My fellow Americans, I believe I have solved our budget problems. In the shower, no less.
Mulling therein the consensus that 'you don't raise taxes in a recession' (or frail recovery), and the reality-based community's corollary that you do raise taxes when faced with a structural deficit, I thought, why not index tax rates to GDP growth? The government has no trouble indexing the yield on TIPS to inflation. Why not set a baseline tax rate that's operative at, say, 3% GDP growth, adjustable down in a set ratio all the way to, say, a 3% contraction, and adjustable up all the way to, say 6% annual growth? Economic velocity will determine our GAIT (Growth Adjusted Income Tax).
Republicans will screech, as they did when Clinton raised taxes in 1993, that the American economic race horse has been hamstrung forever. Fine. Make the whole package contingent on performance over one multi-year cycle. If GDP growth doesn't hit an agreed annual target once in, say, six years, sunset the system. If it does hit the target, reassess after ten years.
Some will protest that taxpayers need 'certainty.' Good -- let's grant ourselves the certainty that tax rates will be commensurate with the demands of the economic cycle.
Go forth, economists and budget wonks, and work out the details. You're welcome!
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