Scott Sumner is Not a Happy Camper About Tax Deal

     Maybe that's a good thing when you here what he thinks a good tax code should be like. He wants to "end the marriage penalty", wants to "reduce complexity" and thinks investment taxes are very unfair. All of this sounds very familiar: oh, yeah, it was Mitt Romney's campaign platform.

    Trying to engage him on this issue in any way but mindlessly agreeing with him is impossible. He seems to always be getting even a little more peevish. Not surprisingly some want to question his claims about the unfairness and inefficiency of investment taxes-and his claim that dividend taxes are "triple taxes." Here's his explanation of this:

    "I’m sick of explaining why the taxation of investment income is unfair, inefficient, and double-taxes wage income that is saved. If you don’t understand, take a course in public finance, or read Miles Kimball’s blog"

    http://www.themoneyillusion.com/?p=18429&cpage=2#comment-217447

     Sick of explaining it?! I must have been home sick that day. He lambasts the NYTimes:

     "Here’s the New York Times editorial page:

A logical way to help raise the additional needed revenue would be to tax capital gains at the same rates as ordinary income. Capital gains on assets held for more than a year before selling are taxed at about the lowest rate in the code, currently 15 percent and expected to rise to 20 percent in 2013. That is an indefensible giveaway to the richest Americans. . . .
Mr. Obama would be wise to instruct the Treasury Department to start work on tax reform now, exploring carbon taxes, both to raise revenue and to protect the environment; a value-added tax, coupled with provisions to protect lower-income taxpayers from higher prices, to tax consumption and encourage saving; and a financial transactions tax, to ensure that the financial sector, whose profits have substantially outpaced those of nonfinancial corporations, pay a fair share. (emphsis added)

     "I really don’t know whether to laugh or cry when I read this sort of nonsense. And keep in mind that this is a newspaper that likes to lambast conservatives for not understanding global warming and evolution. Is it too much to ask that they hire at least one person who understands basic economics?
BTW, the cap gains tax is scheduled to rise to 23.8% in 2013, not 20%."

     "Bonus contest: Let’s see if anyone can find a single news article or blog summary of the fiscal cliff deal, which reports all the tax rate changes accurately. The fact that MTRs for the rich rose to 43.4%. The fact that MTRs for the $250,000 to $300,000 crowd rose by about 4% points, from 35.9% to about 40%. From $300,000 to $360,000 the MTRs rise about 5% to 41%. The fact that MTRs for the lower and middle class rose by 2%. Find one article that gets everything right, and you win the contest. And don’t get cute and submit a link to this post, as I’m sure my data is at least slightly inaccurate. It’s just less inaccurate than the average news article or blog post. I’ll list the winner in an update."

       http://www.themoneyillusion.com/?p=18407

       All these hikes he's identifying-but of course never likes to explain-are him mixing up different things. One almost thinks his objective is to confuse people the way he presents this. In fact he comes up with all these rises because of the new ObamaCare tax hike for investment income that starts in 2014 and has nothing to do with the recent deal to raise taxes on the rich-over $450,000. He's also factoring in the end of the payroll tax holiday though, again this has nothing to do with the end of the Bush tax cuts on those above $450,000 and it's actually the GOP that opposed extending it. Sumner himself in the past never cared for the payroll tax holiday-other than for employers.

    Isn't it interesting how the tax code he favors always benefits the rich? Even on the payroll tax cut he prefers employers to labor. Indeed, his whole theory is that we should have a "progressive payroll tax" talk about a contradiction in terms-or a "progressive consumption tax"-again contradiction in terms.

    Here he continues to kvetch about the "marriage penalty"

    "If I got divorced and kept living with my wife I’d save many $1000s in taxes. How is that fair? Indeed the government has no business even knowing whether I am married or not.
I strongly disagree with your views on the Swedish safety net. The US marriage penalty is one cause of poverty in the US. Low income people in America are much better off not getting married, as compared to the 1950s, and this explains some of the trends that people like Charles Murray obsess over."

    Charles Murray. Hmm.. Maybe he'd like it if the NYT hired him to do economics. Murray could also give us how much the bad genes of non-white people are harming economic growth.

    As for this talk about "tax simplification" it's just a euphemism for a flat-ie, regressive tax. When Sumner gets going on "complexity" the pure banality of this entire gripe of his becomes clear:

   "The complexity of the tax code, including the fact that the IRS itself is unable to answer questions when I call for advice. If they don’t understand their own code, how can the average person?"

    That in itself is a fallacious argument. It's right up with Michelle Bachman complaining that Congress should not have passed the fiscal deal as it was 160 pages and too long for anyone to have read yet: does she seriously want to claim that anyone ever reads an entire bill-in the long version?  Does she also imagine that one person wrote the thing?

    Sumner too in his kvetching over some hapless IRS rep on the other end misses the point of specialization. No matter what the tax code is you'd never get something so simple that anyone can explain it in 3 sentences over the phone. His very criteria for "simplicity" is banal.