Six Policies Economists Love (And Politicians Hate)

Notice one of their suggestions? Scrapping the income tax in favor of a consumption tax. (The FairTax!)

And hey, this is from NPR! Still want to call them crackpots?

Here's the article:

So here they are, along with a few words about each of the economists who helped craft it:

The proposals

One: Eliminate the mortgage tax deduction, which lets homeowners deduct the interest they pay on their mortgages. Gone. After all, big houses get bigger tax breaks, driving up prices for everyone. Why distort the housing market and subsidize people buying expensive houses?

Two: End the tax deduction companies get for providing health-care to employees. Neither employees nor employers pay taxes on workplace health insurance benefits. That encourages fancier insurance coverage, driving up usage and, therefore, health costs overall. Eliminating the deduction will drive up costs for people with workplace healthcare, but makes the health-care market fairer.

Three: Eliminate the corporate income tax. Completely. If companies reinvest the money into their businesses, that's good. Don't tax companies in an effort to tax rich people.

Four: Eliminate all income and payroll taxes. All of them. For everyone. Taxes discourage whatever you're taxing, but we like income, so why tax it? Payroll taxes discourage creating jobs. Not such a good idea. Instead, impose a consumption tax, designed to be progressive to protect lower-income households.

Five: Tax carbon emissions. Yes, that means higher gasoline prices. It's a kind of consumption tax, and can be structured to make sure it doesn't disproportionately harm lower-income Americans. More, it's taxing something that's bad, which gives people an incentive to stop polluting.

Six: Legalize marijuana. Stop spending so much trying to put pot users and dealers in jail — it costs a lot of money to catch them, prosecute them, and then put them up in jail. Criminalizing drugs also drives drug prices up, making gang leaders rich.

There you have it, six major proposals that have broad agreement, at least among economists. Though we should note that there were some pretty significant quibbles about just how to implement the income-tax and carbon-tax proposals.

The economists

Dean Baker, co-director of the Center for Economic and Policy Research in Washington, D.C., and widely published blo "You could probably describe me as left of center. It'd be fair."

Russ Roberts, George Mason University economics professor. "In the grand spectrum of economic policy, I'm a pretty hard core free market guy. I'm probably called a libertarian."

Katherine Baicker, professor of health economics at Harvard University's Department of Health Policy and Management. We simply called her a centrist on the show.

Luigi Zingales, professor of entrepreneurship and finance and the University of Chicago's Booth School of Business. "What I like to say is that I'm pro-market, but not necessarily pro-business."

Robert Frank, professor of management and economics at Cornell University's Johnson Graduate School of Management. "I'm a registered Democrat. I think of myself as a radical pragmatist."

http://www.npr.org/blogs/money/2012/...liticians-hate

Another (fair tax ) thread jeesh

If it's a progressive consumption tax, how is that different from a progressive income tax?

You work harder, in order to spend more on the finer things, so you pay more. Consumption Tax
You work harder, to make more money, to afford the finer things, and you pay more. Income Tax.

You seem to forget one thing. Large companies such as Apple and GE receive huge tax breaks as a result of their lobby efforts and the tax laws that allow this are not going anywhere. What do you think is going to happen?The government listens to a bunch of Economists or a bunch of large companies that employee millions.

And on item 1:

One: Eliminate the mortgage tax deduction, which lets homeowners deduct the interest they pay on their mortgages.

How long do you think a Congressmen stays in office if he tries to push this through? Who will he listen to, the people who elected him or some economist?

You seem to forget one thing. Large companies such as Apple and GE receive huge tax breaks as a result of their lobby efforts and the tax laws that allow this are not going anywhere. What do you think is going to happen?The government listens to a bunch of Economists or a bunch of large companies that employee millions. Originally Posted by BigLouie

BL, you're worrying me. You are making sense. I don't think Apple gets as many breaks as GE, but you are right about one thing. Politicians will listen to whoever has the money, and shares it with them. That is also why the discussion of alternative tax systems is academic. This system isn't going to change, except to get worse.

BL, you're worrying me. You are making sense. I don't think Apple gets as many breaks as GE, but you are right about one thing. Politicians will listen to whoever has the money, and shares it with them. That is also why the discussion of alternative tax systems is academic. This system isn't going to change, except to get worse. Originally Posted by CuteOldGuy

Yeah, these days, as you said, most large scale change (of any kind, Social Security, tax reform, Medicare/Medicaid, etc.) is largely academic simply because no politician who wants to keep his job is willing to throw himself on the grenade.

Regardless of which part of the political spectrum one may be, solutions to all of those problems involve making some powerful lobbying group unhappy, which is going to kill your political career if you touch it.

The only one of those points that makes me hesitate is #3 just because we see how viciously corporations act right now with their current levels of taxation and I can't seem to think that they're not going to go even more nuts with no income taxes. Also, if we subscribe to the idea that corporations are people, then shouldn't they pay taxes like the rest of us?

You should've also added on #7: Legalize Prostitution!

Regardless of what ever taxation system you choose, the fact remains that it takes X-Number of dollars to operate all Government Entities. If the money is not collected though income tax, it will be collected through another venue.

Which means at the end of the year, you will be right back where you started from. If you are paying about 40 percent of your Gross to some type of taxing entity, Iincome, SS, Sales, Vehicle Inspections, Vehicle Tags, etc) you will still be paying about 40 percent.

The solution, of course, is to have all Government Entities stop spending so much. Good luck with that.

Some States and Cities are already reaching the point of critical mass, because they are simply paying out more than they can take in. The Federal Government doesn't have that problem, because all they have to do is keep printing more, and more, and more money.

Of course, we all know where that leads, but that is for another thread.