Last Week In Taxes
Last week saw the President signing the next in his series of minor-league attempts to reform the federal tax system. The keystone pieces of the legislation were a temporary continuation of the current rate of dividend and capital gains taxes through 2010 at 15% and at least another year break for those who’ve been paying the AMT (Alternative Minimum Tax).
Publications like USA Today have called this in their editorial pages “irresponsible” and “dubious” to use their favorite descriptors. In some ways, they are right, and in some ways, as usual, they defend the status quo of New Deal/Great Society taxation. One could expect such publications to do little else.
Last Wednesday, for example, they spoke of “cuts” and “tax breaks” for the rich. This mantra is nothing new. We saw it last week on the evening news and echoed in a number of “centrist” newspapers. What perhaps is most bothersome about it is that they still try to sell such opinions as valid.
In small ways, I agree with them. The individual tax rate hasn’t seen any downward movement in five years. I’d remind them that under the previous Democratic president it didn’t see any downward movement at all. In fact, it trended upward. I don’t remember USA Today or any other major news organ of the antiques speaking on behalf of the great unwashed masses at the time, because they didn’t. To them, the individual rate should go up. Still, I agree with them that Bush not pushing Congress to reduce it further, especially on the middle class, is pathetic and terribly typical for Washington.
Another defense it and the Left continues to make is in favor of the AMT. The “soak the rich” tax, designed to get the few wealthy individuals eons ago who had enough money and lawyers to figure out how to pay nothing by exploiting the tax code, now gets over 15 Million families a year. That’s right. The AMT now soaks millions, reaching down into the middle class. Was it ever intended to do this? No. Is this a bizarre and sad mistake? Yes. The AMT was never designed to be indexed for inflation. Do most people in Washington want to do the decent thing, realize this was a Marxist ploy by Democrats way back when to punish the nomenklatura and delete this pathetic piece of legislation from the tax code? No. The most we can muster is a delay. It takes a Hearstian-sized pair on the part of USA Today to agree with that logic.
Even better, such measures as staving off the AMT for one more year and keeping down the dividends and capital gains tax, as noted, are argued against based on their “cost” to government. They don’t cost government anything. They cost you and me big time. Either in lost production, lost investment, or lost income they cost the American citizenry.
This is an important point and one you all should seriously consider. Government doesn’t create wealth. It doesn’t have some invisible river that it scoops free cash out of to spend on pet projects. All government can do is steal wealth from the citizenry and the private sector to sustain itself. By its very nature, it is parasitic. Some things and programs we want have to be paid for, so we feed the parasite. In some areas, it is benign. In others, it is as harmful as a legion of ticks.
We are told that repealing the AMT by the likes of Congressman Chuck Grassley (R-IA) will cost us $611 billion over the course of a decade. He rightly points out that government shouldn’t even have that money to begin with, but he can’t help but try to offer a compromise so that government doesn’t “starve”. I like the Congressman, but he is symptomatic of the rest of Washington. They can agree that they harm us more than they should, but it’s for the good of government you see, so bite the leather belt and take the pain. You don’t even get a shot of whiskey in this case.
I’m not sure how we’re supposed to have serious tax reform in this country, be it choosing the Fair Tax or some other plan that will reduce the still-growing tax code. I am sure that the people most responsible for doing that, though, are not morally, ethically or even mentally prepared to make that change. Congress fights for the status quo, mostly because it is dominated by incumbents who agree with the status quo. New legislators in general would even carry this sort of thinking with them, because to get that deep in the establishment, you sort of have to believe.
Still, there are those working their way up who don’t believe things have to be as they are or that we have to compromise away their mistakes. You should all take hope that Neal Boortz’s Fair Tax book debuted at #3 on the NYT bestseller paperback list. That’s unheard of, and also shows just how many of the citizenry agree that something’s got to be done. They too are finding out that the people representing them are sadly not the ones who will or want to do it. Maybe that gives us a small glimmer of hope over a wholly depressing topic such as “tax reform”.
Last week saw the President signing the next in his series of minor-league attempts to reform the federal tax system. The keystone pieces of the legislation were a temporary continuation of the current rate of dividend and capital gains taxes through 2010 at 15% and at least another year break for those who’ve been paying the AMT (Alternative Minimum Tax).
Publications like USA Today have called this in their editorial pages “irresponsible” and “dubious” to use their favorite descriptors. In some ways, they are right, and in some ways, as usual, they defend the status quo of New Deal/Great Society taxation. One could expect such publications to do little else.
Last Wednesday, for example, they spoke of “cuts” and “tax breaks” for the rich. This mantra is nothing new. We saw it last week on the evening news and echoed in a number of “centrist” newspapers. What perhaps is most bothersome about it is that they still try to sell such opinions as valid.
In small ways, I agree with them. The individual tax rate hasn’t seen any downward movement in five years. I’d remind them that under the previous Democratic president it didn’t see any downward movement at all. In fact, it trended upward. I don’t remember USA Today or any other major news organ of the antiques speaking on behalf of the great unwashed masses at the time, because they didn’t. To them, the individual rate should go up. Still, I agree with them that Bush not pushing Congress to reduce it further, especially on the middle class, is pathetic and terribly typical for Washington.
Another defense it and the Left continues to make is in favor of the AMT. The “soak the rich” tax, designed to get the few wealthy individuals eons ago who had enough money and lawyers to figure out how to pay nothing by exploiting the tax code, now gets over 15 Million families a year. That’s right. The AMT now soaks millions, reaching down into the middle class. Was it ever intended to do this? No. Is this a bizarre and sad mistake? Yes. The AMT was never designed to be indexed for inflation. Do most people in Washington want to do the decent thing, realize this was a Marxist ploy by Democrats way back when to punish the nomenklatura and delete this pathetic piece of legislation from the tax code? No. The most we can muster is a delay. It takes a Hearstian-sized pair on the part of USA Today to agree with that logic.
Even better, such measures as staving off the AMT for one more year and keeping down the dividends and capital gains tax, as noted, are argued against based on their “cost” to government. They don’t cost government anything. They cost you and me big time. Either in lost production, lost investment, or lost income they cost the American citizenry.
This is an important point and one you all should seriously consider. Government doesn’t create wealth. It doesn’t have some invisible river that it scoops free cash out of to spend on pet projects. All government can do is steal wealth from the citizenry and the private sector to sustain itself. By its very nature, it is parasitic. Some things and programs we want have to be paid for, so we feed the parasite. In some areas, it is benign. In others, it is as harmful as a legion of ticks.
We are told that repealing the AMT by the likes of Congressman Chuck Grassley (R-IA) will cost us $611 billion over the course of a decade. He rightly points out that government shouldn’t even have that money to begin with, but he can’t help but try to offer a compromise so that government doesn’t “starve”. I like the Congressman, but he is symptomatic of the rest of Washington. They can agree that they harm us more than they should, but it’s for the good of government you see, so bite the leather belt and take the pain. You don’t even get a shot of whiskey in this case.
I’m not sure how we’re supposed to have serious tax reform in this country, be it choosing the Fair Tax or some other plan that will reduce the still-growing tax code. I am sure that the people most responsible for doing that, though, are not morally, ethically or even mentally prepared to make that change. Congress fights for the status quo, mostly because it is dominated by incumbents who agree with the status quo. New legislators in general would even carry this sort of thinking with them, because to get that deep in the establishment, you sort of have to believe.
Still, there are those working their way up who don’t believe things have to be as they are or that we have to compromise away their mistakes. You should all take hope that Neal Boortz’s Fair Tax book debuted at #3 on the NYT bestseller paperback list. That’s unheard of, and also shows just how many of the citizenry agree that something’s got to be done. They too are finding out that the people representing them are sadly not the ones who will or want to do it. Maybe that gives us a small glimmer of hope over a wholly depressing topic such as “tax reform”.
posted by Rob Beck | 6:59 AM
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