Oops! Gregory Mankiw tells the truth—The middle Class will Pay more for Any Fiscal crisis Solution

Posted by Kendall Harmon

When President Obama talks about taxing the rich, he means the top 2 percent of Americans. John A. Boehner, the House speaker, talks about an even thinner slice. But the current and future fiscal imbalances are too large to exempt 98 percent or more of the public from being part of the solution.

Ultimately, unless we scale back entitlement programs far more than anyone in Washington is now seriously considering, we will have no choice but to increase taxes on a vast majority of Americans. This could involve higher tax rates or an elimination of popular deductions. Or it could mean an entirely new tax, such as a value-added tax or a carbon tax.

To be sure, the path ahead is not easy. No politician who wants to be re-elected is eager to entertain the possibility of higher taxes on the middle class. But fiscal negotiations might become a bit easier if everyone started by agreeing that the policies we choose must be constrained by the laws of arithmetic.

Read it all.

Filed under: * Economics, PoliticsEconomyPersonal FinanceTaxesThe U.S. GovernmentBudgetMedicareSocial SecurityThe National DeficitPolitics in GeneralHouse of RepresentativesOffice of the PresidentPresident Barack ObamaSenate

Posted December 30, 2012 at 6:26 am [Printer Friendly] [Print w/ comments]

1. AnglicanFirst wrote:

For the purposes of discussion regarding the national budget, a “productive person” can be defined as a person who pays federal income taxes and a “non-productive person” can be defined as a person who does not pay federal income taxes and who depends upon money from the federal government for subsistance, housing and medical care and who is not retired under age 60 or who is not disabled.

Much of our fiscal problem is due to the non-productive Americans in our society.

The productive persons carry the burden that the non-productive persons do not shoulder. 

As the percentage of non-productive Americans increases, the burden for supporting them will fall on fewer and fewer productive Americans.

At some point, the productive Americans will not continue to carry that burden by opting out of the hard work required to be productive because they will be ‘taxed-out-of’ being able tyo enjoy a life style that is the just reward of being productive.

December 30, 3:52 pm | [comment link]
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