The Great Debate

The rich are not an easy quarry

Christopher Swann– Christopher Swann is a Reuters columnist. The views expressed are his own –

Cash-strapped politicians are more willing to play Robin Hood than at any time in a generation. Tax rates on the rich may soon hit levels not seen since the 1980s.
The wealthy, alas, are not easy prey. Backed by highly paid lawyers and accountants, no other group is better able to run circles around the taxman. As a result, America’s politicians may get less cash than they bargained for and more economic distortions.

There are many easier and less disruptive ways to get the cash.

Of course, the temptation to launch a direct strike on the rich is understandable. The past three decades have been very good to the affluent. The top 1 percent of earners now account for 19 percent of America’s income, up from 9 percent in 1980. This elite group has also been quiescent, dutifully paying 40 percent of all income tax, according to the non-partisan Congressional Budget Office.

It has been many years since the rich had a powerful incentive to test the limits of the tax code. The top rate of income tax has fallen with only minor interruptions since its vertiginous peak of 92 percent in 1953. But a foretaste of what might be expected was offered by Maryland’s ill-fated creation of a millionaires-tax bracket in 2008.

A year later 1,000 millionaires had disappeared — a third of the total — and revenues from this group had fallen by $100 million. Some may have left the state while others may have found ingenious ways to reduce their reported income.

A simpler way to pay taxes

 Diana Furchtgott-Roth– Diana Furchtgott-Roth, dfr@hudson.org, former chief economist at the U.S. Department of Labor, is a senior fellow at the Hudson Institute. The views expressed are her own.  –

It’s April 15, and you’ve finished the arduous task of filing your taxes. You’ve found your W-2 form from your employer, your pennies of interest income from your checking account. If you itemize, you’ve tracked down the acknowledgement of your charitable contributions to the church, the Sierra Club, and the local anti-poverty organization.

The system is so complex that it may have contributed to the tax delinquencies of four Cabinet-level Obama appointees (or their spouses) who had to pay up to win Senate confirmation. At least two other Obama choices withdrew because of their tax problems.

A stimulating energy policy


- Robert Engle is the Michael Armellino Professor of Finance at New York University Stern School of Business and a Nobel Laureate. His views are his own. -

We have faced energy crises before. The last energy crisis was about running out of oil. This one is about the fear that we might not. The future health of our planet is jeopardized by the greenhouse gases emitted by our industrial society. But can we afford an expensive energy policy in this time of economic distress?

The simplest and best solution to reducing emissions is thought by most economists to be a comprehensive tax on the emission of greenhouse gases. Only in this way will individuals and businesses that avoid the tax be doing what is socially desirable. Only in this way will it become profitable to find substitute energy sources; no longer would it be necessary to subsidize alternatives. The price of oil will rise naturally when we begin to run out, but in this proposal, the price would rise before we reach the bitter end. It is only a matter of timing.

A small business owner’s wish list for the new president

Pam SatranPamela Redmond Satran is a developer of baby-naming site nameberry.com, based on the name guides she coauthored with Linda Rosenkrantz. The opinions expressed are her own.

Dear President-Elect Obama,

In the final days leading up to your election, we heard a lot about what you were going to do to help small-business owners. Now it’s time to pony up. Not sure where to start? As someone with the audaciously bad timing to launch my website, nameberry.com, on October 14, I have some ideas:

Start a web-based work initiative
Taking a cue from FDR’s bold work initiatives in his first 100 days, you might train people to work on small web businesses like mine. Instead of the CCC (Civilian Conservation Corps), call it the WWW Camp, where laid-off mortgage brokers and moms craving flexible hours can learn software coding and database management and website design. The result: More jobs in northern Vermont and southern Virginia; more accessible and affordable help for the new generation of small web-based business owners like me.

How increased mortgage interest relief can save the economy

(James L. Melcher is the president of Balestra Capital, a New York-based hedge fund. He co-authored this article with Joan McCullough, macro-economic strategist at East Shore Partners. Jim MelcherThey are writing in a personal capacity and the opinions expressed are their own.)

Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke have been behind the curve in dealing with the breakdown in the banking system and financial markets. All of their initiatives have had only limited impact as they persist in treating the symptoms and not the cause. We are in the early stages of a severe global recession. It is critically important to take more aggressive steps.

The most vexing variable in this entire crisis has been the value of underlying collateral. Any remedy, therefore, is ineffective unless we acknowledge first that the fate of the collateral lies in the hands of the borrowers. Thus, it is imperative that triage measures be taken without delay to ensure the survival of the mortgagors.

from Tales from the Trail:

McCain says he wants people to ‘get wealthy’

johnmc.jpgGREEN, Ohio - John McCain wants Americans to get rich.

That was the message from the Republican presidential hopeful Wednesday as he focused again on the differences in his tax proposals and those of Democratic rival Barack Obama.

The Arizona senator has hammered Obama in recent days for a philosophy of spreading Americans' wealth around, articulated by the Illinois senator in a now famous exchange with an Ohio man dubbed Joe the Plumber.

McCain promised at an outdoor rally with an enthusiatic crowd he and his running mate, Alaska Gov. Sarah Palin, would not make people or businesses send more money to the federal government.

Capitalism is not dead

diana-furchtgott-roth1Diana Furchtgott-Roth, former chief economist at the U.S. Department of Labor, is a senior fellow at the Hudson Institute. The opinions expressed here are her own.

The past month’s turmoil in U.S. and global financial markets has spawned several articles tolling a death knell for capitalism. Some said that the crisis is proof that capitalism never worked, others opined that the solutions to the problems will end capitalism.

To paraphrase Mark Twain, reports of capitalism’s death are greatly exaggerated. Although Washington is using non-market solutions in an attempt to unfreeze the credit markets, they have not succeeded, and are unlikely to be permanent. The next administration, Republican or Democratic, might take over more of the economy. But if one country in our global economy proceeds down an unsuccessful socialist road, others will demonstrate the effectiveness of capitalist measures—just as America led the way with tax cuts in the 1980s.