The I.R.S. reports that in 2007, that is, before the economic crisis, the top 0.1 percent of taxpayers — roughly speaking, people with annual incomes over $2 million — had a combined income of more than a trillion dollars. That’s a lot of money, and it wouldn’t be hard to devise taxes that would raise a significant amount of revenue from those super-high-income individuals.
For example, a recent report by the nonpartisan Tax Policy Center points out that before 1980 very-high-income individuals fell into tax brackets well above the 35 percent top rate that applies today. According to the center’s analysis, restoring those high-income brackets would have raised $78 billion in 2007, or more than half a percent of G.D.P. I’ve extrapolated that number using Congressional Budget Office projections, and what I get for the next decade is that high-income taxation could shave more than $1 trillion off the deficit.
By contrast, as he notes, the proposal to raise the age on Medicare from its current 65 to 67 would only shave $125 billion over a decade.
Folks, there are 8 times as many savings in raising the taxes of the super wealthy as there is in screwing a generation of seniors.
That is just one example he offers in Things to Tax, his column in this morning's New York Times.
Krugman also supports the idea of a tax on financial transactions. This one could be quite tiny,
Because there are so many transactions, such a fee could yield several hundred billion dollars in revenue over the next decade.It would possibly also have the salutary effect of discouraging some of the computerized wheeling and dealing that has added to the market instability - which one might consider, as that contributes to the devaluation of the stocks held for longer term investments in places like IRAs. And as Krugman notes, both Hong Kong and Singapore, rated the two highest on Heritage Foundations index of economic freedom, have such a tax.
His conclusion is important - read this brief paragraph:
Now, the tax ideas I’ve just mentioned wouldn’t be enough, by themselves, to fix our deficit. But the same is true of proposals for spending cuts. The point I’m making here isn’t that taxes are all we need; it is that they could and should be a significant part of the solution.
Yes they should, and those who insist they shouldn't are not interested in eliminating the deficit. They want to use to slash social programs because they don't feel obligated to support anything from which they don't obtain a direct and personal benefit.
Taxes are one cost of a civilized nation.
Unfettered capitalism, with few taxes and even fewer regulations, are antithetical to real liberty and democracy.
Krugman didn't say that in this column. But he could have.