Crazy ideas
Two crazy ideas... one political and one economic/political
Political:
What if congress had a jury? Randomly select 100 people (2 from each state) and send them to Washington and put them in a dorm for a year. Pay them $100,000 for their year of service. Keep their names secret (or at least don't advertise them). Give them the line item veto on all spending bills. If any 2 (3?, 10?) of them agree, the whole group must vote. If the majority votes against it that line item is removed from the bill pending an override by the senate (requiring 2/3rds majority). The whole thing would cost taxpayers $10 million plus room and board.
Economic/Political:
Clearly higher taxes are bad in the long run, but let's consider the behavioral response to higher tax rates in the short term. Particularly, Obama's suggestion of raising taxes on the top 5% by 2-3%.
What could the response be?
Nothing: No harm although a slight reduction in purchasing power (and therefore top end spending)
Move out of the country: Clearly negative but I think this is largely unlikely
Cheat on taxes: Always a possibility but I don't think the change being discussed is the margin at which we create a ton of law breakers.
Find ways to reduce taxable income:
Buy real estate: This would certainly be good for the economy right now
Buy municipal bonds: Hrmm... increased infrastructure investment? That would provide jobs
Start new businesses: Businesses tend to have a rough 1-2 years. Particularly R&D heavy businesses. This would make those businesses slightly more affordable.
A small (<5%) tax increase on the high end MAY actually increase economic development in the short run. Particularly if there's an implicit expectation that it will be relatively short term (<5 years).
just some random thoughts.
Political:
What if congress had a jury? Randomly select 100 people (2 from each state) and send them to Washington and put them in a dorm for a year. Pay them $100,000 for their year of service. Keep their names secret (or at least don't advertise them). Give them the line item veto on all spending bills. If any 2 (3?, 10?) of them agree, the whole group must vote. If the majority votes against it that line item is removed from the bill pending an override by the senate (requiring 2/3rds majority). The whole thing would cost taxpayers $10 million plus room and board.
Economic/Political:
Clearly higher taxes are bad in the long run, but let's consider the behavioral response to higher tax rates in the short term. Particularly, Obama's suggestion of raising taxes on the top 5% by 2-3%.
What could the response be?
Nothing: No harm although a slight reduction in purchasing power (and therefore top end spending)
Move out of the country: Clearly negative but I think this is largely unlikely
Cheat on taxes: Always a possibility but I don't think the change being discussed is the margin at which we create a ton of law breakers.
Find ways to reduce taxable income:
Buy real estate: This would certainly be good for the economy right now
Buy municipal bonds: Hrmm... increased infrastructure investment? That would provide jobs
Start new businesses: Businesses tend to have a rough 1-2 years. Particularly R&D heavy businesses. This would make those businesses slightly more affordable.
A small (<5%) tax increase on the high end MAY actually increase economic development in the short run. Particularly if there's an implicit expectation that it will be relatively short term (<5 years).
just some random thoughts.
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