Skip to content

The New York Times Advances a Poor Argument For Tax Hikes

2 min readBy: Alan Cole

The New York Times this weekend published an editorial criticizing the Republican taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. plans for not raising enough revenue. This is a perfectly fine argument to make (all Republican plans so far cut taxes) but the supporting evidence offered in its favor was spectacularly flimsy:

All of these [Republican] candidates deny fiscal reality. In the next 10 years, revenues will need to increase by 40 percent simply to keep federal spending even, per capita, with inflationInflation is when the general price of goods and services increases across the economy, reducing the purchasing power of a currency and the value of certain assets. The same paycheck covers less goods, services, and bills. It is sometimes referred to as a “hidden tax,” as it leaves taxpayers less well-off due to higher costs and “bracket creep,” while increasing the government’s spending power. and population growth.

Working from this starting point (and adding in some new potential spending priorities) the Times concludes that “taxes have to go up.” This is a very confused view of how the U.S. government funds itself. Neither inflation nor population growth drive a need for tax hikes.

Taxes in this country are levied on each individual, so they actually scale perfectly with population growth. They’re also typically levied as a percentage of income, so they scale with the increases due to inflation (not to mention the gains from actual real economic growth.) A “fiscal reality” that the Times may want to consider is that even if lawmakers do nothing to change the code, revenues will go up by 58 percent all by themselves.

The benchmark given by the Times—a mere 40 percent increase in current dollar revenue over the decade—is actually an incredibly low bar, ably met by all but a handful of Republican plans, typically with trillions of dollars of room to spare.

I’m aware that the Times editorial board wants taxes and spending to go up, and it’s fine to say so. If one said (for example) that tax revenues over the next decade need to be $45 trillion, that would be an argument against the Republican plans, which typically attempt to raise something more like $39 trillion.

However, instead the Times chose to use irrelevant data that did not support its thesis. It should strive to do better.

As an additional note, the projection by the Times of 40 percent combined inflation and population growth is pretty far out of line with what economists and demographers actually believe. Consensus estimates of inflation over the next ten years are at or below two percent, and census estimates of population growth are well below one percent, implying a much smaller number than the one estimated in the editorial. I would be curious to know what sources they used to arrive at their projection.

As a final note, the Times editorial implies that Donald Trump’s plan cuts taxes by less than Ted Cruz’s plan, which is false. The confusion on this comparison likely stems from insufficient research into the nature of Ted Cruz’s new business tax.