Government leaders are considering tax increases on the wealthy and corporations, but they admit it may not be enough.
My hopes for a meeting of the minds in the middle of the political aisle were significantly dampened today. The president announced that his plan for dealing with the U.S. debt is to double the amount of tax revenues that Republican leader John Boehner agreed to last year. The proposal is to increase revenues by $1.6 trillion over the next 10 years by increasing taxes on the wealthy and on corporations. Tax hikes on individuals and businesses had been anticipated by ITR Economics and come as no surprise.
The interesting concession comes via White House Press Secretary Jay Carney who said that increasing taxes on the top two percent of wage earners is not enough to tame the debt and reenergize the economy. You and I have known that all along, but that is the first time I have heard a leading government official say that the move has limited beneficial impact.
Two thoughts come to mind. One, what kinds of corporate tax increases are we headed for? Last year there was talk in Washington of reducing the corporate tax rate. That seems to be a fond memory at this point.
The second thought relates to France’s President Hollande. President Hollande has told the top wages earners that the 75% top income bracket was only for two years and only symbolic, as it will have no real impact on France’s debt problems. Wouldn’t it be nice to hear some of that Austrian-sounding economic theory come out of Washington?