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Aine Seitz McCarthy
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Using all the tools of fiscal policy

8/5/2011

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Congress scraped by with a debt deal and barely averted a fiscal crisis. The cuts have began, but what about (gasp) increased revenue?

C. Ford Runge, another economics professor in my department, on the reality of the current tax structure and the challenge addressing efficient changes in the StarTribune:

But government services are not free, and taxes are the means by which they are made possible. The question is: How can taxes be structured in ways that are fair and efficient and create improved incentives?

To suggest that taxes will cease as an instrument of fiscal policy, or that they will not increase in the face of irresponsible deficits run up by the Congress and the administration, is delusional.

Nonetheless, Republicans claim that any new taxes will "kill jobs," because U.S. businesses are already overtaxed. If they had glanced at their own Congressional Research Service's report of March 31, "International Corporate Tax Rate Comparisons and Policy Implications," they would learn that the United States had an effective tax rate in 2008 of 27.1 percent, slightly less than the 27.7 percent weighted average among industrialized nations' as a whole.


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    Aine Seitz McCarthy

    International development, economics and some pretty ambitious ideas from a stubborn graduate student clinging to her sense of adventure.


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