Let's Compromise on Taxes

The Bush tax rates are about to expire. Republicans want to extend the Bush rates. Democrats want them to go back up to pre-Bush levels. I say we compromise: let the rates go back up for everyone who makes less than, say, $200,000 per year.First, I would prefer that we extend all the Bush rates. Those rates were in place in 2006 and 2007, for example. Yet, somehow, the federal government was able to collect a higher fraction of the economy in those years than it averaged for the four decades prior to George W. Bush's presidency. And the deficits in those years were only 1.9% and 1.2% of GDP, respectively -- lower than the average of those same four decades -- and, of course, much lower than the 10% under President Obama and the Democrats so far. (Source: Office of Management and Budget, Table 1.2.)But a poor-girl federal government can't be expected to survive on just one fifth of the economy anymore.From 1960 through 2008, federal revenues averaged 18.1% of GDP, and spending averaged...(Read Full Article)