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How should we pay for the hurricanes?

by Rodney Berry

Options: Where can the money come from?

4. Levy a special tax

In 1968, President Johnson asked Congress to enact a one-year 10 percent income tax surcharge to help pay for the cost of the Vietnam War. A space was designated for citizens to add the surcharge at the bottom of their tax return.

According to the Congressional Budget Office, a one-time 10 percent income tax surcharge would generate $127 billion – more than half of President Bush’s program to rebuild New Orleans and the Gulf Coast.

The New York Times projects that a progressive income surtax of up to $50 per month for five years would produce $25 billion.

Those who favor this option may say

Those who oppose this option may say

A surtax could be imposed for one year only, or for a brief designated period.
A surtax would promote the notion that everyone needs to sacrifice in time of need. It would unify the nation and foster patriotism.
With billions raised through a surtax, it will be easier to come up with the balance through budget cuts.

This is no time to raise taxes; it could tip the economy into recession.
The best thing we can do for the areas damaged by hurricanes is to bring back private investment to the region. To do that, we need to cut taxes even more, or make the tax cuts permanent, even though it would increase the deficit in the short-term.
If a surtax is a flat tax, it would affect the poor more harshly than higher income taxpayers.

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