Gerson: Liberals Are Huge Tax Cutters

Gerson's column this morning is titled, "Health Insurance For All: How the GOP Can Frame the Issue."

Look, Mike: people don't give a flip if you can frame the issue, if McCain's health insurance plan doesn't actually work for the people who'd actually need health insurance the most. And Ezra's long since said all that needs to be said about that.

But Mike, you said something else that got me thinking: "Obama breathlessly reveals that the McCain credit "wouldn't go to you. It would go directly to your insurance company." Since the credit is intended for the purchase of health insurance, where else should it eventually go?"

Let's say I currently pay $12,000 in Federal taxes. Under McCain's plan, I get a $5,000 "tax credit." How much do I pay under his plan? $12,000. It just goes somewhere specific now - it goes to pay for my health insurance. (Which is what that money's already effectively doing, since I'm insured through my employer.) How's that a "tax credit," Mike?

By this standard, any government spending is a "tax credit." "Hey, we're giving you a $400 tax credit, and spending it on Interstate highways for you!" "We're giving you a 6.2% payroll tax cut, and putting it into Social Security for you!" "We're giving you a $2300 tax credit, and using it to buy you a piece of the Wall Street bailout!"

Yeah, Mike, I'm sure that's what most people mean by a "tax credit."

Ain't enough rolleyes for stuff like this.

How Should We Pay For the Big Bailout?

Rich people got us into this; rich people should pay for it.

That may seem simplistic, but ask me if I care. There's no reason why Joe and Jane Sixpack should pay for the Big Bailout.

So how should we pay for it, and how can we get Dem Congresscritters to think in terms of sticking the upper class with the bill for their own party?

Let's attack the first question first. Here's some ideas:

1) Super-high income tax brackets. Currrently, the tax rates top out at 35% for income over $357,701. Let's let the brackets keep on going, maybe like this:

40% on income over $1 million,
50% on income over $5 million,
60% on income over $20 million,
70% on income over $80 million,
80% on income over $250 million, and
90% on income over $1 billion.

Let the rich people and their GOP toadies whine, and see how much sympathy they get.

2) Same thing with the estate tax. Currently the estate tax amounts to a flat 45% tax on everything over the first $2 million. So how about:

50% on all assets over $10 million,
60% on all assets over $50 million,
70% on all assets over $ 200 million,
80% on all assets over $500 million, and of course,
90% on all assets over $ 1 billion.

3) Tax short-term capital gains prohibitively; tax long-term capital gains like regular income.

If you hold onto a stock or other security n days before selling it, your tax rate is (99-n)%, or your regular income tax rate, whichever is greater.

So if you buy and sell a security the same day, the government gets 99% of the gain. If you hold it for 35 days, the tax rate on your gain is 99-35 = 64%. If you hold it for 90 days, you'll almost surely pay your regular income tax rate on it, because 99-90=9%, and that's surely less than your regular income tax bracket.

And let's make sure this applies to all financial investment instruments - common and preferred stocks, derivatives, securitized packages of loans, you name it. If there's a market for them, we tax 'em.

4) Impose a transaction tax on security transfers, maybe 1/10 of 1% of the sales price of the security.

If the stock market's mostly a big casino, let's skim a bit off the top to help pay for the Big Bailout.

No, I don't know how much these taxes would raise. I guess there's calculators for these things somewhere, but I can't seem to Google them. At any rate, the amounts should be adjusted to reflect the more pessimistic guesses at how much Uncle Sam will be in the hole as a result of cleaning up after the Masters of the Universe.

Now, how do we get the Democratic leadership in Congress to buy in to this, rather than just say, "sure, bail 'em out, we don't care where the money comes from."

Damned if I know. Anybody got any ideas?