Thursday, June 14, 2007

The Wealthy have a Great Idea: Progressive Taxation!

According to the Wall Street Journal,

A new argument is emerging among the pro-globalization crowd in the U.S., the folks who see continued globalization and trade as vital to the country's prosperity: Tax the rich more heavily to thwart an economically crippling political backlash against trade prompted by workers who see themselves -- with some justification -- as losers from globalization.
How . . . innovative. No wonder those guys make so much money. But here's the interesting part:
The sharpest articulation of this view comes not from one of the Democratic presidential campaigns, but from economist Matthew Slaughter, who recently left President Bush's Council of Economic Advisers to return to Dartmouth's Tuck School of Business.
Welcome aboard, d0rks.

More keen insight:

"Individuals are asking themselves, 'Is globalization good for me?' and in a growing number of cases, arriving at the conclusion that it is not," Messrs. Slaughter and Scheve write. (You can see why Mr. Slaughter waited until he had left the Bush administration to speak his mind.) [Not that Bush doesn't encourage his staff to speak their minds.]

The conventional response from fans of globalization, including the Bush administration, is rhetorical support for more aid for workers hurt by imports to salve the immediate pain and better education to equip the next generation of Americans with skills needed to command high wages in a global economy. Both are crucial. Progress on both is painfully inadequate.

But trade-adjustment assistance is traditionally targeted narrowly at workers hurt by imports. Today's angst about globalization is far more pervasive. Whatever the actual impact of offshore outsourcing today, it has millions of white-collar workers frightened. And education takes generations to pay off.

What to do? To preserve political support for the globalization dividend, spread the benefits more broadly by taxing winners more and losers less.

"It is best not to address increasingly salient concerns about inequality by interfering with trade," Mr. Summers argued at a forum sponsored by the Hamilton Project, the think tank he and others founded to provide intellectual fodder for like-minded politicians. His solution: use progressive taxation to offset some, but not all, of the increase in inequality. For starters, return tax rates for couples with incomes above $200,000 to the levels they were under President Clinton. [ . . . ]

This, obviously, would be a sea change in fiscal policy. Mr. Clinton raised taxes, especially at the top, to bring down the deficit. Mr. Bush cut taxes, especially on the top. But all this talk is likely to influence any Democrat who takes the White House in 2008. He or she will almost surely move to raise taxes on the best-off Americans -- both to raise revenue to pay the bills and to resist the three-decade-old inequality trend.

Um. Am I misreading this, or did a WSJ writer just recommend Clinton's taxation policies? And imply that the current situation is a result of Bush's tax cuts? Are the wealthy finally recognizing that it is in their interest not to be total fuckers?

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