For one time in a row Fed head Ben Bernanke got the story right. No, it wasn’t King Dollar. It was taxes.
Testifying before members of the Senate Budget Committee today, Bernanke referred to the scheduled repeal of the Bush tax cuts. He said, “If no action is taken by January 2013, there will be a very sharp change in the fiscal stance of the United States government.”
Now, lest we give him too much credit, Bernanke was kind of making a Keynesian point. Why? Because he said in his “fiscal stance” argument that sharp spending cuts would also damage recovery. But at least he made his tax-hike opposition clear. And at least he opposes higher tax rates, which would in fact damage the economy.
He could have gone further. The Wall Street Journal is reporting that President Obama’s budget for 2013 will propose higher tax rates on the rich. Additionally, Obamacare in 2013 will raise the payroll tax 3.9 percent, and apply that to investment taxes such as capital gains and dividends.
Bernanke didn’t comment either on Obama’s millionaire-tax proposal or the Obamacare tax hike. But you can be sure investors and entrepreneurs are well aware of it.
This piece reminds me of the infinite monkey theorem, which basically says that a monkey hitting keyboard keys randomly for an infinite amount of time will eventually type out the complete works of Shakespeare.
Reply to this commentLinkReport Abuse“If no action is taken by January 2013, there will be a very sharp change in the fiscal stance of the United States government.” Yeah, as in the federal deficit will fall by several hundred billion bucks.
Reply to this commentLinkReport Abusemaybe over 10 years but actually the best it could do in one year is about $50 billion with 90% of that from the pockets of the middle class ...
Lets hear it for the middle class tax increase ... that should win Obama about 3 votes in November ... yours and 2 other kids living in their moms basement ...
Reply to this commentLinkReport AbuseAny remark of his not including "I was completely wrong, and this is all my fault" is meaningless noise.
Reply to this commentLinkReport AbuseThere is income redistribution in this country - via government-imposed taxes - from the middle and upper middle class (who pay 25-35% in federal income taxes + payroll tax) to the super rich (who pay only 15% taxes, even on salaries/carried-interest, and only on income that they are unable to hide in one of the numerous loopholes and tax shelters available to them).
The only way to fix this income redistribution and bring tax fairness is:
Reply to this commentLinkReport Abuse1. Tax all income at exactly the same rates. The income of the super rich (capital gains, dividents, salaries for money managers/carried interest) should be taxed at the same marginal rates as regular income - just as when federal taxes were originally introduced in the USA.
2. Close ALL tax shelters and loopholes that the super rich use to hide a large part of their income (Cayman/Swiss accounts, hundred-million-$-tax-free IRAs, etc.)
3. Eliminate the AMT, which now overwhelmingly targets the working middle and upper-middle class!
4. Introduce new tax brackets for incomes over $1M and $10M. When federal taxes were originally introduced in the USA only incomes of over $1.2M (in 2011 adjusted $) were taxed, at progressive rates, but now there is not even a separate tax bracket for incomes larger that $1M.
I'm still waiting for Kudlow to get the story right one time in a row. I recall he was last a regular on here in the late 2000s, when he repeatedly extolled the period preceding the financial crisis and great recession as Bush's "Goldilocks Economy 2.0" -- not too hot, not too cold; just right.
That Kudlow agrees with the fed chairman on even a minor point is deeply troubling.
Reply to this commentLinkReport Abuse