Conventional wisdom holds that government should avoid tax hikes — indeed, that it should cut taxes — during a recession. And technically, the President is not proposing such a tax hike, since higher rates wouldn’t take effect until at least 2011, by which time he hopes the economy will have turned around.
But higher taxes there will have to be — relatively soon, heftier than currently advertised and lasting far into the future.
Two features of the current situation render reliance on the tax-cut route alone inadequate. First, the scale of money needed to prime the economy is simply too great to accomplish simply through tax-code tinkering.
The other is that the President has boldly decided that now is a once-in-a-lifetime opportunity to address other issues tied to the nation’s long-term economic strength, including an overhaul of health care, energy independence, climate change and education reform. ...
The President premises some of his efforts to control the deficit on an economic rebound next year and on sharply reducing military costs in Iraq — reasonable hopes but not certainties. He also plans to slash spending in areas — including payments to agribusinesses and to private banks that make college loans — that will provoke fierce fights in Congress.
But the President’s plan also relies heavily on higher taxes. His plan would cut levies for most Americans, but increase them on the wealthiest Americans by ending the Bush tax cuts for couples making over $250,000 a year, limiting deductions of top earners and increasing taxes on capital gains.
That’s fair and overdue, and would help reverse the widening economic disparities between rich and ordinary Americans.
But no one should think that 95 percent of the population can ride to greater prosperity solely on the backs of the other 5 percent. The crisis is too deep, and its price tag too high, to avoid other, broader taxes eventually. Eventually, we must all pay, in the hope that we will all benefit.
The Courier-Journal, Louisville, Ky.
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