Tax Timing

It’s tiresome to repeat this, but just to echo Kevin Drum, Bryan Caplan is being ridiculous here. The tax increase he thinks it would be a mistake to implement “at a time like this” is in fact scheduled to be phased in starting in 2013.

Something they taught me back at Emerson Hall was that before you jump on a major philosopher for having committed an elementary mistake, you ought to consider the possibility that you are the one making the mistake. It seems to me that the same principle applies here. Caplan knows Paul Krugman is a good economist. And he knows that it would be odd for a Keynesian like Krugman to advocate for a tax increase amidst a recession. But instead of considering the possibility that it was he, Caplan, who’s not understanding the situation he assumes that Krugman is blundering.

On the merits, I’m not a huge fan of the employer mandate concept in general. Unfortunately, conservative economists and conservative politicians have been extremely effective at making the American political system extraordinarily tax averse. This has created huge incentives to finance things through de facto taxes rather than de jure ones (which is what’s happening here) or through tax expenditures rather than actual expenditures. The aggregate impact of this on American public policy has been quite bad, and its pernicious effects continue to be felt as we watch the health care and cap and trade debate unfold. Unfortunately, as far as I can tell only Bruce Bartlett is willing to come out and say that the conservative anathematization of taxes is now having this negative impact and that conservatives ought to change their view on the matter.