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POPSObama Proposes Tax Increases to Pay for Tax Cuts
He wants to beat up on the oil industry to fund green energy boondoggles. And he wants to beat up on private equity when it's already hard to get people to invest (as Megan McArdle points out, hedge fund managers don't really get that much tax benefit from carried interests) Megan McArdle points out the obvious: But more importantly, paying for the bill with tax hikes--any tax hikes--is going to substantially reduce the stimulus this bill provides. Just as government spending boosts aggregate demand, tax hikes (yes, even on rich people), reduce aggregate demand. Providing stimulus through payroll tax cuts that are financed with tax hikes on other people is like trying to boost your household income by making your wife pay you to mow the lawn. I'm sceptical that "aggregate demand" is really the problem (see Arnold Kling), but if you believe in it, then increasing taxes to cut taxes is self-evidently silly. by Joe Kristan Tax Update Blog http://www.rothcpa.com
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