Republican’s don’t care about
the deficit. They've proven this time
and time again. Yet for whatever reason,
they refuse to see it, and the people that vote
for them refuse to see it. Whether you
look at spending or revenue, nothing they believe delivers serious reductions
in deficits, and nearly everything exacerbates it. Whether it is tax policy or fiscal policy,
they manage to run on deficit “reduction” policies that actually increase the
deficit.
There
are two schools of Conservative thought on tax policy. One says that rates should be cut, and to
compensate for this loss of revenue by closing tax loopholes. Sounds wonderful, even I think that is a good
idea. However they never state which loopholes
they will close…ever. This was a problem
for Governor Romney in the last campaign.
A $5 Trillion dollar tax cut probably should have mentioned some way to pay for it. It’s not even like it is
difficult to find loopholes. A recent CBO report found that there is $900 billion in tax expenditures in the Individual Income tax system alone. The House Republicans on the Budget
Committee (I presume not wanting to be upstaged by Governor Romney) has put
forward a plan to drain nearly $6 Trillion in revenue. Surprisingly, they have not put forward any
way to pay for it, either though closing loopholes or reducing spending. It is nothing more than a talking-point they
use to trick simple-minded people into voting for them. “Reduce rates!” “Close loopholes!” “Tax
simplification!” Those terms do poll
very well and sound nice in 30-second ads.
However, their talking points are never translated into policy, and they
have no intention of ever translating them into policy. It is a quick way to add some more debt, and
nothing more.
The
second idea is a flat tax. A fairly
basic principle, all people should pay the same percentage of their
income. Whether you are a member of the Walton
family and hold more wealth than the bottom 40% of Americans, or you work at
Wal-Mart and need food stamps to feed your child, you will pay the same “X”% of
your income. The idea of a flat tax
sounds wonderful to them. Pry a little
deeper. What rate do they want to set it
at? They really don’t know. Steve Forbes' Presidential campaign was well known for his proposed rate of 17%. The conservative Heritage Foundation has recently proposed a rate of 28%. I've had someone tell me the comically low
rate of 6% to replace all Federal revenue. There are only two real
places to set the rate. Either so low
that large sums of revenue from wealthy and well-off people is lost, and
permanent deficits are created. Or, a
rate that is so high that it discourages economic activity and consumption due
to middle and lower class people having a tax bill increased so immensely that
it hinders their ability to purchase, invest, and save. Either way, everyone
else in the country is giving up something so the wealthiest can have
more. If the rate is low, a debt crisis
becomes more likely and more imminent from the lack of revenue.
If it is too high, the rich will still most likely see a tax cut, and
everyone else in the country will end up having to pay more for their tax
cuts. This has already begun to happen in nations with a flat tax, which have adopted regressive Value-Added Taxes (VAT) on the people.
The
Republicans have long painted themselves as the proponents of a smaller
government and cuts in government spending.
It is true that the incumbent Republican Governors have been practicing
a miniature American austerity; however, at the federal level they consistently
fail to deliver. When the Republicans
held complete control in Washington
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