The language of tax policy -- especially when we need to figure out how to avoid bankrupting the Republic with high taxes on lower incomes and low taxes on high incomes -- is endless fascinating (at least, to me).
How we convince the majority of the electorate to support the estate tax and higher marginal income tax rates on high tax brackets is crucial to whether we'll have the common wealth to buy health care for everyone, higher education for everyone and shift away from foreign oil as the bedrock of our economy. We just need to spend more money on infrastructure to make everyone better off, and that money is going to come from the people who have the most of it. That means higher taxes for high incomes.
Anyway, after the LA Times moderator asked about how they would respond to the inevitable Republican critique that they intend to raise taxes, here is what I heard:
It's not tax cuts or tax hikes but it's about who the tax cuts go to and who the tax hikes are imposed upon.
We now have a trillion dollars worth of corporate tax loopholes and tax cuts that go to the top 1 percent who didn't need them and didn't even ask for them.
My plan gives people making $75,000 or less a tax cut.
This isn't raising taxes -- this is people making more than $250,000 a year on Bush tax cuts that are set to expire.
There have been enormous tax giveaways on HMOs.
Back to Barack Obama (after the moderator tries to clarify that these are tax hikes:
On wealthy Americans. I'm not bashful about it. This looks like a well-dressed crowd. They might pay more. I would pay a little bit more. We have a moral obligation.
It's important to keep in mind that we would go back to the tax rates before George Bush was president. People did very well in that time and they would do very well again.
Hillary's last line got the best reaction from the audience.
That suggests that it's important to shift away from the discussion on higher taxes or lower taxes, and focus on the results of those taxes on the economy. Either we have Clinton taxes or we have Bush taxes. Which one would you prefer?
I also think that it would be very helpful for the candidates to personalize not making much money. Just because they are pulling down six figures now as Senators doesn't mean they should cut themselves off from their days of not making much money. I think that's an authentic message -- I was broke five years ago! -- that helps validate the call for higher marginal income tax rates (it's on those high income guys, not on us).
To shift from one University of Chicago professor to another, there is a great column in the New York Times by Nicholas Epley on the psychology of the term tax rebate versus a tax bonus. According to Epley, most people think of a rebate as their own money returned to them, so they save it. They don't see it as a windfall. A tax bonus, on the other hand, is seen as extra, so more people spend it since it doesn't cut into their budget.
Since the purpose of the stimulus is to get us to spend the money rather than save it, Epley's point is that we should call the check a tax bonus and not a tax rebate. Smart.