We Need Tax Reform, But Not the GOP Version

Crap Cutting 101

So, no that the current GOP has been skunked on their bid to take away your healthcare, they are about to turn their attention to their other pet issue; taxes. More specifically, they plan to cut them. Seriously.

At a time when the so-called “president” is saber-rattling with North Korea and threatening to annihilate the country if they don’t stop testing nuclear weapons, we are facing hundreds of billions in repair costs for much of Texas and Florida and we already have a pretty well constant $443 billion deficit going forward, the so-called “fiscally responsible” GOP is planning to cut taxes even more. (Source) And why, you ask? Because they firmly believe two things that have been proven wrong time and time again over 40 years:

  1. That lower taxes actually bring increased revenues and,
  2. That less revenue means smaller government.

The first one refers to the vaunted “trickle down economics,” in which the Republican Party proffers the fantasy that, when rich people have a few extra bucks, they share them with the working poor and the middle class. They continue to believe this nonsense, despite the fact that none of us can recall a case where this has ever happened in recorded history, especially since Reagan started his presidency with massive tax cuts and was forced to raise them a few years later because it pushed us into recession.

The second one is one the right wing propaganda machine has propagated for years, based on the belief that, somehow, high tax rates have led to bigger government during the post-World War II era. But this error-filled idea has a twin. These geniuses actually think government spending will shrink If tax revenue shrinks.

The fact that both of these ideas are contradictory is beside the point, really. I mean, if lower taxes brings increased revenues, then why would you expect “smaller government” through lower taxes? The current version of the GOP is not known for its smarts.

The size of government, first of all, is based on what “we, the people” want the government to provide, based on the size of the population and the geography it has to serve. It’s just not “reasonable” to expect “smaller government” these days, given that the population has doubled in 60 years, the level of mobility has increased significantly and the level of service needed has grown. Think about it; we have double the population of 60 years ago and we have demanded that they provide us with a basic safety net should the economy melt down. At the same time, we expect them to enforce regulations that keep the marketplace safe for us. We want them to inspect food and we want them to enforce regulations on consumer good, primarily because we can’t expect private markets to police themselves. And let’s be real here; the same people who constantly whine and cry about the size of government also want most things government does to be privatized, which actually ends up costing more. There is also the reality that no one can touch Social Security and Medicare and remain viable politically and these folks seem intent on continuing to expend military spending.

Put simply, it is not rational to expect “smaller government” at this point in time. Of course, the concept itself begs two questions. First off, smaller than what, exactly? Smaller than it was before the New Deal? Smaller than the Cuban government? Smaller than what? The other is, which functions do we, the people, think are essential and can’t be cut significantly? If the answer is “most of them,” the issue of “smaller government” is basically moot; if you believe that keeping the food supply safe is important, then it doesn’t make any sense to not fund that function fully enough to be effective. If you believe all drugs should be illegal, then your whining about “limited government” is hypocritical, to say the least. If you believe we should enforce workplace safety laws, then we should enforce them fully, and not just create an artificially low tax base and pretend it’s all we can “afford.”

Over the years, we as a society have decided that we want the government to fulfill a great many more functions than it fulfilled earlier and the population that government needs to serve has grown significantly. That means the government needs to collect and spend more money to function these days than it did when we didn’t expect the government to do anything but organize armies to fight wars. I mean, come on; we can’t touch Social Security, Medicare and Defense, according to Republicans, yet they seem to expect us to cut the budget by about 30 percent in order to run a surplus and pay down the massive debt they themselves caused. This is the dilemma they have foisted on us, folks; they have convinced many people that we “can’t afford” much of anything and they have convinced us we’re “broke” and can’t afford to do anything that most other countries with less money seem to be able to do, with little or no problem. Think about it; since most of the budget is untouchable, that means we have to cut about 80 percent from every part of the budget that is not those things. Is that reasonable to anyone?

Let’s join the real world for a minute. Our economy thrived during the post-War era, when the top tax rate was 91 percent until 1962 and 70 percent after that. If the GOP is correct, then why did high tax rates not prevent us from becoming the strongest economy in the world. For that matter, our economic fortunes have been in decline for almost 40 years now, ever since we adopted tax cut fever. In other words, we became the richest nation in the history of the world when our tax rate was 91 percent and did even better when it was 70 percent. Since it was lowered to 50 percent and below, we have faltered. In fact the only times in the past 50 years when our economy has done well have been when Clinton and Obama raised taxes marginally. In fact, the only two presidents in the post-war era to have ever reduced the deficit significantly were Clinton and Obama, and they raised taxes. Every time the Republican Party is in charge, the deficit explodes.That’s not coincidence.

When the government had enough money to do more things, they built out an the infrastructure that made us great. That is because, when the top rates were 91 percent and 70 percent, no one paid that much. However, the nature of tax deductions was such that lowering their rate meant investment in everything that grows an economy. Now, thanks to the GOP, Our tax code is so messed up that many people who don’t work pay almost nothing in taxes, while those who work constantly pay a hell of a lot more. As Warren Buffet pointed out not long ago, secretaries for billionaires pay a larger percentage of their income in taxes than the billionaire. That is because Republicans only cut income taxes, and never touch payroll taxes.

And yes, the tax code is messed up. However, what Republicans won’t tell you is, it is Republicans who messed it up. And they are the absolute wrong people to fix it. Look at their latest proposal. Only three tax brackets sounds great, but what the news isn’t telling you where they break out. Essentially, a family of four taking in $200,000 a year will pay the same rate as a billionaire who makes $100,000 per year. And while doubling the exemption sounds wonderful, the fact of the matter is, it won’t save anyone in the middle class all that much. If you’re struggling along on $30,000 a year and have two kids, you pay nothing now, and you will continue to pay nothing. There are no plans to expand the Earned Income Tax Credit, so there will be no benefit for you. If you make $50,000 a year, you might see a couple hundred dollars a year in tax savings. However, you will still have to pay the same amount in payroll taxes.

Expect the very rich to see the most benefit, as usual. Their income tax rate will go down, from about 40 percent to 35 percent, and they will see another cut to capital gains taxes. Best of all, if they inherit a lot of money, they will pay nothing on that because they plan to eliminate the estate tax altogether. Meanwhile, the cap on Social Security taxes will continue to cost the burger flipper a hell of a lot more than it will cost Lord Donny and the rest of the Trump progeny. Plus, there seem to be no plans to change the rest of the tax code, which means an American who moves to Europe will be expected to pay their full share of US income taxes on their money, whereas a rich American billionaire who simply moves his wealth offshore will be required to pay nothing.

A tax system ceases to be “progressive” when the average burger flipper pays a higher tax rate than Mitt Romney, which we have seen with the few tax returns Romney bothered to release in 2012. It’s time to return to progressive taxation and stop screwing what’s left of the middle class. Create more jobs, increase the minimum wage to at least $12 an hour, increase the Social Security cap to at least $500,000, add an extra 10 percent to those who make more than $1 million, regardless of how they make it and get rid of the loopholes that allow people to put money overseas and avoid US taxes. That will solve the deficit problem and possibly even start paying down the debt.

Of course, in order to do any of that, we will have to stop letting Republicans get elected, which means we have to stop blurring the line between them and Democrats, who largely aren”t evil.


Also published on Medium.

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