Diamond talks tax dollars and cents

Ben Franklin said that nothing in life is certain but death and taxes. ?Though each seems at… Ben Franklin said that nothing in life is certain but death and taxes. ?Though each seems at times more daunting and mysterious than the other, men like economist Peter Diamond can at least shed some light on the ancient riddle of taxation.

Diamond took an in-depth look into the American taxation system in his lecture entitled “Thinking about Taxes,” delivered at Pitt’s 12th annual Marion O’Kellie McKay lecture series Friday evening.

“Economists have been thinking about taxes for a long time, back to the time of Adam Smith,” he said.

Diamond was chosen to speak because of his progressive views on social security, taxation and the general shape of economic intelligence.

“[Diamond’s] theories in economics have had a major influence on the way we think about public problems,” Pitt economics professor Jack Ochs said.

The annual lecture series is dedicated to the former chairman of the economics department, Marion Mckay, and it aims to bring scholars to Pitt for public policy discussions.

Diamond said he enjoys speaking at events such as these to get the public thinking about tax analysis. “I appreciate having an attentive audience that is concerned with both the economic science and decisions concerning public policies in the United States,” Diamond said.

Students, professors and members of the community attended the lecture. Students mostly heard about the lecture through their economics classes. “I was really interested about hearing someone of that caliber speak about something I was learning in class,” Pitt freshman Sarah Sandrian said. ” It was really interesting to me to hear his view on how to deal with the tax problem and how politicians should approach the problem.”

Students at the event were inspired to engage the issues connected to U.S. taxation policy. “I hope in the future to be able to come up with a satisfactory way to deal with the problem with social security and the legislation for taxes in our country,” Sandrian said.

Diamond attributes much of today’s spending practices to the legislature’s decisions. “What we do in today’s legislature generates spending,” Diamond said. “We need to set up a framework for the legislature that we can follow later on to set up framing for politics to come.”

He continued by explaining the economic positions of the major political parties. According to Diamond, future Republican candidates stand to keep tax cuts permanent, whereas Democratic candidates want to repeal tax cuts for those who make $250,000 or more a year.

Diamond’s view on tax cuts relies on the economic spending of the government. “Favoring a tax cut today is the same as a tax increase tomorrow taking into consideration that spending doesn’t change,” he said.

After looking at future national debt projections based on the gross domestic product, the Government Accountability Office sees little chance of getting out of the recent debt. “The large gap is too large and to grow our way out of it requires two times the economic growth,” Diamond said. “We haven’t seen that kind of growth since World War II.”

Diamond also believes that the government spends too much on some programs and too little on others, increasing future spending on programs such as Medicare, Medicaid and social security. “Rising health care costs act on the payers and if the trend continues, some things are going to become unsustainable,” he said.

Despite the government’s deficit, there has not been a general consensus on the optimal tax theory since the mid 1990s, according to Diamond.

“Just like Albert Einstein said, the hardest thing in the world to understand is income tax,” he said.