Here we go loop de loop, here we go loop de lie

Closing Loopholes Isn’t Enough

By LEONARD E. BURMAN and JOEL B. SLEMROD, NYT

REPUBLICANS in Congress say they will do anything rather than raise tax rates. Apparently, that includes rushing headlong over the fiscal cliff and throwing the economy into a possible recession.

When, in an effort to avert the now infamous tax increases and spending cuts to take effect on Tuesday, House Speaker John A. Boehner proposed his so-called Plan B — which would have nudged up tax rates only for those earning over $1 million a year — rank-and-file Republicans promptly rebelled, storming their party caucus with the rhetorical equivalents of pitchforks.

One can’t argue with religion — and for some, the unwillingness to bend on marginal rates is just that. But for many politicians, the refusal to raise tax rates rests on a faulty premise.

The Congressional Budget Office projects that if the United States follows a likely scenario in terms of demographic changes, spending and economic growth through 2035, America’s coffers may fall short by as much as $2 trillion a year in current dollars. With a predicted gap so large, any deal to restore the country’s fiscal balance must include at least some new revenue.

(More here.)