In the New York Times today, David Leonhardt announced the formation of “Club Wagner.” It’s named after Adolf Wagner who postulated that as societies prospered taxes would increase due to a demand for more government services. Members of the club are those who favor increasing taxes in the U.S.
Maybe I should rephrase that last sentence. The members recognize that the current tax system generates insufficient revenues to fund the promises of the state and believe that as part of a rational fiscal plan, revenues raised through taxation need to increase. Reluctantly, I have to say that I would count myself a member of the club.
Perhaps, eight or ten years ago, had we taken appropriate measures, we could have avoided arriving at this crossroads, but we didn’t. Now the numbers are what they are, there isn’t rationally a means for the country to responsibly meet its obligations absent increased revenues. Simply cutting spending won’t get it done.
The point now is not to bay at the moon and oppose everything only to be run over by the inevitable. Rather it’s to admit to reality and try and shape something that will do the least damage and perhaps improve on the current system. Certainly it’s possible to construct a tax regime that favors employment and capital formation and contains far fewer distorting loopholes. That should be the goal.