We all must chip in

While I do believe that the wealthy have benefited too much from the previous thirty years of tax policy, namely through lower income and capital gains taxes, I do not want to see them be the only targets of increased taxes. The highest rates under Carter were prohibitive and likely discouraged increased investment; the basement rates for the top 5% under Bush have no impact on investment and, through decreasing receipts available for government expenditures, has contributed to the detioration of our nation’s infrastructure, non-tertiary education system, and second-class healthcare.

All of which is to say that this article by Jackie Calmes at the New York Times is quite prescient.  We cannot afford the investments and debt repayment our nation requires without broadening our tax base.  Money quote:

This [the healthcare debate] will not be the last time that the president runs into a conflict between his audacious agenda and his pay-as-you-go guarantee, when only 5 percent of taxpayers are being asked to chip in. Critics from conservative to liberal warn that Mr. Obama has tied his and Congress’s hands on a range of issues, including tax reform and the need to reduce deficits topping $1 trillion a year.

Unfortunately, Obama has backed himself into a corner by pledging not to raise taxes on 95% of Americans and not to tax employer-provided health benefits.  The latter promise was made simply to put himself into the opposite corner of McCain even though the policy is sound; I presume that the non-politician Obama understands the reform’s soundness.

Taxes can be raised directly or indirectly.  If direct taxes (income and payroll) need to be raised, why not raise them in a progressive and regressive manner?  In other words, a grand compromise could increase the payroll tax on wealthy earners (a progressive move) while also increasing tax rates on lower tax brackets (regressive).  Or a whole range of indirect taxes could come into place: a tax on miles traveled, raising the gas tax, increasing alcohol taxes, instituting a high fructose corn syrup tax, etc.  Because of his rhetorically induced quandry, indirect taxes are probably what Obama will have to introduce.  Or, in 2012, he could refuse to demarcate what tax policies will be out of bounds.