Jesus Is Not A Macroeconomist

Erika Christakis commits poor exegesis:

As near as we can tell, Jesus would advocate a tax rate somewhere between 50% (in the vein of “If you have two coats, give one to the man who has none”) and 100% (if you want to get into heaven, be poor). Mostly, he suggested giving all your money up for the benefit of others. And Jesus made no distinction between the deserving and undeserving poor; his love and generosity applied to all.

Jesus promoted generosity and radical self-sacrifice as individual virtues that would have been meaningless if not freely offered, as his sacrifice of himself was. He never endorsed and probably never imagined government agents and leaders seizing 30-45% of people's income and using the proceeds to pay their salaries and expenses while spending the rest, often discerningly but sometimes not, on the public's behalf. Jesus actually lumped tax collectors with prostitutes as exemplars of sin. Unlike our decent, diligent IRS agents, they were notoriously corrupt in first-century Palestine, Still, I'll bet they came away from most transactions with less than 30-45% of their victims' worldly goods.

I'm for a government that's generous toward those in need because it's good for the strength and stability of our society. I hope Christians, Jews, Muslims, and atheists agree that a decent and wise state is also a compassionate one. While I don't resent paying taxes, it's not because I think confiscation of my property has anything to do with Christian ethics but because I believe in representative democracy and count on our leaders to make smart decisions about national security and those who need help while discerning the tipping point where taxation and the size of government impede a free-market economy's capacity to grow and produce wealth and jobs. It may be 27%, 39%, or 55%, but it's definitely not 100%. Let's please leave our LORD out of that strictly technical calculation. Anyway, he's actually concerned with what each of us does for those who suffer by using our remaining resources and free will. We can't outsource our consciences to Congress.

On Tax Returns, Romney Isn't The New Nixon

New York Times editorial:

Barack Obama released his tax records when he ran for president in 2008. So did Richard Nixon in 1968. In fact, so did George Romney in that same campaign.

But, in 2012, Mitt Romney, the former governor of Massachusetts and onetime chief executive of a private equity firm is still hedging about whether he will do so.

A Pox On Both Your Posts

On Dec. 3 Fred Clark questioned evangelical leader and former Nixon aide Chuck Colson's motives for accusing those who want to raise taxes on the rich of class envy:

During every day that [Colson] worked in the White House as one of the most powerful men in the executive branch, the wealthiest Americans were charged double the rate of income tax that they pay today....

[T]he top marginal income-tax rate today is half of what it was during Colson’s service at the top levels of the Nixon administration. And the capital gains tax today — the tax that matters more to the wealthiest Americans who make money from money rather than from work — is even lower. The capital gains tax rate is just 15 percent, which is why Warren Buffett pays a lower rate than his secretary does.

When Chuck Colson was working alongside the president, revenue as share of GDP was 17.6 percent. Today it is 14.4 percent — historically low, the lowest it has been since 1950.

So according to the standard set by his column, Chuck Colson and the rest of the Nixon administration were a bunch of soak-the-rich radical redistributionists driven by socialist envy.

Clark uses the word "socialist" several times, as if Colson had used it against those who wanted to raise taxes on high incomes. But neither that word nor "radical" comes up in Colson's column, which substantially detracts from the irony that Clark claims exists. Colson may well have thought taxes were too high in 1969-73; many conservatives such as he did, but they couldn't do anything about it since the Democrats controlled Congress throughout the Nixon administration. For his part, Colson errs in accusing those who favor higher taxes of falling prey to the sin of envy. Many experts sitting in cushy think tanks who aren't acting out rage akin to that of Russian peasants nonetheless believe that a sensible fiscal solution requires more revenue from the wealthy (whom else? Russian peasants?) than Republican obstructionists are willing to consider.

Neither putting words in an opponent's mouth nor questioning his motives is a good idea, especially in the name of our LORD. Let us reason together, brothers!

Why Governments Are Going Broke

Reflecting on Wisconsin, a reader writes:

The primary purpose of public unions is to grab for their members more than they would get on the open market. (Think about that!) They do this by public strikes (which are combinations in restraint of trade) and by using the power of campaign ads to buy politicians who will spend taxpayer dollars to pay off those who can keep them in power. No wonder governments are going broke while taxpayers are paying more!

The $300 Billion A Year Man

George Skelton celebrates the centenary of America's conservative icon by reminding readers of his actual record. What would Reagan do? Raise taxes.

Faith, Magical Thinking, And Picking Our Pockets

Paul Krugman calls Republicans hypocrites for acting like deficit hawks all year only to acquiesce in a $800 billion tax-cut extension without getting a dollar's worth of budget cuts in return.

That's not fair. It's ironic instead of hypocritical. Actually, it's not even ironic. It's revelatory of a mindset that Krugman doesn't quite understand, at least intestinally, as he shows when he writes:

Senator Jon Kyl of Arizona — who had denounced President Obama for running deficits — declared that “you should never have to offset the cost of a deliberate decision to reduce tax rates on Americans.”

It’s an easy position to ridicule. After all, if you never have to offset the cost of tax cuts, why not just eliminate taxes altogether? But the joke’s on us because while this kind of magical thinking may not yet be the law of the land, it’s about to become part of the rules governing legislation in the House of Representatives.

That's historical memory, not magical thinking. The federal income tax has been legal, in the form of a constitutional amendment that was ratified in 1913, just seven years longer than women have had the right to vote. I wouldn't say the idea that government can naturally confiscate 25-35% or more of our income is necessarily part of our DNA quite yet.

We obviously can't afford to abolish it. Indeed rational deficit and debt reduction means cuts Democrats and Republicans don't like (Social Security and defense) and more revenue from someplace (us). As long as everyone suffers a little for the sake of all, I'm game.

But Kyl's proposal -- that giving people their money back is categorically different than building an aircraft carrier or launching a new program -- isn't magical or mysterious. It's gratifying evidence that part of our political mind still remembers that the federal behemoth that has sometimes seemed to billow and burgeon of its own accord is all contingent on the consent and confiscated wealth of the governed.

Krugman's right that Reagan-addled Republicans aren't facing up to the deficit's stunning dimensions -- but again, that's not hypocrisy; it's faith. Many honestly expect that tax cuts will trigger an 1980s-style recovery leading to 1990s-style surpluses. In the meantime, going back to Krugman's charge of hypocrisy against Republicans, I wish progressive-minded elected officials would own up more openly to their ideological predisposition toward ever-larger government and permanently higher tax rates. As long as they don't, who's really being disingenuous?

In British politics, at least, you know who's for big government and who isn't. In the U.S., everybody's for deficit reduction, which means either irresponsible tax rate reductions or confiscatory gouging, draconian social welfare cuts or trillions in stimulus spending, depending on who's speaking. It's not just our governments that are impoverished. It's also the language we use to talk about public policy.

Obama Rising

President Obama's historic compromise on taxes and unemployment benefits feels like the beginning of his second, six-year term.

His biggest political problem was the impression that he cared more about his health insurance and financial reform agenda than job creation and GDP growth. Republicans made it worse by refusing his pleas to extend unemployment benefits, which they said they'd never do unless he came up with compensatory budget cuts so that the relatively paltry amount needed to help the jobless wouldn't contribute to the deficit.

Today, in one deft move, Obama scored a win for those the economy is hurting most and showed that the GOP could be had. Not only did congressional Republicans not get their budget cuts, they got a two-year extension of tax cuts that will contribute even more to the deficit, at least in the short term. What their concession proves is that they never really cared about the deficit. They just cared about hurting Obama, and they'd have liked nothing better than to keep hurting him. But Obama realized that they care even more about their Reaganite supply-side ideology, whose cornerstone is relieving the tax burden of one of their key constituencies -- and, in fairness, those who are in the best position of any group of private individuals to invest in growth.

The deal on the tax cuts has predictably ignited the ire of the Democrat left, which is so obsessed with its own, soak-the-rich ideology that it too lapses into inauthentic posturing about the deficit. You can't argue for two years, as most liberal and progressive economists have, that the recovery of the economy depends on massive deficit spending by the government only to turn around and oppose tax cuts strictly on the grounds of fiscal prudence.

Some think the Reagan tax cuts in 1981-82 didn't do as much to ignite the decade's economic miracle as his champions do. Whether supply-side skeptics are right or wrong, today's news suggests that Obama gives considerable credence to what the Congressional Budget Office argued back in August: That putting a little more money into tycoons' pockets, on top of the modest gains the economy is enjoying already, sure can't hurt.

So look what the president's accomplished today. He's finally emerged as champion of the long-term unemployed. He's exposed deficit chicken hawks on both sides of the aisle. He's shown that he's willing to compromise with Republicans, which is what independents and indeed the vast majority of Americans want him to do. And he's taken actions that can't help but strengthen the economy and, as a result, his prospects for reelection.

All that, and Sarah Palin as GOP frontrunner. That's what I call a good day.

Can't Tax, Can Spend

The LA Times on the altered powers of the California legislature:

Democrats still won't be able to raise taxes without agreement from some Republicans; a two-thirds vote requirement remains in place for that. Brown has said, in any case, that he wouldn't approve tax hikes unless voters did. And voters made an additional constitutional change Tuesday that took away the Legislature's ability to impose billions of dollars in fees on businesses with a simple majority vote, raising the threshold to two-thirds.

Oh Oh

When Jerry Brown was newly elected as governor of California last night, I persisted in my optimism that he'd go to China -- that, as only a Democrat could (and as Andrew Cuomo vows to in New York), he'd take on entrenched interests such as public employee unions as a way of venturing a structural fix of our state's budget woes. It was a little more than wishful thinking, since, as a student journalist in the mid-1970s, when he was governor his first time, I remembered him saddling the elites at the University of California with a series of austere budgets. He also flirted with my dinner companion one time in La Jolla, but that's another story.

Then news came that Prop. 25 had passed. Deceptively advertised to voters as a way of docking the pay of state legislators who fail to pass a budget on time, its true effect is to permit them to pass budgets by a majority rather than two-thirds vote. A St. John's friend speculated weeks ago that Brown's promise -- "No new taxes without voter approval" -- was a veiled reference to Prop. 25. But I never imagined voters could be tricked into removing the only check on giving our cash-strapped state government a blank one.

In his comments today, Brown's stressing belt-tightening. But one-party rule plus a majority budget vote may well end up meaning substantial income tax increases.

* * *
Thanks to the miracle of Facebook, I've been reminded by my St. John's brother Mike Cheever that Prop. 26, which also passed, and other laws prevent legislators from raising most taxes and fees without a supermajority, irrespective of their new authority to pass a budget with a simple majority. I had assumed that Prop. 25's change in the budget rules applied to the revenue as well as the expenditure side.

We're Going Socialist? How About Maoist!

According to this "Economist" chart comparing how much 81 countries take in taxes out of $100,000 in annual income, the U.S. ranks at #52 (the bigger the ranking number, the more we get to keep). Weirdly, communist China's almost the same, at #48.

Calling Mr. Solzhenitsyn

I didn't realize that David Axelrod said on "Face the Nation" that anti-tax "tea party" protesters were engaged in political speech he considers "unhealthy." What's sickening is those in power identifying dissent as pathology.

For Goodness Sake, Don't Tell Obama

Conservative purist Bruce Bartlett thinks the "tea party" set should count their blessings:

The irony of these protests is that federal revenues as a share of the gross domestic product will be lower this year than any year since 1950. According to the Congressional Budget Office, the federal government will take only 15.5% of GDP in taxes this year, compared to 17.7% last year, 18.8% in 2007 and 20.9% in 2000.

The truth is that the U.S. is a relatively low-tax country no matter how you slice the data. The following tables illustrate this fact by comparing the U.S. to other members of the Organization for Economic Cooperation and Development, a Paris-based research organization.

Maybe The IRS Is Hiring

Though I don't always agree with him, I never miss the weekly e-newsletter from Rep. John Campbell (R-Newport Beach). Here's his math on the federal budget that passed the House and Senate this week without a single GOP vote, en route to an appropriations process that will be considerably more rancorous. Italic and boldface type in the original:

The spending increases are so massive that it doubles the national debt in only 5 1/2 years and triples it in 10 years. The government can probably not even sell that much debt. We’ve already seen this scenario play out in the UK and Germany, where issuances of their national debt failed to attract enough buyers. If the President wanted to balance his budget, he would need to increase every federal tax on every American by at least 30%. That means an increase on your payroll taxes, gas taxes, income taxes, alternative minimum taxes, corporate tax, capital gains tax, cigarette tax, excise taxes, etc by 30% each. This is in addition to what he has already proposed.

We're All Socialists Now

hilzoy offers some perspective on President Obama's tax proposals:

Obama is not proposing to raise the personal income tax. He is proposing to allow the Bush tax cuts on families making over $250,000 a year to expire. The Republicans wrote that expiration into law to conceal to hide the costs of their tax cuts. Under the law they wrote, the top marginal tax rate will go up from 35% to 39.6% in 2011.

If a top marginal tax rate of 39.6% is socialism, then there are a lot of socialists in the world. For instance, Japan, South Korea, Australia, along with a lot of the OECD: all have rates higher than Obama is proposing. (Note: I just chose some countries at random. I'm sure I could have found more.) No wonder the world economy is in trouble! There's socialism and class warfare everywhere you look!

Buy It This Year, Sell It Whenever, Tax-Free

From his weekly e-newsletter, a bright idea from Rep. John Campbell (R-Newport Beach):

[My soon-to-be-introduced] bill would eliminate all Capital Gains taxes for any assets purchased in 2009, regardless of when the asset is sold. So, people would be encouraged to purchase homes, property, stocks bonds and businesses in 2009. This incentive would alter the risk/return ratio and likely spur a great deal of economic activity that is currently paralyzed by fear and uncertainty. And from the federal government standpoint, there might be an increase in revenue to the federal government now as the sellers report capital gains. The “loss” of revenue on the sale would not occur until some years later when the asset is sold and hopefully the government is also on better footing.

The 50% Danger

Michael Barone fears that if wealthy people's federal and state taxes reach the magic number of 50%, they'll do what they did when taxes were high in the 1970s -- hide their wealth instead of putting it to work:

[A]t that point, I fear, the animal spirits of high earners are going to be directed away from productive investment and toward tax avoidance and tax shelters. Away from creating new enterprises that can provide avenues upward for any and all, and toward gaming the system for the well-connected and shrewd insiders. Away from an economy that grows more than anyone imagined and toward an economy where system-gamers take shares of a static pie away from the rest of us. Is that where we really want to go?

The Great Equalizer

How President Obama plans to use federal tax policy, according to David Leonhardt in the New York Times:

Budget experts were still sorting through the details on Thursday, but it appeared that various tax cuts and credits aimed at the middle class and the poor would increase the take-home pay of the median household by roughly $800.

The tax increases on the top 1 percent, meanwhile, will most likely cost them $100,000 a year.

“The tax code will become more progressive, with relatively higher rates on the rich and relatively lower rates on the middle class and poor,” said Roberton Williams, a senior fellow at the Tax Policy Center in Washington. “This is reversing the effects of the Bush policies,” he added, and then going even further.

And just as Franklin D. Roosevelt’s tax increases on the wealthy followed a stock market crash, which had already depressed their incomes, Mr. Obama’s proposals — if they become law — would too. The combination has the potential to reverse a significant portion of the inequality trends of the last few decades.