Pawlenty's Tax Mythology

by Michael Sean Winters

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Tim Pawlenty released his tax plan yesterday.
To be clear: There is no evidence that the health of the economy is directly tied to marginal tax rates. There is evidence that a significant drop in marginal rates serves as a one-time spur to economic investment. But, that's it. In most industrialized countries, the government takes a significantly larger share of GDP than does the U.S. government, with no markedly different levels of economic health. Of course, in today's xenophobic GOP, "European" is a cuss word, so it is hard to make this point.
So, let's return to the GOP's hero extraordinaire, Ronald Reagan. The top marginal income tax rate on the day he left office was 50%. I would be completely satisfied to go back to that rate. Any takers among the Reagan-worshippers?
I am all for a simpler tax code, one that removes many of the special provisions that were inserted into the code at the behest of lobbyists for large corporations, which only serve to tilt the economic playing field, and drain the Treasury. The current tax code is a byzantine mess, a godsend to tax lawyers and a curse for everyone else, volume upon volume of confusion.
But, there is nothing confusing about the tax table. You know, after you determine your taxable income, you just turn to the back and compute your tax. That is not confusing. So, there is nothing intrinsically complicated, or anti-investment, or bureaucratic, or big-government about the progressive income tax. I think we actually need more tax brackets at the upper end, to differentiate between a couple, living in the Bay Area or Manhattan, making $250,000 and living a middle class lifestyle, but who willl be subject to the same tax rates as Bill Gates.
Pawlenty, alas, is adrift in the mythic lands of current GOP economic theory. It is all bosh.

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