Questions for Tonight’s Democratic Debate

November 15, 2007

Tonight’s Democratic debate in Las Vegas will undoubtedly bring up the issue of the war in Iraq, but tax policy issues, especially what to do about the Bush tax cuts, have come up in previous debates as well. Here are some questions on fiscal policy that we would like to see asked of the candidates.

(1) Most of you favor making the tax system more progressive and your first instinct to accomplishing this is to raise marginal tax rates. And most of you, especially Senator Obama, have claimed that special interests have too much influence in tax policy. Why not do what many public finance experts on both the left and right advise, which is to raise revenue and make the tax system more progressive in a way that limits the special provisions in the tax code that tend to flow to higher-income Americans. This would include the mortgage interest deduction, the deduction for state and local taxes, the municipal bond interest exemption, and the exempting of employer-provided health insurance from income.

(2) Currently, approximately one-third of all tax returns have no individual income tax liability due to the various credits and deductions in the code. But many of you have proposed various tax credits for certain purposes, whether it’s education, health expenditures, or housing. How can you provide these credits to those who have no individual income tax liability unless you make these credits refundable? And if you are making these credits refundable, what is the difference between this and merely increasing spending through some traditional budget program? Shouldn’t it come down to whether or not the IRS or some government agency like HHS is more efficient at achieving the goal you are seeking?

(3) Many of you, along with those on the Republican side, talk about how your policies will benefit “the middle class.” Senator Edwards has even said that up to $200,000 is middle class. Can each of you please define what you mean by “middle class” in terms of income ranges and/or household types?

(4) Social Security has been a contentious issue over the past decade and various reforms have been proposed. But it’s rarely ever asked of government programs — what are we trying to do with this policy? So I’d like to ask you — what exactly do you feel is the purpose of Social Security? Do you see it as a retirement program, or is it an insurance program that is designed to provide a safety net for elderly individuals, or is it something else? (Answering this question can actually provide a solid framework for moving foward on what to do about Social Security.)

(5) Tonight we are gathered in Las Vegas, a city that is known for its individual freedom. Some on both sides of the aisle have suggested using tax policy as a means for regulating individual behavior such as extremely high taxes on cigarettes and alcohol, as well as special taxes on pornography, gambling, and even taxes on fatty foods. Do you believe it is the role of government to use selective excise tax policy for the purposes of altering individual behavior in these areas?

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