Income Redistribution: Mundell on taxes

(The Patriot Post) - Nobel Prize-winning economist and Columbia University professor Robert Mundell is often credited as being one of the original “supply-side” economists, so when he speaks, one should listen. Mundell now advises that if the Democrat-controlled Congress follows through on its promise to rescind the Bush tax cuts, “the U.S. [economy] will go into a big recession, a nosedive.” He further warns Democrat nominee and sworn tax hiker Barack Obama, “It’s a lethal thing to suddenly raise taxes. This would be devastating to the world economy, to the United States, and it would be, I think, political suicide” in a general election.

Instead of the typical Democrat solution, Mundell advocates lowering taxes even further. Specifically, the marginal rate, which is currently 35 percent; it should be 30 percent, according to Mundell. Additionally, the corporate rate should be cut to 25 percent. He advocates making the other Bush tax cuts permanent because “[e]liminating that uncertainty would be more important than pushing for a further cut—in the income tax rates, anyway.” The uncertainty is all the more glaring when looking at the history of income taxes. The top marginal rate has been anywhere from three percent when first instituted to 92.5 percent during World War II. Should Obama be elected and Democrats further expand their congressional majorities, the “change you can believe in” may be only what you can find in the couch.