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Think tank: FinReg and regulators; Wyden-Gregg; and fiscal multipliers during a financial crisis

1) Douglas Elliott at Brookings looks at the decisions regulators will have to make after FinReg passes.

2) Arloc Sherman and Chad Stone at the Center for Budget and Policy Priorities analyze CBO data that shows the gap between the richest 1% and the middle and poorest quintiles tripled from 1979 to 2007:

3) Jim Nunns and Jeff Rohaly at the Tax Policy Center show that the Wyden-Gregg tax reform proposal is roughly revenue neutral, and more progressive than the current tax code.

4) Giancarlo Corsetti, André Meier and Gernot J. Müller find that government spending multipliers are modest most of the time, but quite large in financial crises.

5) Fredrik Carlsson, Mitesh Kataria, Alan J. Krupnick, Elina Lampi, Åsa Lofgren, Ping Qin, Susie Chung, and Thomas Sterner at Resources for the Future find that ordinary Swedes are more willing than Americans to pay for climate change action, while Americans are more willing to pay than the Chinese.

By Ezra Klein  |  July 12, 2010; 1:45 PM ET
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All the right-wing cotributors here should look at the graph Ezra linked to above from CBPP (link no 2 in the post) to see how the incomes of the top 1% have grown, relative to everyone else's incomes, over the past few years. Anyone who is defending Jon Kyl and is not in the top 1% or at least the top 2-3% is a chump and is being played.

Posted by: Mimikatz | July 12, 2010 4:00 PM | Report abuse

And lest some of you have illusions about where you fall, the top 1% has an AFTER-TAX annual income of $1.3 million per household. Unless your after-tax household income is over $198,000 you are not even in the top quibntile. You are in the 60-80% quintile or below. Click the link and read down. The conservative philosophy depends for its strength on a whole lot of less-than-fully informed optimists.

Posted by: Mimikatz | July 12, 2010 4:07 PM | Report abuse

You missed a key line in the Wyden-Gregg report:

"These estimates are all static, in that they do not incorporate potential behavioral responses to the tax changes. On balance, such responses would likely reduce revenues under the proposal."

Posted by: SteveCA1 | July 12, 2010 4:35 PM | Report abuse

"Anyone who is defending Jon Kyl and is not in the top 1% or at least the top 2-3% is a chump and is being played."

I wouldn't defend Jon Kyl - his position is a bit bizzare, but I'll bite here.

Most conservatives probably just aren't very envious of the rich. I'm certainly not. The conspiciuous consumption of the rich is irrelevant to my happiness, despite what behavioral psychologists believe (or perhaps because these guys have told me people care about relative wealth, that I'm aware of it and no longer care as it is irrational). Sometimes the rich actually use the money in socially beneficial ways - note how the two richest Americans are basically giving the lion's share of their wealth to charitable causes - causes which if given the choice I would rather contribute to than the government.

Conservatives believe, rightly or wrongly, that higher and more complicated taxes reduce economic performance and makes everyone worse off.

I'm sort of an odd duck. I'm actually not all that offended by the size of government but by its complexity, scope and the systemic risk it creates.

I'd be completely fine with a 30% flat tax (eliminating the existing income and FICA taxes) on all labor and capital income and replacing Social Security with a $12,000/yr income grant to all citizens 18 and up, even though this means no individual pays any net tax until they earn $40,000, and even though there is a slight work disincentive by giving people this much money. As long as in the long-run the deficits disappear and the structure is sustainable, I'm okay.

Between FICA, the implicit marginal taxes of lost benefits and the income tax, nearly everyone is probably already facing a 30%+ marginal tax rate. Might as well make it simple and give people a guaranteed amount, that they can depend on, which simplifying taxes and reducing marginal rates. No strings attached either - keep out of jail, don't get stripped of your citizenship and maintain a bank account and its yours, from 18 to death. No government bureaucrats telling you how to use it, whether for food or housing. You get $1,000/mo and its up to you to spend it wisely.

I think it might even do a lot of good. Think of a couple with no breadwinners right now - they have a $24,000 safety net. However, I'm not going to be bothered by the fact that someone who earns $10,000,000 in one year gets to keep roughly $7,000,000 of it.

Even if there were no massive negative economic problems with a 60% or 70% tax on incomes over $1,000,000, on principle I oppose them. Taxes should fund the government creating minimal distortions and avoiding an excess burden on the poorest - if those conditions are satisfied then I am as well. Pure libertarians like msoja might object that this scheme is just another form of theivery, but if I can get the government to simplify and reduce its mission at the cost of some redistribution, then I'm game.

Posted by: justin84 | July 12, 2010 5:01 PM | Report abuse

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