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Tax Foundation president Scott Hodge on the fiscal cliff and alternative ways to raise revenue.
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Chart let's continue with this discussion shall we ready to fall off the fiscal cliff it's going to happen and it's exactly what the Democrats want.
According to Scott Hodge of the Tax Foundation.
So what are some alternatives.
To raising revenue Scott joins me now with some ideas but Scott I don't know if the Democrats are gonna go for it to your point you've.
Written quite extensively on this topic it seems the economy is poised to fall off the cliff and that's exactly what the Democrats and the president want to happen.
Well I think the easiest way to raise taxes on the rich is simply allow all the bush tax cuts to expire.
Which a lot of Democrats are pushing for because it's it happens naturally automatically and they are going -- they don't have to vote for -- And then in January they can put Republicans on the spot and say hey let's lower taxes for everybody except the rich and then they get everything they want.
Very simply.
-- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- If we do go over the cliff there's no resolution for the Alternative Minimum Tax is AMT it won't be patched.
If that does not get resolved you have something like twenty million more Americans.
Who would have to -- -- -- who otherwise wouldn't and again that could be good leverage for the Republicans how you see that issue playing out.
Yeah and certainly Republicans don't have many -- cards here but daddy is a big one because the Alternative Minimum Tax largely hits.
Blue States democratically.
Oriented states like Maryland like New Jersey like New York Connecticut California Illinois.
All of those are democratic strongholds so they can say to the White House -- were not canoe lot patch the AMT.
Unless you give us something -- we'd like to.
And that's gives them a little bit more negotiating power but.
That's -- pretty fragile looking negotiating position NASA what they have to give up some more.
Here note this morning Scott the least harmful ways to raise government revenue in terms of negotiating power corporate income tax the most harmful for long term growth yet followed by high personal income taxes of course but then on.
The downside the least.
Harmful if you -- consumption taxes and property taxes.
Well we just put this out we'd like to get congress focus on.
Doing the least amount -- harm while they raise the revenues of some sort.
You can do it through asset sales selling all kinds of things that the government owns and shouldn't known let's get rid of it.
There's a lot of things in terms of oil leases and in mineral rights is about as as much as a trillion dollars with the mineral rights out there the government can sell off rather than now raising taxes.
They can require government workers to pay more toward their health insurance.
And pensions that would be a good thing.
And raise revenues so there -- lots of ways that they can raise revenues without doing harm to the economy.
So then -- CI focused -- interesting here now has sure ice the president so insistent upon raising tax rates for the wealthy if to you and to your point we don't necessarily have to do that to get meaningful savings are meaningful revenues.
Well it seems like a matter of sort of religious or -- -- -- head on his part you know he's you know not.
None on this is a matter of an article of faith on the part of Republican are part of Democrats and liberals.
To get rid of the bush tax cuts for the wealthy they campaigned on it for more than ten years now since it was enacted during the Bush Administration.
They want to get rid of rid of it.
That's fine but they ought to understand too -- -- those -- some of the most harmful economically.
Ways of increasing.
Revenues for the federal government they ought to look to things that promote growth not harm growth.
I mean there's so many sub issues -- -- lay them out beautifully about the logistics and the IRS getting its schedules -- -- -- some other business issues research.
R&D credits that companies -- -- so there can't perhaps stop.
Spending money on R&D until they get a firm idea what kind of credits they're entitled to.
What do you mean do you think this economy which is are -- so fragile.
We're getting weak jobs numbers probably gonna get another bad one on Friday.
How at risk are we for really.
Going into a contraction a recessionary time here.
Well I think is very serious we're already seeing indications.
Investment is down and that's largely because the bonus expensing.
Is about to expire and so we should -- that in order to keep investment going.
But I think one of the things that worries many economists as -- fact that we could be downgraded again our credit -- in the unites states is at risk.
And this is the kind of an action that can bring about that kind of downgraded.
Boy that's a great point you raise side to close that are interview Scott -- thanks so much and we've been discussing this a lot -- if we get another debt downgrade this one could be troublesome this is what we might actually see.
The bond market reacts because not a grant to downgrades there's nowhere to default he can't default to the better rating frankly this is a big problem -- got -- -- that's great point Egyptian.
