The Economic Plan Everyone Can Agree On

[_cinepro]

Last July, the NPR Planet Money Podcast assembled a team of economists ranging from libertarian to progressive and asked them to find issues that they could all agree on.

The proposals they came up with are interesting. You can hear the whole discussion here:

http://www.npr.org/blogs/money/2012/07/ ... c-platform

Here's the platform in summary:

One: Eliminate the mortgage tax deduction, which lets homeowners deduct the interest they pay on their mortgages. Gone. After all, big houses get bigger tax breaks, driving up prices for everyone. Why distort the housing market and subsidize people buying expensive houses?

Two: End the tax deduction companies get for providing health-care to employees. Neither employees nor employers pay taxes on workplace health insurance benefits. That encourages fancier insurance coverage, driving up usage and, therefore, health costs overall. Eliminating the deduction will drive up costs for people with workplace healthcare, but makes the health-care market fairer.

Three: Eliminate the corporate income tax. Completely. If companies reinvest the money into their businesses, that's good. Don't tax companies in an effort to tax rich people.

Four: Eliminate all income and payroll taxes. All of them. For everyone. Taxes discourage whatever you're taxing, but we like income, so why tax it? Payroll taxes discourage creating jobs. Not such a good idea. Instead, impose a consumption tax, designed to be progressive to protect lower-income households.

Five: Tax carbon emissions. Yes, that means higher gasoline prices. It's a kind of consumption tax, and can be structured to make sure it doesn't disproportionately harm lower-income Americans. More, it's taxing something that's bad, which gives people an incentive to stop polluting.

Six: Legalize marijuana. Stop spending so much trying to put pot users and dealers in jail — it costs a lot of money to catch them, prosecute them, and then put them up in jail. Criminalizing drugs also drives drug prices up, making gang leaders rich.

[_palerobber]

i'm liberal / progressive and here's my vote...

1. YES

2. UNDECIDED -- i'd need to study the issue more.

3. NO -- corporations can already get deductions for R&D and some other types of reinvestment. i'd support expanding those deductions if needed, but not just scrapping corporate taxes all together.

4. DEPENDS -- i'm open to consumption tax but it depends entirely on the details (and yes, anything flat or regressive is a non-starter).

5. YES -- but cap and trade (a conservative proposal) would be better.

6. YES

[_palerobber]

...one more thing.

i think the suggestion that taxing income, by definition, discourages people from earning as much money as they possibly can is ludicrous.

[_cinepro]

...one more thing.

i think the suggestion that taxing income, by definition, discourages people from earning as much money as they possibly can is ludicrous.

It's discussed at 15:00 in the podcast.

[_krose]

You had me at "NPR."

Seriously, I find it hard to believe that libertarians and progressives agreed on some of these. But I'll add my dos centavos anyway.

1. Great idea. In fact, I can't think of a tax deduction that should not be eliminated.

2. I would prefer to get employers completely out of the health insurance picture, so I would support this if it helps get us closer to single payer.

3. I would accept this in a trade for taxing capital gains and dividends (above a reasonable level, say $100K) at the regular rate.

4. In principle I prefer a consumption tax. But my concern is that the rate would have to be so high to replace income tax revenue that it would be unpalatable to the people. A point-of-sale tax alone wouldn't be enough. We would have to implement a European-style VAT, where goods are taxed at multiple points in their production.

5. Sure. We also need to find a fairer way to pay for roads, as cars shift to electric and other alternative fuels. Something that taxes miles driven.

6. That's an easy one. Same with most other vice laws, like prostitution. Stop criminalizing vices, and tax the activities instead.

[_cinepro]

Seriously, I find it hard to believe that libertarians and progressives agreed on some of these.

I think that's the difference between economists and politicians. ;)

[_palerobber]

...one more thing.

i think the suggestion that taxing income, by definition, discourages people from earning as much money as they possibly can is ludicrous.

It's discussed at 15:00 in the podcast.

thanks, i've have to take a listen.

update:
i listened but there was no argument offered (unless i failed to listen long enough), just this logically flawed recitation:
A. taxing can be used to discourage things
B. we tax income
C. therefore, taxing income must discourage it

first of all, while taxation can be used like this, it rarely is. "sin taxes" are a tiny sliver of our current federal, state, and local tax regime in the US. and second, even if we accepted this obviously flawed logic, why would we want to "discourage" consumption which is the main driver of our economic growth (or so i'm always hearing) ?

[_palerobber]

deleted.

[_EAllusion]

That's basically Gary Johnson's tax plan and more or less what I support. It's a very standard libertarian proposal, so it was interesting to see that this is what a range of economists ended up compromising on.

Awesome.

[_EAllusion]

You had me at "NPR."

Seriously, I find it hard to believe that libertarians and progressives agreed on some of these.

Five of those have heavy support in the libertarian community. The only one that might shock you is the carbon tax, but there is a sizeable contingent of libertarians behind it for reasons that are complicated.

This is close to the plan that the current libertarian presidential candidate offers, though NPR is right to say that this is not something that the mainstream media would take seriously enough to penetrate the public discourse.