Download The fiscal crisis in the united states and the history of tax consent

Title
Author
Publisher
Jtitle
Abstract
Genre
URL
Powered by TCPDF (www.tcpdf.org)
The fiscal crisis in the united states and the history of tax consent: summary
Brownlee, W. Elliot
Keio Economic Society, Keio University
Keio economic studies Vol.48, (2012. ) ,p.101- 103
Journal Article
http://koara.lib.keio.ac.jp/xoonips/modules/xoonips/detail.php?koara_id=AA00260492-201200000101
KEIO ECONOMIC
STUDIES
THE
48, 101-103 (2012)
FISCAL
CRISIS IN THE UNITED
HISTORY
OF TAX CONSENT:
STATES
SUMMARY
AND
THE
W. Elliot Brownlee
Universityof California,Santa Barbara, USA
The
contemporary
budgetary
fiscal crisisin the United
and expenditure
on social services. These
ure to raise tax revenues
powerful
The inflation which
"bracket-creep"
problems
sufficiently, which
was
followed World
tax (which
have resulted mainly
the consequence
from
a fail-
of a persistent and
problems.
War II interacted with the mass-based,
had
financed
In response,
creep problems
two purposes
but more
ambitious
and 1948
of President Dwight
Recovery
modest,
temporary
and increases in taxes earmarked
and investment.
B. Johnson
measures
in 1981.
taxes
engineered
an even
of Ronald
The
Reagan
only tax increases
for the Korean
for the very popular
For the latter
cut income
the administration
Tax Act (ERTA)
en-
to address bracket-
D. Eisenhower
of Lyndon
and highly
to create severe
the federal government
until 1982, sometimes
cut in 1964. For all three purposes
the Economic
during this period were
mobilization)
often to stimulate consumption
the administration
significantly in 1954, and the administration
championed
wartime
in 1945
acted major tax cuts The tax cutting continued
way
huge
pattern of tax resistance. This essay explores the history of this pattern.
progressive, income
more
States consists of two elements:
deficits and a severe structural deficiency in key types of public investment
and Vietnam
wars
Social Security and Federal High-
programs
Much
of this tax cutting took place during what
the "era of easy finance"―a
public finance scholars have
period, lasting until the 1970s, in which
and inflation yielded substantial increases in income-tax
lated tax increases.
tic programs,
"Great
The revenue
including
Society"
bonanza
the introduction
of President
Johnson.
allowed
revenues
economic
even
without legis-
a significant expansion
of Medicare
of domes-
and the diverse programs
In addition, the federal government
various implicit financial commitments.
An important
mechanism
"Fannie
Mae"
dized the residential mortgage
market
and, reinforced by the federal highway
gether major
new
conurbations.
these kinds of measures
sent eroded
and community
However,
for example,
developers, helped
create and tie to-
relied on taxpayer consent. In sum, tax consciousness
during this era of economic
The stage was set for a subsequent
by the Keio Economic
expansion
and prosperity, automatic
of public programs,
loss of faithin government.
Society
subsisystem
by disguising the public subsidies, none
increases, major tax cuts, painless expansion
Copyright c2012,
Mac,"
of the
increased
for doing so was the
financial service corporation.
and tax subsidies to homeowners
and "Freddie
called
growth
and hidden
of
and conrevenue
subsidies.
102
KEIO
Beginning
peared
with the oil shock
for two
economic
decades.
ECONOMIC
STUDIES
of the 1973, the "natural" fiscal slack largely disap-
Long-term
economic
growth
slowed,
in government.
While
President Reagan
and other Republican
against government,
bipartisan worries about mushrooming
banking
to reduce
community
followed
tax increases in American
gan, George
H.W.
increases―Reagan
in 1993.
U.S. income
By
in 1982,
was
the most
the most
to rail
the
Deal era. Three
1983, and 1984; George
provided
H.W.
crucial leadership
significant base-broadening
to adopt signif-
significant string of peacetime
and Bill Clinton all played important
In addition, Reagan
which
all drove the federal government
was perhaps
history outside of the New
Bush,
leaders continued
deficits,pressure from
deficits,and popular support for the protection of national
defense, Social Security and Medicare,
icant tax increases. What
1986,
recessions interrupted
recoveries, inflation accelerated, and the public increasingly lost confidence
presidents, Rea-
roles in adopting
Bush
the tax
in 1990; and Clinton
for the Tax Reform
measure
Act of
in the history of the
tax.
the end of the Clinton
forced by the tax revenues
administration in 2001,
which
a resumption
the series of tax increases
of rapid economic
expansion
rein-
generated,
the United States achieved significant deficitreduction. The tax increases did not reflect,
however,
any enthusiasm
for increasing
of the federal government.
increases in spending
And,
social spending
The three Presidents ended
on civilian programs
spending
to reduce
budget
domestic
spending.
a trend of rapid
1955
Their central goals were
or protect military spending;
By
fundamentally
con-
to fund entitlement commitments;
and
discretionary
stressing the goal of deficitreduction, the three Presidents had
tax consent. They
explained increases in Social Security taxes and
gasoline taxes to the public but the Presidents did not link increases in income
with the need for domestic
During
which
had begun
of the new
century, the United
States resumed
in 1981. The electoral victory of George
the onset of a recession in March
of tax cutting which
taxation
social spending.
the firstdecade
Reagan
with
taxes but also by reducing
deficits. The lowest priority of all three Presidents was
further undermined
and 1981.
of alternative energy. Thus, these three presidents coped
on significant social programs.
servative: to expand
the social reach
on infrastructure, education, job
the end of the "era of easy finance" not only by increasing
spending
had been
during the period between
they actually cut, as a share of GDP,
training, and development
or enhancing
what
2001, created the political basis for an extended
yielded across-the-board
favors to the wealthiest Americans
cuts contributed in a major
the tax cutting
W. Bush, along with
period
benefits but focused heavily on extending
and to increasing returns on capital investment.
way to the emergence
The
of unsustainable levels of deficits and
debt
This study suggests that solutions to the contemporary
attain in light of the historic weakness
ing the domestic
programs
required for the economic
States, political leaders will have
enue and expansion
United
of domestic
States has done
fiscal crisis will be difficultto
of tax consent. To develop
to make
arguments
spending-something
the means
of fund-
and social health of the United
on behalf of both new
that no federal government
since the 1930s In the process, the United
tax revin the
States will need
to
BROWNLEE:
embrace
form
what
will have
might
and more
FISCAL
be described
CRISIS
AND
THE
as fundamental
to argue not only that new
tax revenues―"the
companied
THE
HISTORY
OF TAX
tax reform.
social programs
Advocates
transparent.
which
make
tax systems
of fiscal re-
will require significant new
price of civilization"―but also that the increased
by substantial reforms
103
CONSENT
much
taxes will be ac-
fairer,more
efficient,