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Home Publications Blogs Beat the Press David Brooks Is Upset Because President Obama Won't Raise Taxes on Middle Income People and Cut Them for the Wealthy

David Brooks Is Upset Because President Obama Won't Raise Taxes on Middle Income People and Cut Them for the Wealthy

Tuesday, 26 February 2013 05:03

After all, that is what real Democrats are supposed to do. (It's not sufficient in David Brooksland to have just one party that openly advocates redistributing money to rich people.) Of course Brooks doesn't put the agenda he imagines as bold in these terms, but these are two of his three big points.

On taxes he proposes replacing the income tax with a value added tax for people earning less than $100,000 and reducing the corporate income tax to 15 percent. Brooks asserts that this will increase fairness while boosting growth.

Really? We have been redistributing the tax burden downward for most of the last three decades. It is certainly possible that growth would be even worse had we not lowered marginal tax rates, but it is not easy to find the growth dividend in this picture.

Brooks associates this shift with eliminating unnecessary income tax forms. It is not clear that his preferred plan would lessen the need for forms, since it would require tens of millions of rebates if it were not to be horribly regressive compared to the current system.

However, the idea of getting rid of tax returns is an interesting one. The United States could get rid of most returns even under the current system. It could follow the example of several European countries where the IRS would compile tax returns for people and send the returns to them for their inspection. Taxpayers would then either accept the calculated tax liability or file the forms to show why the government's calculation is in error.

The reason for not going this route is that H&R Block doesn't want the government to save people the time and money involved in tax preparation. David Brooks doesn't talk about beating up on the tax preparation industry, because his hero president doesn't do things like that.

On Medicare, Brooks continues the myth about the affluent elderly suggesting that:

"Obama would take spending that currently goes to the affluent elderly and redirect it to the young and the struggling."

That's a great line, too bad Brooks has no clue about income distribution among the elderly. We just had a big debate over tax rates on the wealthy. The cutoff for this category was put at $400,000 for a single individual. If we used the same cutoff for defining "affluent" among the elderly, it would net us less than 0.5 percent of Medicare beneficiaries. This means that using this income level as a strict cutoff (as opposed to a phase-out) would save us less than 0.5 percent of benefits with a strict means-test at this point. Even if we made the cutoff $200,000, or less than half of this level, we would save much less than 1.0 percent of benefits with a strict cutoff.

While the rich have a hugely disproportionate share of income, they don't get much more in Medicare and Social Security than the rest of us. (Actually they get less from Medicare, since we already charge them higher premiums.) This means that if we want to get any real money from these programs, we would have to means-test people with incomes around $50,000. This gives a whole new meaning to affluent. (It's interesting that Brooks never gives his income cutoffs in these columns even though he raises the issue endlessly.)

Brooks also wants Obama to lecture lower income people about getting married:

"Third, Obama could talk obsessively about family structure and social repair. Every week we get another statistic showing how social and income inequality is dividing the nation. A team led by Robert Putnam of Harvard recently completed research showing that while childhood obesity is falling among kids whose parents graduated from college, it is still rising among kids whose parents have a high school degree or less."

It's not clear that these lectures from the president would have much effect. His time might be better spent lecturing his friends in the finance industry on obeying the law (or his employees in the Justice Department on enforcing the law), but they probably would not do any harm. Still, these lectures are one third of Brooks' bold agenda?

Anyhow, at least Brooks is not still blaming Obama for rejecting policies that he actually embraced. Is our columnist learning?

Comments (6)Add Comment
Thanks for this, after reading nytimes lead editorial that Obama miscalulated
written by JaaaaayCeeeee, February 26, 2013 6:20
Today's lead editorial castigates President Obama, for holding back the information that contractionary fiscal policy is contractionary, for months, not letting Republicans know soon enough of the effects of sequester on the states that they represent. Obama supposedly miscalculated, with overconfidence, that Republicans would cave. They feel Obama wasted the time to make the consequences clear to the public, leaving us little time to realize what will happen within days. The only spin that they left out is complaining how divisive Obama is.
written by foosion, February 26, 2013 6:47
The main problem with the IRS doing the initial calculation is that it would make the tax process less painful, which would interfere with the Republican jihad against taxes.

It would be nice is someone with a bully pulpit would explain that we don't have out of control spending and deficits and that cutting government under current conditions would hurt growth, not help it. Alas, no politician wants to say that contractionary policies are contractionary or even try to correct the public's factual misapprehensions.
Speaking of H&R Block...
written by LSTB, February 26, 2013 7:31
I just saw an ad of theirs saying that they'll give TurboTax users a free second-check. I think it's funny that computers and the Internet are killing the tax preparation industry anyway.

Of course we could eliminate most tax forms and prep work entirely by shifting taxes onto land rents. Just set up a monthly direct deposit withdrawal line. That would wipe out the tax preparation industry for good, and probably some accountants to boot. Certainly a better idea than the odious VAT.
How much nonsense can be in one article
written by Jennifer, February 26, 2013 8:29
Really, he just keeps topping himself. He states that he doesn't think Obama should style himself as a Clinton "centrist" or a "liberal" Reagan-how can anybody reasonably argue that Obama has been anything but a center-right figure and the Republicans have been off the deep end for the past four years? Since such an argument is impossible he just makes stuff up like "Republicans champion the individual", while "Democrats champion the collective". Democrats champion the collective so strongly that they have pushed for a serious overhaul of an economic system so that large banks and corporations are not favored, they pushed hard for a public option for the ACA instead of a completely privitized system . . .
The myth of the wealthy elderly persists-- "entitlement spending for the affluent"--what entitlement spending goes to the affluent? He suggests that Obama should push for "early educaton (I guess universal pre-K is something else?), community college, research, and infrastructure projects." All of this has been done by the current adminstration, in fact the most basic intrastructure funding has been blocked by Republicans.
He finishes then with the right's favorite solution for the poor, family values. I was not aware of this but it turns out that social and income inequality is directly related to poor "family structure" (as opposed to unemployment created stress in the family structure) and this can be solved by the President of the United States "talking obsessively" about it. Apparently, they do not need resources or those "entitlements" (those are all going to the elderly).
It is interesting that the one thing Tom Friedman sometimes gets right is the one thing that Brooks never mentions, the environment. If there is a large, potentially society-destroying train wreck coming that we are not properly prepared for it's the effects of climate change.
written by watermelonpunch, February 26, 2013 2:32
Does anyone find the idea of the President of the United States giving citizens talking tos about family structure & obesity, to be well... Very unAmerican????
When has it changed the at the President is no longer a REPRESENTATIVE of the people, but stern Father to a bunch of 8 year olds?
Furthermore, I don't think people ought to have to get married in order to survive or do well in our economy. I think that's the problem. Trying to force people to conform is rather unAmerican too.
Another example...
written by djt, February 26, 2013 4:58
Yet another example of a place (tax returns) where the protection of an existing profit center must be preserved to the detriment of every individual but the few working for the company.

Our entire economy and social life is being held hostage to existing profit centers. It's stifling innovation in many sectors of the economy. Other economies that don't need to defend the existing profit centers will leapfrog the US and do it better. We are stuck, in a way, with the status quo.

The creation of over 100 million tax returns could probably be eliminated. That's billions of man hours of work freed to spend with family, volunteer, and improve one's community (although most will spend the extra time watching TV).

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.