Glenn Hubbard in Politico

http://www.futureofcapitalism.com/2010/08/glenn-hubbard-in-politico

One of the surprising things in the battle of ideas these days is the degree to which the center-right of the political spectrum wants to make government tax and spending policy tilt more away from the "rich." There's some of this in a plan by Rep. Paul Ryan and Senator Coburn, who are Republicans, backed by Karl Rove, to raise Medicare premiums on couples making more than $170,000 a year. Now Glenn Hubbard, who was chairman of President George W. Bush's Council of Economic Advisers and is dean of Columbia Business School, has an op-ed piece in Politico suggesting "a temporary payroll tax holiday...for lower-income workers." On Social Security, he suggests "progressive indexing, in which lower-income workers' benefits are indexed to growth in wages (as under current law), while benefits for higher-income workers are indexed only to growth in prices."

There's some of this in Rep. Paul Ryan's highly touted new "Roadmap" as well:

When the plan is fully implemented, Medicare beneficiaries will receive on average the standard $11,000...

Income-Relating. The payment amount is modified based on income, in a manner similar to that for current Medicare Part B premium subsidies. Specifically: beneficiaries with incomes below $80,000 ($160,000 for couples) receive full standard payment amounts; beneficiaries with annual incomes between $80,000 and $200,000 ($160,000 to $400,000 for couples) receive 50 percent of the standard; and beneficiaries with incomes above $200,000 ($400,000 for couples) receive 30 percent.

I understand the reverse Robin-Hood argument: Why should today's low-income and perhaps even uninsured workers be taxed to provide better health benefits to wealthy retirees? But since Medicare taxes are based on income anyway and, unlike Social Security, there is no cap, those rich retirees probably paid more than their share into the system already. Cutting the benefits they paid for in taxes is a bad deal for them.

And here we thought the Democrats were the "soak the rich" party. In fact, it's an approach tempting across the political spectrum, perhaps because, with tax rates that increase the more one makes and plenty of benefits that phase out based on income levels, most Americans have already conceded the principle that "the rich" should pay more to the government and get less back than everyone else. The argument is just about how much more they should pay in, and how much less they should get back.

by Ira Stoll  |  Aug 5, 2010 at 11:54 am Related Topics:  Income Inequality, Politics, Reverse Robin-Hood, Taxes receive the latest by email: subscribe to the free futureofcapitalism.com mailing list