligned far too successfully in this political economy, cost is central to the discussion.

DW

Bruce Bartlett January 29th, 2012 at 3:03 pm
In response to perris @ 115

I think the media once tilted to the left. Ex-Fox, I think it is pretty close to the center. Fox is just a subsidiary of the Republican Party (or maybe it’s the other way around; I forget).

pastfedup January 29th, 2012 at 3:03 pm
In response to Bruce Bartlett @ 37

Late to the party, but I did want to comment on this. Not sure who the “We” is in the statement that ‘we want to discourage rich people from wasting their time figuring how to save on taxes . . .’ Correct me if I’m wrong, but don’t the rich just hire a team of tax lawyers for that? The rich care about how much taxes they pay, alright. Why else would they hide money in the Cayman Islands?

Bruce Bartlett January 29th, 2012 at 3:04 pm
In response to DWBartoo @ 117

I think the term “conservative” has also lost its meaning and I seldom use it. I prefer to say “right wing.”

DWBartoo January 29th, 2012 at 3:04 pm

If you regard the Republicans (of late, I imagine, you to mean) as “nuts”, Bruce, then how do you view the “opposition party”?

In my view, they are equally corrupt and concerned primarily with kowtowing to the “intersts” of concentrated wealth.

DW

Bruce Bartlett January 29th, 2012 at 3:05 pm
In response to pastfedup @ 119

Tax avoidance is not costless.

Bruce Bartlett January 29th, 2012 at 3:06 pm
In response to DWBartoo @ 121

I think the Democratic Party is adrift and just reacts to what the Republicans do. Democrats also lack the courage of their convictions. They just occupy space as far as I am concerned. That’s why I’m not a Democrat.

oldgold January 29th, 2012 at 3:06 pm

For the same reason we can’t fix any other problem in Washington: one of our two major political parties is nuts.

Amen!

James K. Galbraith January 29th, 2012 at 3:07 pm

Among the many provocative comments in your book is the small passage on “Think Tank Corruption.” Care to give us a brief summary?

James K. Galbraith January 29th, 2012 at 3:08 pm

… and specifically, how this corruption relates to the tax code.

Bruce Bartlett January 29th, 2012 at 3:08 pm

It’s now forgotten, but things were different not too long ago. Jamie disagreed strenuously with Reagan’s policies, but I don’t think he viewed them as inherently nuts in the same way I think Republican polices today are.

Scarecrow January 29th, 2012 at 3:09 pm

One of the points you make near the end is that it may take a divided Washington to achieve any sensible reform. You define that division one way, with at least part of Congress held by Dem, and a GOP Prez. We currently have the opposite. Is it your view that the current division makes progress impossible? Because it’s not clear how either alternative works if, and I agree with you, one of the parties is nuts (and the other adrift). Can economists get us out of this nutty era?

Kelly Canfield January 29th, 2012 at 3:09 pm

Bruce – you really favor a consumption based tax, some flavor of a VAT, and as far as I can tell it’s because of the “money machine” you talk about in the book and that it could be a gun aimed at the deficit which you really really don’t like.

OK, how is that supposed to work given the fact of income distribution over the years? I prepared this video graphic a while back which shows the growing disparities amongst the quintiles.

If the money is ll in the top 2 quintiles, how is there any fairness in taxing all quintiles on consumption, where the top ones have less involved in consumption?

Bruce Bartlett January 29th, 2012 at 3:10 pm

Once upon a time, think tanks were like universities without students. Brookings still is, but all the others have become PR/lobbying operations. The right wing ones are utterly devoid of substance. They just promote whatever their rich contributors want.

Bruce Bartlett January 29th, 2012 at 3:11 pm
In response to Scarecrow @ 128

The Senate is the main problem. Something has to be done about the filibuster. What, I don’t know.

Bruce Bartlett January 29th, 2012 at 3:13 pm

You need to differentiate between pre-tax and pre-spending distribution and the post-tax, post-spending distribution. Taxes have never redistributed income very much. It’s mostly done on the spending side. I think we need a tax system that raises more revenue at less dead weight cost to finance better quality spending.

DWBartoo January 29th, 2012 at 3:13 pm

I think you are too kind to the Democrats, Bruce, by a considerable margin.

;~DW

James K. Galbraith January 29th, 2012 at 3:13 pm

At the time, I had a mixed view on that. Some parts of the Reagan program (Department of Interior, EPA…) I viewed as a hand-off to some of the worst and most abusive forces in American politics. But on economics, there was this interesting mixture: at least part of the program was coherently (even, in some ways, brilliantly) argued by its advocates, and the fun of it was that they were willing to engage the argument.

And then on the arms race, where Reagan at first seemed to be a true wild man, there was a hidden side to things that liberals were not entitled to know about. I learned quite a bit from a long conversation with Gorbachev a few years ago – a topic for another time.

Bruce Bartlett January 29th, 2012 at 3:14 pm

I do believe we are dangerously close to becoming a plutocracy. The Citizens United decision is a key reason. I don’t know what to do about that. I think a constitutional amendment is impractical.

Bruce Bartlett January 29th, 2012 at 3:16 pm

I think you at least respected Weidenbaum, Stockman, Anderson, Ture, Roberts et al. even if you disagreed with them.

James K. Galbraith January 29th, 2012 at 3:16 pm

Coming back to the think tanks, is there a tax reform that would help?

masaccio January 29th, 2012 at 3:16 pm

I think you are exactly right about the Democratic party being adrift.

DWBartoo January 29th, 2012 at 3:17 pm

More and more of us are finding ourselves on the same page, or walking about the same wasteland, Bruce.

More than the tax code needs a-changing …

;~DW

Kelly Canfield January 29th, 2012 at 3:17 pm

Hang on – those are constant dollars per the US Census. So the growth bias in income has been to the top quintiles, indisputably.

I am asking you, a consumption or VAT tax would redistribute the tax burden inequitably, based on dollars, right?

James K. Galbraith January 29th, 2012 at 3:17 pm

Yes, in general. And Jude Wanniski became a friend in later years.

Meredith January 29th, 2012 at 3:17 pm

Are there any current Republican economists whose ideas you respect?

Bruce Bartlett January 29th, 2012 at 3:18 pm

I think a case can be made for scrapping the charitable contributions deduction, but that’s never going to happen. I think the IRS should audit all tax-exempt organizations much more than they do.

pastfedup January 29th, 2012 at 3:19 pm
In response to spocko @ 85

But multi-million dollar bonuses and payouts to CEO’s and executives does not maximize shareholder value. It cheats the shareholders of some value.

James K. Galbraith January 29th, 2012 at 3:20 pm

So it’s primarily an enforcement issue.

Bruce Bartlett January 29th, 2012 at 3:20 pm
In response to Meredith @ 142

I can’t think of any offhand. One problem is that conservative economists who aren’t nuts avoid writing about issues where they would have to disagree with the GOP.

Kelly Canfield January 29th, 2012 at 3:20 pm

related – in your book you show that the Dept. Of Commerce shows enforcement is a problem when in 2005 the AGI gap was an astonishing $1.3 TRILLION dollars.

Can you talk about IRS enforcement for a moment.

Bruce Bartlett January 29th, 2012 at 3:21 pm
In response to pastfedup @ 144

It’s theft from shareholders as far as I am concerned.

Meredith January 29th, 2012 at 3:21 pm

And a funding one. The IRS is grossly underfunded at the moment.

Bruce Bartlett January 29th, 2012 at 3:22 pm

Not necessarily. Converting the deduction for charity to a credit would make contributions by the wealthy more costly in terms of taxes.

Bruce Bartlett January 29th, 2012 at 3:22 pm
In response to Meredith @ 149

Yes. I said so in a column recently.

Bruce Bartlett January 29th, 2012 at 3:24 pm

Republicans use the IRS like a political punching bag. It will take a Republican president faced with pressure to raise taxes to restore IRS funding to an adequate level.

Bruce Bartlett January 29th, 2012 at 3:25 pm

It’s part of a larger problem of corporate control that was identified back in the 1930s by Berle & Means.

James K. Galbraith January 29th, 2012 at 3:26 pm

One of the issues that troubles me is the use of charitable contributions for purposes from which the donors may benefit directly (such as lobbying for tax preferences.) Quite different from funding a hospital, or a university, from which your personal benefit is likely to be minimal.

Is there a way to control the abuse of tax-exempt status more effectively, to ensure that a charitable contribution is in fact charitable, rather than political?

gesneri January 29th, 2012 at 3:26 pm

It seems you’re ignoring the middle class, and I would think they’re a fairly large portion of the taxpayers receiving the mortgage tax deduction. Poor people don’t own homes, but a pretty good percentage of the struggling middle class does. Or are you writing off the middle class as dead or dying?

Bruce Bartlett January 29th, 2012 at 3:28 pm

That’s a problem that I don’t really know what to do about.

Bruce Bartlett January 29th, 2012 at 3:28 pm
In response to gesneri @ 155

Lots of countries don’t allow mortgage interest to be deducted and have a healthy middle class.

masaccio January 29th, 2012 at 3:31 pm

I don’t care if you are a D or an R. You make sense.

gesneri January 29th, 2012 at 3:31 pm

Perhaps, but right now, our middle class isn’t at all healthy. Would this really be the time to drop a deduction that many in the middle class depend on?

Bruce Bartlett January 29th, 2012 at 3:32 pm

That’s a different problem largely unrelated to taxes. Our biggest problem is a lack of aggregate demand.

James K. Galbraith January 29th, 2012 at 3:33 pm

I’d add to that, two points: a) most middle-class homeowners don’t benefit from the mortgage deduction because they don’t itemize, and b) making the mortgage interest deduction the only form of deductible interest (which was done back in 1986) played a major role in turning homeownership into a vehicle for personal finance. This in turn helped produce the financial crisis.

But, back to Bruce: you write incisively of the early 20th century economists who argued that interest of all types should be deductible, because it represents merely the return from deferred consumption. Irving Fisher argued, as you say, that we shouldn’t tax interest for the same reason we don’t tax insurance settlements.

What’s your view of the merits of this position?

Bruce Bartlett January 29th, 2012 at 3:34 pm
In response to masaccio @ 158

I am neither a D nor an R. I’m the only genuine independent I know of.

Kelly Canfield January 29th, 2012 at 3:34 pm
In response to gesneri @ 159

It’s odd but true that in the book, and substantiated, it’s about 15 million tax returns (households) that use the mortgage exemptions – out of about 180 million households.

perris January 29th, 2012 at 3:35 pm

back from dinner

consumption tax is code for saying “lets tax the labor class more then the wealth class”

middle and lower classes spend FAR greater percentages of their income on items that would be taxed under consumption, almost their entire salary, the wealthy spend far less on those goods

the only way to make a consumption tax is to ADD a tax that equalizes the percentage difference not payed by people who make more then they spend, if I am taxed by consumption and the real tax comes out to 25 percent, someone making a few million winds up being taxed 10 percent, they MUST pay the difference otherwise they are stealing from us

just as they do now, by ignoring the regressive nature of most taxes they are stealing our assets to pay their bills

regressive taxes MUST be addressed, the lower classes must NOT wind up spending a greater percentage of their assets then the wealthy

simple stuff “conservative economists” like to ignore

very frustrating seeing all these conservative talking points without counter ballance…gonna join ecahn and have a movie

Scarecrow January 29th, 2012 at 3:36 pm

Bruce — you have a very interesting chapter on the history/influence of Grover Norquist, particularly on how he’s made it almost impossible to have a rational discussion of revenues, etc. Do you see any evidence that this influnece is waning? Or that he’s offering his pledgees any more flexibility than in the past? Bottom line: what are the prospects for repealing (letting expire) part/all of the Bush tax cuts?

Bruce Bartlett January 29th, 2012 at 3:36 pm

It’s just part of the larger case for a pure consumption-based tax system. While I would enact one if I could, I consider it to be too Utopian to waste much time on. Incidentally, if we have VAT right now we could stimulate consumption very effectively by cutting it temporarily. Since we don’t have a VAT, it’s pretty much impossible to stimulate demand on the tax side.

DWBartoo January 29th, 2012 at 3:37 pm

Yes.

Bruce Bartlett January 29th, 2012 at 3:38 pm

Keep in mind that a lot of homeowners don’t have a mortgage. There are a lot of elderly who live in houses they own free and clear.

Bruce Bartlett January 29th, 2012 at 3:40 pm
In response to Scarecrow @ 165

So far I see no evidence that Grover’s power is diminishing. Re the Bush tax cuts, one argument I haven’t seen anyone make yet is that if Obama loses they are guaranteed to expire. He will veto any post-election effort to do so and Democrats in the Senate will filibuster it.

Mauimom January 29th, 2012 at 3:42 pm

Quite different from funding a hospital, or a university, from which your personal benefit is likely to be minimal.

Except when your dim-wit off-spring wants to go to Harvard.

Bruce Bartlett January 29th, 2012 at 3:42 pm
In response to perris @ 164

Consumption taxes are inherently regressive. But not as regressive as most people think. Over a lifetime, consumption tends to be proportional to income.

Bruce Bartlett January 29th, 2012 at 3:43 pm
In response to Mauimom @ 170

Be careful. Jamie was a legacy admission to Harvard.

James K. Galbraith January 29th, 2012 at 3:43 pm

So the low-tax crowd should vote Obama. And conversely…

Truly the mind reels…

Scarecrow January 29th, 2012 at 3:44 pm

If the way to use a VAT to increase demand is to reduce the VAT, that effectively means a consumer can spend more without taxation. So do you achieve effectively the same thing by just giving people money — helicopter style, or reducing payroll taxes, whatever. Are those reasonably effective substitutes if we don’t have a VAT?

Bruce Bartlett January 29th, 2012 at 3:44 pm

Honestly, the best way to avoid a big tax increase on January 1 is to re-elect Obama.

DWBartoo January 29th, 2012 at 3:45 pm

… ve ri tas!!!

;~DW

Mauimom January 29th, 2012 at 3:45 pm

He was a QUALITY admission to Harvard.

Perhaps I should have said “Yale” or “Princeton.” My bad.

You, I hope, know that I was referring to the “development admissions.” Believe me, I know a few. It just so happens that they were to Harvard, but I know some Stanford ones as well.

Sorry to be so feeble at attempting to make my point.

James K. Galbraith January 29th, 2012 at 3:45 pm

Actually not. I was a faculty brat, which is different.

Bruce Bartlett January 29th, 2012 at 3:46 pm
In response to Scarecrow @ 174

We know that doesn’t work from our experience with tax rebates. But if we had a broad-based consumption tax that was temporarily reduced, people would bring forward future consumption. We know this because that’s what happened in every country just before a VAT took effect.

Bruce Bartlett January 29th, 2012 at 3:46 pm

Point taken. I bet your father didn’t even have to pay your tuition.

James K. Galbraith January 29th, 2012 at 3:48 pm

I’m sure he did.

Scarecrow January 29th, 2012 at 3:48 pm

Do it for your country! ;>)

Bruce Bartlett January 29th, 2012 at 3:49 pm

I know at Stanford that the children of faculty who go there pay nothing.

Meredith January 29th, 2012 at 3:50 pm

That’s similar to behavior by individuals and corporations when taxes increases are imminent, yes?

DWBartoo January 29th, 2012 at 3:51 pm
In response to Scarecrow @ 182

The “demands” which our times make of us, eh, Scarecrow?

Who should it be, hmmmmmm ………

;~DW

Meredith January 29th, 2012 at 3:51 pm

BTW, a full 1/3 of owner-occuped homes are owned free and clear, according to the 2009 American Housing Survey.

Bruce Bartlett January 29th, 2012 at 3:52 pm
In response to Meredith @ 184

Yes. For example, there was a big bulge in capital gains realizations in 1986 before the capital gains rate was increased in 1987.

James K. Galbraith January 29th, 2012 at 3:52 pm

We’re coming close to the end, so I’d like to ask a bit about your view of those taxes you don’t discuss much in your book.

What would you do about the payroll tax?

Would you favor an energy tax or carbon tax?

And, supposing you could get a VAT in return for repealing the payroll tax, wouldn’t that be better than substituting it for the income tax?

BevW January 29th, 2012 at 3:52 pm

As we come to the end of this Book Salon,

Bruce, Thank you for stopping by the Lake and spending the afternoon with us discussing your new book and Taxes.

James, Thank you very much for Hosting this great Book Salon.

Everyone, if you would like more information:

Bruce’s website (Economix) and book (The Benefit and The Burden)

James’s website (University of Texas, Austin)

Thanks all, Have a great week.

If you want to contact the FDL Book Salon: FiredoglakeBookSalon@gmail.com

Bruce Bartlett January 29th, 2012 at 3:52 pm
In response to Meredith @ 186

That’s higher than I thought it was.

Bruce Bartlett January 29th, 2012 at 3:54 pm

The payroll tax is essentially a tax on value-added, so replacing it with a VAT wouldn’t accomplish much. I also think it is important to maintain a linkage between contributions and benefits.

James K. Galbraith January 29th, 2012 at 3:54 pm

A pleasure, and thanks for having us.

Back to the wars…

DWBartoo January 29th, 2012 at 3:54 pm

Thank you Bruce and Jamie.

Thank you as well, Bev.

And my thanks to the mods, for your forbearance.

DW

Bruce Bartlett January 29th, 2012 at 3:55 pm

I think a broad based carbon tax would be a good substitute for a VAT if it’s politically impossible to impose a VAT.

Bruce Bartlett January 29th, 2012 at 3:55 pm

Thanks. Everyone: BUY MY BOOK.

marymccurnin January 29th, 2012 at 3:56 pm

Thanks Bruce. It was a great book salon.

masaccio January 29th, 2012 at 3:57 pm

Thanks to our host and guest. I hope the book gets a lot of readers; we all benefit from Mr. Bartlett’s insights and learning.

Scarecrow January 29th, 2012 at 3:58 pm

Thanks much to both Bruce Bartlett and James Galbraith, for coming and taking so many questions. Fun, excellent discussion. Highly recommended book.

Kelly Canfield January 29th, 2012 at 4:04 pm

Having read the book, I highly recommend it. Bruce admits his biases up front in the introduction, which is quite admirable.

There are a few parts which will ring harsh to liberal ears, but really the most of it is completely fact based.

And the Grover Norquist smack-down is really quite enjoyable, besides factual and infuriating.

bigbrother January 29th, 2012 at 4:33 pm

Bill Monning Assemblyman is running foe a state senate seat, had campaign meet here and his top issues were tax and campaign finance. e have a 2/3 budget rule.

papau January 29th, 2012 at 5:13 pm
In response to Bruce Bartlett @ 59

BINGO – Tax the hardest that which can not be moved via accounting to another country – sounds very true.

And the hardest thing to hide are your assets.

So why not a worldwide asset tax, with credits of course for the tax on assets you pay to other countries?

papau January 29th, 2012 at 5:30 pm

Sorry, but I disagree.

Income taxes exemptions for investment motivate nothing in terms of economic growth and job growth. A VAT just moves the tax burden away from the rich.

Now if you put in a net worth (asset) tax along with the VAT, we can perhaps get to an agreement on “tax reform”.

I ran a tax department of a large international company – we could move “income” around. I could “buy” “expenses” to reduce taxes and “sell”/move investment and operational income into business forms that are not taxed, and then I can elect Ayn Rand folks that select Ayn Rand folks like Greenspan to run the Fed who in turn refuse to regulate – letting the rich and corporate do whatever. The brief enforcement of IRS Section 482 (deferred tax accounting) under Clinton kept jobs in the US (This I know because I spoke to those getting board input in many companies and know of the decisions to move jobs that were postponed).

I put little faith in tax reform. The 1986 Act simplified and removed “loopholes”, – but in 25 years we are back with even more and larger loopholes and 10,000 pages of law and regulations to read before you get to Court decisions.

Let’s have that steeply progressive – but under 65% top rate – income tax that treats wage and investment income the same, plus a net worth (asset) tax plus a VAT because exports demand a US VAT to even out trade – the VAT being the only consumption tax at the Federal level. Then treat corporations the same as people – with no deferred tax.

HotFlash January 29th, 2012 at 6:31 pm

Excellent happy book salon! What a pleasure to read.

papau January 29th, 2012 at 6:55 pm
In response to papau @ 202

And for God’s sake DO NOT MOVE FROM A WORLDWIDE TAX APPROACH. It is extremely easy to avoid tax in every other country for a corporation because in those other countries they do not have a worldwide tax and they are happy that they get a “reasonable percentage” of what you choose to tell them was the profit in their country.

perris January 30th, 2012 at 3:41 am

that’s an empty claim, consumption taxes are regressive and the very reason “conservative economists” propose them, it’s code for “let’s find a marketing scheme to make the less fortunate pay even MORE of our bills”

“over the lifetime” is simply not true, money gets spent on untaxable investments and goods, tax shelters, over seas, as romney demonstrates, they spend the money where they can shed their expenses

and even if your empty were correct (it’s not), the “over time” leaves those assets for investment income that is not available to the people who have payed those taxes immediatly rather then “over time

plain, simple stealing from the labor class, that’s what a consumption tax accomplishes

Sorry but the comments are closed on this post