Surplus NOT from Capital Gains Receipts (Re: Krugman quality control

[christian11 at mindspring.com]

So despite all the media hype, the surplus is not due to people cashing out their stock and paying capital gains (although that has contributed) but is due to increases in normal income tax receipts - fueled directly by the 1993 increase of nearly 33% on the tax rates of wealthy.

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As a % of GNP, tax receipts under Clinton have not increased significantly, relative to the last twenty years (at about 19.4%, it's a bit above the middle of the scale, between 18.0 and 20.2). A bit less than you'd expect actually, considering this is the greatest boom in the history of whole universe, as Clinton is apt to call it.

You might say that the administration might have taxed others. True. But a tax code is not progressive simply because it collects more nominal taxes from the rich. What matters is how the tax code, combined with fiscal policy, affect the distribution of wealth. Who cares if the top 1% of incomes pay 29% of taxes? They own 31% of the country's wealth--they should be paying at least that.

Besides, what's so great about a surplus anyway? 

Christian