The Times Budget Fixing Game

The NYT has a fun, interactive game that lets you fix the budget. Raise taxes, cut spending or mix and match. You probably won’t come up with the ultimate solution but it should give your friends a good idea of your ideological leanings.

Consider Arnold Kling’s experience:

I played the deficit reduction game at the New York Times. I stopped playing when I had already eliminated the 2030 deficit without raising taxes. The choices that did the most for me were capping Medicare growth after 2013 (I love the way that they don’t make me explain how I would do that), reducing the tax break for health insurance, raising the Social Security retirement age to 70, changing the inflation index for Social Security, reducing Social Security payments to people on high incomes, raising the age of Medicare eligibility to 70, and reducing troops in Iraq and Afghanistan.

This was a really fun game. Thank you, New York Times.

And then there’s Felix Salmon who prefers taxing the bejesus out of everyone:

The too-hard part comes on the tax-hike side, where the options are far too limited. For instance, you have two choices when it comes to taxes on capital gains and dividends, both of which cap that tax at 20%. Can’t I opt to raise that tax to the same level as the income tax? Even the deficit commission does that.

Similarly, for the payroll tax, the most you can do is raise the ceiling so that it covers the same 90% of all income that it covered at inception; you can’t raise it any further than that, or abolish the ceiling entirely.

And on the mortgage-interest deduction, there’s no option for abolishing it, as I would love to do; instead all you can do is swap it out for some lower-cost credit.

Most importantly, the options for new taxes are extremely constrained. The carbon tax is relatively modest, raising $40 billion in 2015; I’d like to see something significantly larger — ideally a cap-and-trade system with credits which were fungible with Europe’s system — which would raise more money and include significant rebates for people in the bottom half of the income distribution.

The bank tax is also a good idea, but again it doesn’t go far enough, since it hits only the largest banks: why not add the option of a Tobin tax, too, which would raise revenue from financial transactions no matter who was engaging in them.

I’d also love to see the option of a wealth tax, which could raise a lot of money from those most able to afford it.

Finally, although I’m a fan of a consumption tax, I don’t like the NYT’s sole option on that front — a 5% national sales tax which applies to everybody equally. I’d much rather see something much more progressive: look at each taxpayer’s annual income, subtract their annual savings, and the difference is their annual consumption. Allow everybody say $50,000 of consumption per year tax-free, and then start taxing consumption over that point, with the tax rate rising as consumption grows. If you spend over $250,000 a year, your marginal consumption could be taxed quite highly.

In general, the NYT options on both the spending-cut and the tax-hike side tend to hit the poor and the middle classes more drastically than the rich; what’s missing here is the option to implement something much more progressive, in both senses of the word. It’s a missed opportunity, and a shame.

Maybe the real value of the game is to demonstrate the chasm that exists between a man of the left and one of the right. Oh well, at least there’s plenty of room for compromise.

And Felix, don’t take it so seriously. It really is only a game.

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