Thursday, August 04, 2005

The Krugman Money Quote

From a debate in Harper's. I can imagine the veins in his forehead popping out as he said this:

HUBBARD: Well, there’s a substantial body of economic research to suggest that the lower marginal tax rates since then have stimulated savings, investment, entrepreneurship. And to solve our entitlements problem with tax increases, it would not just be a matter of restoring 1970s tax rates. It’s not just that top rates would have to go up. I am describing a tax increase of 50 percent. And I don’t mean for the rich. I mean every tax collected in America.

KRUGMAN: Every federal tax.

HUBBARD: You could not raise that amount of money on a soak-the-rich strategy.

PETERSON: A tax increase can’t provide the bulk of the solution.

KRUGMAN: I don’t see why not. Even if we raised it all through taxes—something I wouldn’t support, by the way—the total tax take in America would go from roughly 27 percent of GDP, including state and local, up to 35 percent. In many advanced countries, the take is close to 40 percent.

His claim that he wouldn't support this by the way, stands in marked contrast to his previous statement that we should be getting 28% of GDP in federal revenues. I guess he was for it, before he was against it.