Okay. I’m back!
Couldn’t take Krugman for awhile. He’s so annoying. But, for the sake of my loyal readers, I want to demolish him today, just for old time’s sake.
In this blog, Krugman argues that there is, indeed!, quite a lot of money to be had by raising the tax rates on the rich. He says that The Tax Policy Center estimates that if tax rates where at “pre-Reagan” levels, it would raise $78 billion this year. Krugman, calculating that $78 billion is almost a half a percent of GDP, continues:
So, what I did was to apply that revenue as a percent of GDP to CBO projections of GDP over the next decade. And what this says is that going back to pre-Reagan-type higher-income taxation would yield about $1.1 trillion over the next decade.
Let’s keep two things in mind. First, the CBO estimates are ALWAYS garbage. Here’s one of my favorite 10 year projections from them:
Calculating anything using their 10 year projections is AMATEUR HOUR - fitting for Krugman.
Anyway. Let’s get real.
Krugman, via the Tax Policy Center, says if tax rates were at “pre-Reagan” levels, we would “have raised an additional $78 billion, or a bit over half a percent of GDP.”
I call bullshit on that.
So, the CURRENT income tax code collected 8.1% of GDP
Now, let’s see the numbers in the “pre-Reagan” utopian days. Using the same sources as above, in 1979, GDP was $2.659 trillion and income tax receipts were $217 billion.
In other words, when we had “brackets well above the current 35 percent maximum,” the government collected….8.1% of GDP.
So, all that screaming and crying seems a bit silly, right? When I calculated these, I didn’t even write down the hundredths place digit on the percentages because it seemed so insignificant. But - assuming it was even bigger in 1979 - who cares? It’s meaningless.
It’s criminally stupid for Krugman to say that restoring the old tax code would yield an additional $1.1 TRILLION dollars. Based on CBO estimates, no less!
How about this - even if it raised an additional $78 billion this year, that would cover 2% of the spending, or roughly one week of bills. It IS insignificant. Obsessing over taxing the rich to fund one week of spending that is STILL UNSUSTAINABLE is a waste of time.
Krugman, you lose.