It’s looking increasingly likely that Barack Obama will be elected president, and that he will be able, with the help of a Democratic congress, to enact the tax policies he’s been advocated. There’s a maze of credits for this and that, but there seem to be four obvious results of his plan. I’ll take them in order.

• People earning 250K a year or more will pay more taxes.

• Corporations will pay more taxes.

• The middle class, roughly people earning between 40K and 250K a year, will pay less taxes.

• A number of people towards the bottom of the income scale who currently pay some taxes will end up paying no taxes at all.

Republicans would like to claim that taxing high-income individuals more is bad for the economy. They don’t make up a large portion of the electorate, so to make an argument against these taxes you have to convince people that there’s an effect that goes beyond the people paying the tax. But I don’t think the evidence is very good for this. We were extraordinarily prosperous during the Clinton administration, when the top marginal tax rate was increased, and the economy did significantly less well so during the Bushes before and after, when it was lower. The empirical evidence seems to suggest that taxing the rich more heavily is actually good for the economy, which seems counterintuitive.

It’s hard to imagine someone making 300,000 dollars a year having to pay a few percent more in taxes and deciding to chuck the whole thing. He might cut back on his expenditures, or he might try to earn more to make up for the loss. Either way, he’s going to continue to do what it takes to earn 300K+ a year.

Corporation tax rates, on the other hand, definitely effect their bottom line, which they are going to try to solve by raising prices, or cutting labor costs, neither of which are especially good for the economy. They might even decide to move their base of operations outside of the country. I think any tax hikes here have to be very carefully targeted, so as to discourage companies from taking jobs outside of the country, or cutting jobs, or overpaying their CEOs, without punishing companies that are actually growing U. S. jobs and whose pay scale isn’t ridiculously top heavy. I’m not excited about Obama’s plan here, but some things can be accomplished with international cooperation – the Brits and others have tossed out the idea of an international effort to hold down executive pay – and most of the world seems eager to cooperate with an Obama presidency.

Middle class tax cuts probably do stimulate the economy. They’re certainly going to be popular among the middle class.

It’s the last part I struggle with most, which is taking people off the tax rolls entirely. Understand, I have no eagerness to take money from someone earning minimum wage. But when Joe Biden said that paying taxes for the rich was patriotic, he struck a chord with me. Taxes are the main way that we, in this country, pool our resources for the common good. Taxing someone not at all makes them not a part of that, and tells them that their patriotism is not wanted or helpful. What I'm hoping is that we'll see some raises in the minimum wage that push most of the people in this group into the middle class "still paying taxes but less now" group.

Either way, the deficit is rising, and the country’s bills need to be paid somehow. It’s a same the G. W. Bush, having been bequeathed a surplus, caused the US to take on so much debt in his first seven years. We can't do all that we'd like to do to stop the recession because of the deficit, and we can't do all that we'd like to do to help the deficit because of the recession.