s the argument here for a social safety net, or has the argument now become income equality?
There's a difference. - From Post commenter Benson
There is a difference. Whatever your view about govt's role in reversing income inequality, it's probably not practical at this point to talk about going all the way back to the income distribution of 25 years ago. The question then remains of whether we have an efficient safety net that at least prevents the poor from sinking into actual misery.
Apparently, you want to reduce inequality simply by taking more money from rich people. How is some person struggling to make ends meet benefited by raising taxes on the rich? Not one bit, unless you can claim that the extra tax revenue would magically be sent to poor people, which it won't. The inequality obsession of the left is a red herring. Come up with ways to reduce poverty -- increasing the income of poor people should be our concern, not trying to reduce the income of the rich.
Agree there's no point in taxing away top earner's income just for the hell of it, but there are two considerations: one is the cost to social cohesion and democracy when some Americans become so rich that they can essentially buy their way out of the ordinary travails of the community and the other is the cost to economic growth when rent-seeking reaps disproportionate rewards that are not recaptured by the tax code.
There are two separate issues here: one is the impact of tax changes on revenues/deficits; the other is the impact of tax changes on income distribution. The Congressional Research Service report only addressed the latter.
Again, your quarrel would appear to be with the CRS report, which convincingly showed that the net effect of the cuts was to make tax code less progressive -- not regressive, just less progressive.
It's pretty simple: having previously raised the top rate on ordinary income to 35 percent under Bill Clinton, Congress dropped the top rate on long-term cap gains and dividends to 15 percent on George W. Bush. Then the IRS ruled that "carried interest" is capital income, even tho it's a pretty metaphysical distinction. The private equity guys live off the 20 point gap between ordinary and capital income.
It's a good question I'd like to answer but which is not addressed in the CRS report I wrote about.
My best sense is that the public is not as distressed about income distribution as you might think, independently of the Bush tax cuts. But they are worried about deficits and believe if anyone's taxes should get raised to reduce govt debt, it should be "the rich."
Actually lower-income people already pay cap gains tax at a lower rate -- it's just that hardly any of them have any cap gains or dividends to begin with. Mitt Romney wants to put the rate at zero on all income below $250,000 per household.
Restoring the tax rates of 25 years ago would not restore the income distribution of 25 years ago.
We're a long way from capital flight at the moment, fortunately. To the contrary, US seems to be a safe haven for capital from worried wealthy in the Middle East, Europe, etc. Our basic preference as an editorial page has been to broaden the base of taxation, while lowering rates -- and increasing revenue modestly.
Thoughts, comments, suggestions or criticisms about The Post's Live Q&As? Send us an e-mail.
Become a fan of Post Live on Facebook.
Follow @WashingtonPost on Twitter.
