Toward, and Away From, Bipartisanship

Obama economic advisers Jason Furman and Austan Goolsbee described the Obama tax plan in yesterday's Wall Street Journal.

A notable sentence:

The tax rate on dividends would also be 20% for families making more than $250,000, rather than returning to the ordinary income rate.

That is, Senator Obama appears to embrace the principle that dividends should be taxed at a much lower rate than ordinary income. (Recall that this income has already been taxed at the corporate level.) This principle was a fundamental premise behind the 2003 tax bill, signed by President Bush and opposed at the time by a vast majority of Democrats in Congress. If we can now achieve bipartisan consensus to limit the tax burden on corporate capital, that would be a significant step in the right direction.

On an unrelated issue, however, the Furman-Goolsbee piece seems to take a surprising step away from bipartisanship. They take a swipe at Senator McCain's proposal to replace the tax exclusion for employer-provided health insurance with a more flexible health insurance credit. When President Bush suggested a similar idea last year, Furman and coauthors called it "a step in the right direction," and many other commentators agreed. It is too bad that Team Obama is now dissing the proposal.