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Category: Taxes


From ABC’s This Week today:

SEN. JOHN MCCAIN: …we’ll argue about whether we should increase your taxes or decrease them. Obviously, I’m for decreases in taxes. Maybe Americans want their taxes increased. We’ll argue about —
GEORGE STEPHANOPOULOS: … for middle-income Americans, only raise them on the wealthy.
MCCAIN: Oh, yes, sure, the wealthy, the wealthy. Always be interested in when people talk about who the, quote, “wealthy” are in America. I find it interesting.

Interesting, like McCain in 2001:

I cannot in good conscience support a tax cut in which so many of the benefits go to the most fortunate among us, at the expense of middle class Americans who most need tax relief.

MTP – Ron Paul: Get Rid of Income Tax

Republican candidate Ron Paul is an Internet sensation. He has raised more money in one day on the Internet than any other candidate — Republican or Democrat. He was on Meet the Press two weeks ago. The first question that Tim Russert asked was about his stance on income tax. (Please see video)
Ron Paul would like to eliminate all income tax. On the surface, cutting taxes always seems like a good thing. We hear over and over again, how our tax dollars are being wasted. Wasted in Iraq. Wasted on a bridge to nowhere. Wasted on planes that the military never even asked for. But there are a lot of things that taxes go for that are necessary — maintaining veterans hospitals, maintaining roads and bridges, multimillion dollar radar invisible planes, energy subsidies to the poor and much, much more.

I guess that Representative Ron Paul would have looked better if he had specifics to his proposal. If you’re going to eliminate $1.1 trillion from the treasury how much would you say if by bringing all American troops home from abroad? Representative Paul did not know the answer. If you going to raise money from excise taxes and import tariffs, how much money could you raise? Would that hurt commerce and if so how much? What are you going to do with a half-million troops that you bring home from abroad? Honorable discharge? Are you planning on shrinking the military by a half-million troops? He had no answers to these very basic questions.

The fact that the United States existed for over 150 years without income tax, is not the issue. The world has changed (expectations for the government have changed. In the early 1900’s Americans mostly lived on farms, now we live in cities. Fire codes weren’t that important on a family farm. Now, we need the government to tell businesses put a fire exit here. Place sprinklers there.) The United States has existed for over 200 years without the Internet. I wouldn’t suggest you get rid of the Internet just because we didn’t have it 100 years ago. I would suggest that eliminating the income tax and transferring a lot of those taxes to the states is not practical. I lived in Texas for a number of years, a state which has no state income tax but does have property tax. Property taxes were ridiculous depending upon where you lived.
In my opinion, Republican candidate Ron Paul is truly a libertarian at heart. He believes in having a very small central government and believes that local governments should take care of local problems. This simple logic seems to make sense on the surface but if you look over the last 50 years at the problems that have divided our nation like civil rights. Local governments are unable to handle these issues. Ron Paul remains an interesting candidate with interesting ideas unfortunately, his ideas have gone the way of the dodo bird. He is fighting a battle that Thomas Jefferson lost to Alexander Hamilton and George Washington over 200 years ago.
Update: Ron Paul says that he wants to get back to a “constitutional size” government. Maybe I missed it but nowhere in the constitution have I been able to find any mention of the size of government. If you can find it please let me know. He uses this argument to cleanse his viewpoint. It is like him saying “See the founding fathers agree with me.” Thoughtful Americans understand that the founding fathers disagreed on almost ever issue. The Constitution and the Declaration of Independence are compromise documents. Just as Thomas Jefferson disagreed with Washington and Hamilton over the size of government and the power of the central government. Hamilton and Washington thought that a strong central government was needed to protect the colonies and pay for our collective debt (accumulated during the Revolutionary War). Jefferson saw a strong central government as the same as the English monarchy that we just fought to get rid of.

Buffett isn’t paying enough in taxes

Warren Buffett, the second richest man in the world, has been an outspoken critic of the Bush tax cuts since back in 2001 or 2002. He is one of the few billionaires who are honest enough to admit that they aren’t paying as much in taxes (proportionately) as you or I. This is the problem in America. We have been sold a bill of goods and the goods are terrible.
Let’s start with the Death Tax. This is dumbest argument but the Republicans sold it to the American people. The story goes like this – So poor family farmer would lose his farm if we continued the Estate Tax. The second part of the argument was that folks that make a lot of money should be able to keep their money. If we tax it again, it will be double taxed and that’s not fair. (I’m getting nauseated while I type this. I think that I’ll need some Pepto Bismol.) We get “double taxed” all of the time. When we buy gas with our money that has been taxed, we pay gasoline tax. When we pay sales tax on a shirt, it is double taxed. The purpose of the estate tax was to prevent the formation of entitlement or royal class. The thought was that everyone should have to work for a living. The Republicans turned that idea on it ear and they pushed to repeal the Death Tax. Let’s go back to that poor family farmer. No one has been able to show one incident where a family farmer has lost his farm secondary to the Estate Tax. All of the Republicans arguments were bogus.
Tax cuts have never worked to boost an economy. They have worked to pad the pockets of rich Americans but they have never put money in the pockets of the average Joe and Joan. Here’s what Lee Price from the Economic Policy Institute has said about the tax cuts back in 2005.

Since 2001 President Bush and congressional leaders have promised that enacting each of a series of tax cuts would strengthen the economy by bringing faster growth, more jobs, and greater investment. With Congress again debating whether to extend past tax cuts and enact new ones, it’s time to review how much the last four years of tax cuts have affected the U.S. economy and budget outlook. Unfortunately for most Americans, the tax cuts since 2001 have not made today’s economy stronger. Over the last five fiscal years, the tax cuts have had a direct cost of $860 billion and (with interest costs) a total effect on the deficit of $929 billion. By creating excessive permanent deficits, they have lowered our future standard of living.

So, that brings us back to Warren Buffett. Maybe he understands that the average Joe or Joan needs a break. They are the ones that need tax relief. How about a tax cut for the everyone who makes between $30,000 – $100,000? How about that? And then to offset this we need to increase taxes on the top 1% of households. This isn’t class warfare as some Republicans have stated. Instead, it is equality.
Update: A.L. has written about a Wall Street Journal op-ed which sang the praises of Bush’s tax cut. A.L. took a different route but came to the same conclusion as I did above, tax cuts do not pay for themselves. They never have and never will.
Buffett interview (video) with Tom Brokaw where he clearly states that he doesn’t pay enough in taxes.

Dubya: Tax Cuts Hikes Unleash The Entrepreneurial Spirit

Dubya earlier today (emphasis added):

Tax cuts let Americans keep their own money. It stimulates entrepreneurship. And we have a debate here in Washington over tax cuts. Democrats in Congress want to increase taxes and turn them into additional government programs, and I strongly oppose that approach.
We want the people to keep more of their own money because we understand that the American economy, entrepreneurs and small business owners are the ones who create jobs. The genius of our free market economy is that it grows from the bottom up, through the college student who starts up a business in a parent’s garage, or a stay-at-home mom who works out of a home office, or the small business owner who dreams of growing his or her enterprise into a big business.
The entrepreneurial spirit has helped our economy keep pace with new technologies, and America is a leader in innovation. Twelve years ago, eBay did not exist. Today eBay is a global business that reported nearly $6 billion in net revenues last year. Hundreds of thousands of Americans now make part of their living by selling products on that website. EBay is an entrepreneurial success story that has helped thousands of Americans become entrepreneurs themselves.

Twelve years ago, it was 1995.
So eBay was founded two years after President Clinton’s deficit reduction package, which included tax increases.
The one that Republican leaders lambasted with attacks such as “biggest tax increase in the history of America,” “it will kill jobs and lead to a recession” and “the impact on job creations is going to be devastating.”
Republicans didn’t understand our economy then. They sure don’t understand it now.
With Democrats in Congress proposing to raise tax revenue (tobacco taxes for more kids’ health insurance and closing tax loopholes benefiting Big Oil for more renewable energy), the need to reframe the tax debate is increasingly urgent.
LiberalOasis warned Dems of the need to reframe the tax debate after the November elections.
As explained in Wait! Don’t Move To Canada!, the debate can be reframed away from the Republican favored “less vs. more,” by using the success of the 1993 package to show how ‘a “fair and adequate” tax system helps our overall economy more than the unfair and inadequate taxation practiced by Republicans.
Dubya’s idiotic comments create a fresh opening to do just that.

Be Candid, Be Careful

John Edwards had a pretty strong start to his presidential campaign: articulating a fairly clear populist vision, and candidly answering sticky questions to show how he would realize that vision.
(Time reported that at his announcement: “He answered so many questions that reporters practically ran out of things to ask.”)
In 2004, he struggled to break out of the pretty boy/empty suit image. This time around, he’s on his way to claiming the substance mantle.
In particular, on ABC’s This Week he did not flinch when George Stephanopoulos said his plans would, “cost a lot of money.” Edwards responded:

Let me speak to that. There is a tension between the desire, which I have myself, of getting us out of this ditch we’re in fiscally and, at the same time, doing the things that I believe we need to do to transform America to be effective in the 21st century.
Energy … universal healthcare … strengthening the middle class, doing things to lift 37 million people out of poverty, all those things cost money, [which] means you cannot do about the deficit what you’d like to do…
…If I were choosing now between which is more important, I think the investments are more important…
…we can’t let the deficit get worse. We’d like to see it reduced.
But I do not believe we can reduce it as substantially as we’d love to see done for the long-term fiscal and economic health of America and do the other things that need to be done, too.

He also was admirably candid when it came to the possibility of increasing taxes.
When Stephanopoulos asked about “sacrifices” to achieve energy independence, part of Edwards’ answer was:

…at the end of the day, we may be faced with more serious choices.
People are concerned about a gasoline tax, including myself, because of its regressive nature. You can’t take it off the table.
[A] carbon tax, which Vice President Gore has been talking about — is it a necessity? Not yet, in my judgment, [but] I would never take those things off the table.

Edwards is absolutely right — substantively and politically — to recognize the need to take these matters head on.
Only then can the Democratic Party build a solid mandate for policy change, able to withstand right-wing counterattack.
Having said that, there’s a reason why most politicians don’t talk candidly about fiscal matters.
Because candid talk, not handled delicately, can be political suicide.
Regarding taxes, Wait! Don’t Move To Canada! cautions:

… let’s be careful not to sell fair and adequate taxation with an “eat your spinach” style of message.
In the 1992 Democratic presidential primary, former Sen. Paul Tsongas earned some niche appeal by refusing to embrace a middle-class tax cut, saying harshly, “I’m not Santa Claus.” But Clinton was able to pierce his bubble by retorting, “I am tired of what is cold-blooded being passed off as courageous,” and “People have been plundered for a decade. It’s time to ease up.”
Clinton preached fairness for a brighter tomorrow, while Tsongas preached pain, and the uplifting vision won.
Politicians shouldn’t be scolding people that they have to suck it up and pay their taxes. You don’t tell the shareholders what to do. We are the ones who decide what our government should do and how much we should pay for it.
The politician’s job is to help voters make informed decisions, not to condescend and shove policies down their throats.
If Democrats regularly present to voters the straight dope on how we have prospered with fair and adequate taxation and how we have struggled under reckless tax cutting, while stressing that the ultimate decision on taxes rests in the people’s hands, Republicans will have a tougher time charging Democrats with forcing pain on the public.

Edwards’ comments on energy taxes veered pretty close to preaching pain.
He can make the same point, better framed as a public choice so we can attain the vision of an energy independent America.

Harry Reid: Trapped In The GOP Tax Frame

Over at Hullabaloo, Digby laments incoming Senate Majority Leader Harry Reid’s embrace of tax cuts, and calls for liberals to “challenge the conservative consensus” of low taxes “with new language and new ways of thinking about government”.
Digby also kindly notes that Wait! Don’t Move To Canada! has something to offer on this subject.
Specifically, the book discusses how we can reframe the tax debate on favorable, and more accurate terms.
Here is the key excerpt (pgs 43-45):

[President Bill] Clinton’s deficit reduction plan [which included higher taxes] worked. In 1996 the deficit had been cut by 60 percent and the economy improved, creating 10 million jobs. Republicans who had been preaching that Clinton’s tax policy would bring about economic apocalypse looked foolish.
That’s the kind of sea-changing development that can be used to reframe a debate.
Instead of continuing to accept the Republican frame, Clinton could have articulated that Democrats support levels of taxation that are fair to people at all income levels and adequate enough to carry out the responsibilities that the people ask of their government. Republicans, on the other hand, support inadequate taxation, so our government can’t properly function, with unfair tax giveaways to their corporate donors and those who make more than $200,000 each year.
That’s a frame consistent with the principle of representative, responsive, and responsible government. It does not say that tax cuts are always good, or that tax increases are always good. It simply makes the commonsense point that a responsible level of taxation, properly financing our government, is healthy for our overall quality of life.
However, Clinton did not seize the opportunity. He stuck with the Republican frame and continued to argue that tax cuts are the path to economic growth.
At an October 1995 fundraiser, Clinton told the crowd, “I think I raised [taxes] too much.” He then campaigned for re-election on another promise of tax cuts, though he distinguished his plan from his opponent’s by promising fiscally prudent “targeted tax cuts,” as opposed to a “risky $550 billion tax scheme” which would lead to cuts in Medicare and Social Security. It became a debate over whose tax cuts were better, and with a good economy at his back, Clinton won.
The same debate repeated itself in 2000. Then-Texas governor George W. Bush honed the argument against targeted tax cuts by accusing Al Gore of being a “pick and chooser,” while Bush would cut taxes for “everybody who pays taxes.” This was no knockout punch — again, Bush’s arguments did not win him the most votes — but it did find the rhetorical weakness in the case for “targeted tax cuts.” If tax cuts were so wonderful, why shouldn’t everybody get them?
And so, after three elections in a row where one professed tax cutter faced off against another, President Bush was unabashed at claiming a mandate for huge cuts. Democrats, having accepted the benefit of tax cuts, had no principled foundation with which to fight back. Bush quickly rammed a tax cut bill through Congress with bipartisan support.
Even though Clinton put the nation on sound fiscal footing, he left his handiwork extremely vulnerable by not articulating the guiding principles that got the job done. Bush took full advantage and put Clinton’s balanced budget in the shredder.

Granted, Harry Reid is in a tough spot, because nothing was said in the midterm election campaign to reframe the tax debate.
But the budget has still been shredded. The bill will eventually come due.
And an argument will need to be made that our current level of taxation isn’t adequate for the government that the people need and want, if Democrats are to build a mandate to do what’s necessary — instead of ramming something through in a panic without a mandate, which can spark a political backlash (see 1994).
By keeping us in the GOP’s tax frame, Harry Reid is not building that mandate.
That mandate needs to be earned, by leading public discussion — perhaps sparked by congressional hearings on tax reform — offering proposals based on the “fair and adequate” principle, and building public support.
If that’s done now, we will have a much easier time discussing these issues in 2008.
And if you think you can’t successfully engage voters to get their buy-in on tax reform, remember that Gov. Mark Warner of Virginia did it just a few years ago.

More Fallout

Political Animal and The Sideshow kindly rally to my aid.
Also, Jonah Goldberg had claimed during the discussion that Rep. Charlie Rangel pledged to repeal all the Bush tax cuts if Dems win and he became House Ways & Means Chair.
This apparently has become a GOP talking point, and in recent days, Rangel has debunked it to the W. Post and to CNN.
The W. Post reported:

Of his comment to Bloomberg News in September that he “cannot think of one” of Bush’s tax cuts that merit renewal, Rangel said he was discussing the ground rules for broad-based tax reform to fix what most experts agree is an inefficient and unnecessarily complicated tax system.

And on CNN today he said:

What I did say was that, if they want to have tax reform, if they want simplification, everything has to be on the table. You can’t pick and choose what you want and say you’ve got to overhaul the system.

For what it’s worth, I recommend a liberal, “fair and adequate” version of tax simplification in Wait! Don’t Move To Canada!.
Hopefully, Rangel will focus more on crafting a proposal that will highlight core liberal principles on taxation and reframe the tax debate, and not cut a bad deal with the White House.

GOP Priorities: Looting Our Treasury

As the constitutional amendment banning gay marriage failed to garner support from two-thirds of the Senate, Dem messages regarding the timing seem to have resonated.
With Iraq disintegrating, gas prices spiking, New Orleans not functioning, health care costs skyrocketing, wages stagnating, poverty rising, budget bleeding, and our immigration system failing, the GOP focus on gay marriage seems particularly out of sync with what’s on most people’s minds.
Next up this week is estate tax repeal — aka the Paris Hilton Tax Cut.
Will Democrats maintain the same message?
It’s arguably even more important now.
It’s one thing to call out the GOP when it panders to fringe fundamentalists.
It’s another to dress down the essence of their entire domestic agenda.
None of the above crises can be solved by further draining our national treasury and turning the super-wealthy into a permanent aristocracy.
Yet that’s what’s at the top of the GOP agenda.
Not major investment in renewable energy, which would also create good-paying jobs.
Not health care reforms to cover the uninsured and reduce costs.
Not a course correction in Iraq that would end occupation, begin real international engagement and lead to legitimate democracy (and would also, as a side benefit, save us billions, maybe trillions, in war costs.)
The GOP is fully aware and fearful of how the estate tax connects to larger issues.
They flinched at the last minute from voting on repeal after Katrina, because they knew the public wanted a financial commitment to New Orleans, not to wealthy party donors.
They were afraid of the connection. We should make the connection.
That is far more important than trying to forge some “less bad” compromise, which would make defeating repeal for naught.
The Carpetbagger Report said earlier this week that a party which would ban gay marriage before passing a defense authorization bill is simply “unserious” about governing.
So is a party that pretends any problem can be solved by looting our treasury at the behest of a tiny elite.