Can’t Cut Spending? Look Around the Globe

New York Times ^ | April 16, 2010 | Tyler Cowen

[reaganaut1]

AMERICA’S long-run fiscal outlook is bleak, mostly because of an aging population and rising health care costs. To close the gap between expenditures and revenue, we’ll likely see a combination of revenue increases and spending cuts. And we’ll need to focus especially on reducing spending, largely because that taxes on the wealthy can be raised only so high.

Consider the tax burden on high earners once the Bush administration’s tax cuts expire next year. Add up the federal, state, city and sales taxes for a lawyer in New York City who earns $300,000 a year. Depending on the circumstances, this individual could be facing marginal tax rates in the range of 60 percent. Higher income tax rates would discourage hard work and encourage tax avoidance, thereby defeating the purpose of the tax increases.

...

Burdening citizens with much higher taxes would fundamentally change what this country is about. Our founders envisioned a government that would provide public goods but not guarantee everyone’s well-being against every possible obstacle. Immigrants would be offered a franchise to come here and make good if they could — while bearing considerable risk themselves. To this day, this openness has elevated many millions in health, prosperity and liberty — and enabled many newcomers to innovate and offer new goods and services, or scientific ideas, to the world.

Higher levels of government spending and taxation would also soak up resources that might otherwise foster innovation and new businesses. And sentiment would most likely turn ever stronger against those immigrants who consume public services and make the deficit higher in the short run. Current residents might feel more secure in a larger welfare state, but over time the loss of commerce and innovation takes a toll.

The macroeconomic evidence also suggests the wisdom of emphasizing spending cuts.

[reaganaut1]

The article later discusses how Canada cut spending by 20% from 1992 to 1997.

[freeangel]

Hey, slimes, too little, too late. People are already reitiring in droves and starting to put money in most unusual places. Much of the public has done so and will continue to do so to give obama and his thugs the finger.

[pnh102]

Add up the federal, state, city and sales taxes for a lawyer in New York City who earns $300,000 a year. Depending on the circumstances, this individual could be facing marginal tax rates in the range of 60 percent.

If said lawyer voted for 0bama then I am happy for him.

[Ciexyz]

The baby boomers' generation worked and paid taxes to support our older folks. Now when it's our turn to retire, we see all these doom and gloom articles about how we're costing too much. We see a national health plan voted in that has, in effect, advisory panels that are really death panels in disguise. Hmmmm.....