Winter is Coming: Tax Policy for the Coming Bitter Hard Times: A Review of Robert J. Gordon, The Rise and Fall of American Growth

11 Pages Posted: 7 Dec 2017  

Calvin H. Johnson

University of Texas at Austin - School of Law

Date Written: December 6, 2017

Abstract

The United States has always defined itself in terms of great optimism and progress. For long periods, that self-definition was accurate. It no longer is. Robert J. Gordon’s magisterial economic history, The Rise and Fall of American Growth, describes 1870-1970 as the miracle century that improved the real standard of living tenfold. For the future, says Gordon, the United States faces an anemic growth rate of less than a third of a percent per year, and — even worse — only the richest tier will see growth.

For tax, the realistic expectations of slow future growth mean a high danger of collapse in our ability to run deficits or borrow money well within the decade. Federal creditors have been extraordinarily generous to the U.S. government, accepting interest below the expected rate of inflation. They have assumed that federal debt is risk free. If our creditors lose faith in our ability to repay debt, or believe that we will just pay it off with inflated paper, then the debt will no longer be treated as risk free. The loss of faith will probably not be just a squeeze but a collapse.

The increasing inequality of America means we must follow the money to reach the broad taxable capacity. We need to increase the efficiency of tax and shift the burden of tax to richer taxpayers — not with higher rates, but by better descriptions of their economic resources.

Suggested Citation

Johnson, Calvin H., Winter is Coming: Tax Policy for the Coming Bitter Hard Times: A Review of Robert J. Gordon, The Rise and Fall of American Growth (December 6, 2017). 157 Tax Notes 851 (Nov. 6, 2017) ; U of Texas Law, Public Law Research Paper No. 580. Available at SSRN: https://ssrn.com/abstract=3083828 or http://dx.doi.org/10.2139/ssrn.3083828

Calvin Harsha Johnson (Contact Author)

University of Texas at Austin - School of Law ( email )

727 East Dean Keeton Street
Austin, TX 78705
United States
512-232-1306 (Phone)
512-232-2399 (Fax)

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