Obama Is Flexible On Highest Tax Rates

[BlueStreak]

88. It won't hurt anybody to go back to 20% cap gains and dividents as ordinary income

The elderly are typically in a low tax bracket already, so the dividend scale is already progressive. And if anybody is getting enough in gap gains to make a real difference, they can afford it.

But the point is it has been months since these items were discussed publicly. Instead they are ONLY talking about the mythical top income rate that none of the wealthy ever pay (to any significant degree).

Another problem with this whole thing is that Obama is offering to take a TEMPORARY tax cut that we couldn't afford and turn it into a PERMANENT tax cut that we cannot afford. That just plain sucks.

We are spending about 24% of GDP for government. We are taxing about 16% of GDP and might end up taxing 16.5% of GDP once this Kabuki theater is over. We cannot cut our way to 16% and that would be horrible economic policy. We might be able to cut our way to 22% and grow our way to 20%, but that still leaves us with a 4% structural shortfall as a PERMANENT matter.

The deal ought to be to end the Bush cuts for the rich now and to end the rest of the Bush cuts once we get to 6% unemployment.