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

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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?