Sunday, February 24, 2013

David Brooks and the Progressive Regressive Tax

Lost among the commentary on David Brooks' (lack of) grasp of budgetary details and proposals, is this:
My fantasy package, and I’m not running for office, would include a progressive consumption tax, and it would have chained CPI, and it would have a pretty big means-test of Medicare.
Many have pointed out that means-testing Medicare won't have a significant impact on expenditures, as the wealthy consume health care at roughly the same rate as everybody else. The "chained CPI" idea is meant to reduce Social Security benefits over the long term which, needless to say, will have the most pronounced impact on the poor. But seriously, a progressive consumption tax? The whole reason that factions of the political right are in love with a "consumption tax" is that it's inherently regressive. Take that away, and what's the point?

Brooks' reminds me of the people who want to impose a mileage tax on automobiles. You could simply increase gas taxes - which would also have the impact of placing a higher tax burden on larger, heavier vehicles and thus encourage people to shift to smaller, lighter, more efficient vehicles. But why not create an entirely new tax to accomplish part of what could be better achieved by adjusting the rate of an existing tax? If you want to raise additional tax revenue in a progressive manner without hammering the population of citizens that lives paycheck to paycheck, why impose a "consumption tax", imposing upon business an additional system of collection and remittance, with associated complicates system of exemptions or rebates to make it "progressive", when you can simply raise the already-progressive income tax rate and better accomplish your goal?

Unless, of course, the "progressive" part of your plan is a deceit - something to fool the masses before you hit them with a new, regressive tax. (Just as means testing Medicare and diminishing the return on Social Security might be seen as less about balancing the budget and more about undermining the present broad support those programs have as a result of their universality?)

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