Economy

Paul Krugman: How Bad America Could Get If a 1%-Loving Republican Wins in 2016

Krugman paints a picture that shows how bad things could easily get, again.

Photo Credit: via YouTube

Paul Krugman now has some official numbers on his side to make the case that having Obama in the White House instead of Mitt Romney has made a serious difference to the country. In Monday's column, Krugman looks at the IRS’s tax tables for 2013, which were released last week, and concludes that elections have real consequences. His argument is directed to people on the left, who are disappointed with Obama and argue that there is no major difference between the two parties (except Bernie Sanders) and that the wealthy will always dominate.

Well, yes, but there has been some measurable progress, Krugman argues. 

For one of the important consequences of the 2012 election was that Mr. Obama was able to go through with a significant rise in taxes on high incomes. Partly this was achieved by allowing the upper end of the Bush tax cuts to expire; there were also new taxes on high incomes passed along with the Affordable Care Act, a.k.a. Obamacare.

If Mitt Romney had won, we can be sure that Republicans would have found a way to prevent these tax hikes. And we can now see what happened because he didn’t. According to the new tables, the average income tax rate for 99 percent of Americans barely changed from 2012 to 2013, but the tax rate for the top 1 percent rose by more than four percentage points. The tax rise was even bigger for very high incomes: 6.5 percentage points for the top 0.01 percent.

These numbers aren’t enough to give us a full picture of taxes at the top, which requires taking account of other taxes, especially taxes on corporate profits that indirectly affect the income of stockholders. But the available numbers are consistent with Congressional Budget Office projections of the effects of the 2013 tax increases — projections which said that the effective federal tax rate on the 1 percent would rise roughly back to its pre-Reagan level. No, really: for top incomes, Mr. Obama has effectively rolled back not just the Bush tax cuts but Ronald Reagan’s as well.

The point, of course, was not to punish the rich but to raise money for progressive priorities, and while the 2013 tax hike wasn’t gigantic, it was significant. Those higher rates on the 1 percent correspond to about $70 billion a year in revenue. This happens to be in the same ballpark as bothfood stamps and budget office estimates of this year’s net outlays on Obamacare. So we’re not talking about something trivial.

And, of course, Obamacare would have been killed if Romney had won, meaning the 17 million Americans insured since 2012 and rising would have remained uninsured.

Meanwhile, the various economic disasters predicted by Republicans did not come to pass. This is important, Krugman points out, because it showed that raising taxes on the rich a teeny bit does indeed not destroy the economy.

All of which is to say that the stakes for the 2016 election are exceedingly high, with among other things, GOP candidates proposing tax cuts that make Bush's look like mincemeat.

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