TPM Cafe | Talking Points Memo

Tax Talk Anyone?

By Tijana Dvornic - May 4, 2007, 7:49PM

Hello from the newest blogger here at Warren Reports. Although most people don’t believe me when I say this, my primary interests are in taxation and tax policy, which means that I couldn’t be joining the blog at a better time!

If you’re into tax, news and politics have recently become much more interesting. With the presidential election approaching, it is natural that tax is becoming a matter of public interest and heated debate. But this time, it seems that the discussion will involve some fundamental issues regarding the tax system (as opposed to the usual partisan bickering over raising or cutting taxes).

Several recent developments may lead to what I hope will be a much broader debate: the recent AMT (fiasco?), the looming expiration of President Bush’s tax cuts (and the estate tax repeal), and of course, the calls for the abolition of the income tax system in favor of a flat sales tax. The middle-class taxpayer will be the one particularly affected, and significantly at that, regardless of which way the debate shakes out. So, the debate should continue, which should give me a lot to blog about. I am looking forward to starting this discussion here at Warren Reports, and I hope you’ll join me with your comments.

Comments (4)

Tijana:

Welcome aboard. I was getting ready to write an entry on my blog regarding the basis for the estate tax. All that I remember from law school is that the purpose of the estate tax is to prevent dynasties. Can you do a post that explains the estate tax, who is being taxed and the justifications for the tax?

I would also like to hear something on Arthur Laffer's argument that lowering tax rates results in higher tax revenues and a response to his argument that increasing taxes will always lead to a slower economy. Has there been any studies that talk about at what point tax rates really do lower revenues?

Satellite Sky Blog

Find the Truth. Do Justice.

Posted by OkieLawyer
May 5, 2007 7:09 AM | Reply | Permalink

Well, Tijana, you are in for a treat. Here is the introductory paragraph of The Progressive Income Tax: Theoretical Foundations:

The Progressive Income Tax has an impact on the welfare of an economy's participants that few people understand. This is because most economists have overlooked the impact that an across-the-board change in disposable incomes will always have on market prices. In this article, we review the merits of the Progressive Income Tax from an analytical perspective that fully incorporates the impact of this crucially important variable.
Our analysis leads to some conclusions that many will perhaps find stunning:

---Even a steeply progressive income tax---right up to 99% on the highest incomes---would impose no loss of purchasing power on wealthy income earners

---Reducing the income tax rates of rich citizens will weaken the economy if Congress cuts spending to pay for the tax cuts

---Increasing the amount of taxes collected from wealthy citizens will actually provide a stimulus to the economy

---The rich cannot get richer---in real terms---by getting their taxes cut, but they can become richer if they pay more in taxes

---The government is a major producer of Real Wealth

---An increase in the size of government is almost always quite desirable

---Wealthy citizens who are wise should be lobbying for an increase in government spending and an increase in their tax rates

Cornell's Dr. Robert H. Frank [Microeconomics & Behavior 1991, The Winner-Take-All Society (1995), Luxury Fever (1999), Principles of Economics (2001)] had this to say after reading The Progressive Income Tax: Theoretical Foundations:

"...you can put me on record as saying that your arguments on tax policy are among the best that I've seen..."

Perhaps a read worth your time?

Posted by James Kroeger
May 6, 2007 7:45 AM | Reply | Permalink

Great idea to expand Warren Reports to tax issues!

Posted by Purple State
May 6, 2007 8:46 AM | Reply | Permalink

Denocrats should do one thing: double the standard deduction so the vast majority of Americans wouldn't have to itemize. For such a simple change, nothing would do more to simplify people's lives and eliminate ridiculous nonsense. Everyone gets a cut that's simple, progressive, and fair.

Posted by jalmari
May 7, 2007 3:38 PM | Reply | Permalink

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Tax Talk Anyone?

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