Which brings us back to the middle class. When President Obama talks about taxing the rich, he means the top 2 percent of Americans. John A. Boehner, the House speaker, talks about an even thinner slice. But the current and future fiscal imbalances are too large to exempt 98 percent or more of the public from being part of the solution.
Ultimately, unless we scale back entitlement programs far more than anyone in Washington is now seriously considering, we will have no choice but to increase taxes on a vast majority of Americans. This could involve higher tax rates or an elimination of popular deductions. Or it could mean an entirely new tax, such as a value-added tax or a carbon tax.
To be sure, the path ahead is not easy. No politician who wants to be re-elected is eager to entertain the possibility of higher taxes on the middle class. But fiscal negotiations might become a bit easier if everyone started by agreeing that the policies we choose must be constrained by the laws of arithmetic.Mankiw, as noted in the brief bio at the end, was a Romney adviser but more importantly was an adviser to President George W. Bush as well and is a leading light for U.S. conservatives. Talk of raising taxes, any taxes, as we know is anathema for them but things seem to be changing. What prudent conservatism is supposed to be about, after all, is balancing budgets and fiscal discipline and all that.
And you don't have to agree with the rest of the content of Mankiw's column, which trots out Romney's campaign talk on relative percentages of paid income taxes as between the wealthy and the middle class, to take away from it the point that he is now willing to speak of raising taxes. It's good for the House Republican bunch to hear that key message from one of their own.
We, of course, have a VAT, the Americans don't. And while we don't have a carbon tax, unless you live in B.C., it's quite the thing to see this notable American conservative float it.