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Friday, December 28, 2012

Thoughts on the cliff

Cliffside scenes were common for Wile E. Coyote and the Road Runner. They never died from falling off the cliff, and we won't either. My thoughts:
  • Although there was a rationale to reduce the FICA rate from 6% to 4% during the depth of the recession, the economy has improved considerably and therefore the rationale no longer applies. Meanwhile, Social Security and Medicare are under great financial pressure. We must pay for those programs, so let the FICA rate revert to 6%. By itself this won't fix Social Security or Medicare, but it will keep the program from getting worse.
  • People with high incomes should pay more taxes than they have paid in recent years. Whether this is accomplished by raising marginal tax rates or closing loopholes is an implementation detail. Personally I'd prefer to see loopholes closed and the Alternative Minimum Tax redesigned. I'd also like to see inheritance taxes increased.
  • It's time to impose high taxes on guns and ammunition -- and also to decriminalize marijuana, get it out of the hands of organized crime as we did with alcohol subsequent to the repeal of Prohibition, and tax it to the same extent that we tax alcohol. The amount of money raised wouldn't be significant, but the social impact would be. (For the record, I am not a user.)
  • Federal spending must be reduced. Withdrawing from Afghanistan is the single most important step to reduce spending. I don't believe that we need a financial cliff to force withdrawal from Afghanistan; we should leave regardless.
  • Commentators blame partisan politics for the delay in addressing the cliff. Perhaps that's true, but ultimately the voters themselves are responsible for splitting government between the parties.