Not Tax Cuts, Tax Reform!
In 1913, when Americans voted to give the federal government vastly expanded taxing authority, they likely could not imagine the massive and hugely complex system that would one day arise. Today, the United States has the second highest corporate tax rate in the industrialized world. But the mindless liberal urge to use tax policy as a form of social policy has them calling for even higher rates. Raising taxes is not the answer; neither is cutting them. We must have real and substantial tax reform. Why is this the only real solution? I’ll tell you.
The World Has Changed
Just to our north, Canada has a corporate rate of 16%. To our south, Mexico’s rate is 28%. In the UK, the highest corporate tax rate is 24%. Russia (formerly known as the Soviet Union) has a top tax rate of 20%. China’s corporate tax rate is a mere 25%! In the US, our top tax rate is 39%.
Thirty years ago, when Reagan, in partnership with Democrats, began the process of reforming the tax system, tax rates for industrialized nations were also high. But when the US prospered from that effort, other nations followed our lead. So, when a liberal says, for the umpteenth time, Clinton raised taxes to 39% and the economy boomed!” I say, “the world was a different place.”
Liberals seem to love change, why can’t they grasp this one? While US rates have gone up, rates in other countries have dropped significantly on corporations.
Effective vs. Real Tax Rate
A more thoughtful and reformed liberal might say, “well, 39% is our effective rate, but it’s not the real rate!” What do they mean by this? Simply that, because of the way our tax system is structured, there are numerous deductions, loopholes, and credits companies can take advantage of to reduce their taxes. In 2009, the real tax rate on the top 1% of earners was 29%, not the 39% effective rate. So there was a 10% gap between the listed rate and what was actually paid.
But this is a big part of the problem, and the real reason why we must talk tax reform, not tax rates. Our rates are deceptive because there are legitimate, legal loopholes to lower the amount of taxes one must pay to the government. In the 80’s, Reagan and O’Neil didn’t cut rates so much as they eliminated loopholes and adjusted the rate so that actual tax rates were much closer to the effective tax rate.
Conservative politicians talk a great deal about a balanced budget amendment. I think equally as valuable would be a law or amendment requiring the federal government keep effective tax rates to within about 3% of real rates. This would force government to reform the tax code on a regular basis, and create more pushback on liberals who seem to think that the answer to all our ills is higher taxes. I have news for you. If rates simply go up without some level of reform, how do you know those “millionaires and billionaires” will pay even one cent more than before?
Actually, it’s likely they’ll pay less. Raising taxes typically increases the tax avoidance behaviors of companies. What is one of the main tax avoidance techniques? Moving some or all operations out of the country. Duh!
Think Globally, Act Nationally
When considering how best to deal with national tax policy, we must think globally. Companies often go where they have the best chance to succeed.
Thanks to the US, the world has become an increasingly interconnected global economy. That’s a good thing. At the same time, we can no longer think nationally when it comes to tax policy.
When Clinton raised taxes in 1994, the economy did fine. GDP growth for the next few years averaged about 3.5%. When Clinton cut taxes in 1997, especially the Capital Gains tax, the economy took off. But in the 1990’s, the world was less connected than it is today, and taxes in other industrialized nations were higher. That’s no longer true today.
It’s very simple; if you want to send more jobs overseas, raise taxes. If you want to bring jobs to the US and see new jobs created, reform them.
But the fatal flaw for liberals is their narrow worldview. President Obama could hold spending steady over the next five to ten years and eliminate our deficit. To do that, all he would have to do is reform the tax code and bring taxes down by 10%-12% across the board.
A simpler tax system means there’s less opportunity to cheat, paying taxes is far simpler (and, therefore, cheaper), and businesses will grow faster. Not to mention the appearance of more new business and the movement of overseas companies to the US. A growing economy means more jobs for all and a large spike in the growth of those who pay taxes. As President Kennedy once said, “a rising tide lifts all boats.”
November 16th, 2012 at 2:34 pm
One of those giant loopholes is the mortgage interest deduction. I think fat chance getting that eliminated.
I was just remembering that a generation ago we almost got a balanced budget amendment through Congress.
November 17th, 2012 at 6:33 am
The big loser, other than our economy, will be charities if they cap all deductions to $50,000.
November 17th, 2012 at 9:36 am
So if we can’t eliminate tax breaks and we can’t raise tax rates, what do we do? We can’t cut government because too many people depend on government spending.
November 17th, 2012 at 11:43 am
Oh those gov’ment workers and freeloaders will eventually transition to more useful private sector jobs, but it will be tough going for a generation. Why don’t they just reduce government across the board to, say 1980 levels, and cut everything else that has bloated since?
November 17th, 2012 at 1:53 pm
I like that idea, too, patrick, but my guess is that a dem president, a dem senate, house members who depend on pork, and governors who depend on federal aid might not like it so much.
November 17th, 2012 at 3:04 pm
“We can’t cut government because too many people depend on government spending.”
When other countries put caps on the duration of these programs were the beneficiaries not forced to find work ?
I say we cut them off with a few months notice and let them take what ever job the market offers.
Hell, I see help wanted signs everywhere for low skill positions. I’d work at Mickey Ds if I had too. I couldnt care less what anyone thinks.
I know the scam.
Its too easy to stop it but it in a way would be a little communist.
These people are referred to jobs by the unemployment service but they show up for interviews looking like slobs or act insubordinate just so they wont get hired.
I’ve managed a few restaraunts and chef’d a few kitchens where I’ve seen people purposely blow the interview or application.
I propose we chaperon them and record the whole process so they’ll be as honest and forth coming as they need to be.
If they dont adhere to the simple principles of job hunting we cut them off.
If their monthly income is less than the benefits they were receiving the government can cover the difference with much less strain ton the fed or state budget than if that person were 100% unemployed.
I understand these are mostly minimum wage/entry level positions but its best to have them receiving a paycheck, paying into state n fed revenues and both fed n state paying out less benefits than they would to a completely unemployed person.
The private sector would get some relief by having production at less cost to them and we’d see an increase in revenues to the state/fed.
Thats just one approach.
Then again, maybe I’m not crediting peoples ego or sloth as much as I should.
Maybe I’m a closet communist.
Then again, if Barry doesnt turn us into The Peoples Republic of China pretty soon they’ll own us anyway.
November 17th, 2012 at 3:30 pm
yeah, micky. I hear what you’re saying. My point is that it’s probably unlikely to happen. Ryan wasn’t even allowed to talk about medicare during the campaign.
November 17th, 2012 at 4:05 pm
Sadly yes, it is unlikely.
But it felt good to say it anyway
November 17th, 2012 at 4:13 pm
Actually it can happen. Government can be cut by going over the fiscal cliff. It’s not really such a bad idea, and the politicians don’t have to do a darn thing to make it happen.
November 17th, 2012 at 6:28 pm
So, patrick, let’s see if I’ve got it right. I want the fiscal cliff so that tax rates can go up; david wants to get rid of deductions; you want to decrease social spending; a guy I work with wants to massively cut defense. This is the best thing ever. we each get to imagine our perfect government for the next month or so. It’s like a frank capra movie.
November 17th, 2012 at 7:15 pm
I have absolute confidence that whatever they do will not be short of just another layer of bullsht.
November 18th, 2012 at 5:35 pm
If the conservatives want to have their views heard with any accuracy, they are going to have to “clean house”.
That is, disassociate themselves from the Hannitys, Rushs and Becks of the world.
Why?
Because when people that are not overly interested in politics think of a party, they often are drawn to the views of those that get the most coverage, and like it or not that would be those that get ratings.
Ok, let’s cut Beck (since he was eventually eliminated, in my opinion because he is a boob, but more likely because people simply became bored of him) and replace him with O’Reilly.
There are a lot of people that would possibly be attracted to certain aspects of the Republican Party, but immediately think of the statements of people that are only “in it for the money”.
It is in the best interests of commentators on Fox to have extreme views in order to garner ratings. The GOP will need to make it clear that Hannity does not speak for most of them and that Rush is, indeed, not the head of the Republican Party.
Thy need people to understand that Hannity or Mark Levin spout exaggerated statements for “their” purposes, not for the benefit of Republicans.
If the general electorate thinks that the GOP is only comprised by “extremists” they will never again win the Presidency or Senate seats.
Due to districting, the House is a different matter as they are, in reality, regional elections.
It is time for Republican politicians to clearly state that these “entertainers” are not representative of their party.
“Yeah, but what about MSNBC?” Well, as many of you so often state, “No one watches them”. Additionally, they won the election so it was not a substantial problem.
November 18th, 2012 at 5:55 pm
And to reinforce the point there is Internet post from Sunday night.
“If you were waiting with bated breath for the “Draft Palin” movement, it’s your lucky day! Conservative columnist Charlotte Allen has endorsed Sarah for the 2016 GOP nomination in today’s Los Angeles Times. Allen argues, apparently with a straight face, that “large segments of the electorate neither know nor care much about serious economic and political issues,” and that Palin is the ideal Republican vehicle for “appealing to voters’ emotions.”
Continuing her penetrating political insights, Allen adds that the former governor’s good looks are key to Republican success, since “men love Sarah Palin, and she loves men.” We’ll just let that sink in.
November 18th, 2012 at 6:09 pm
“That is, disassociate themselves from the Hannitys, Rushs and Becks of the world.”
Most of us dont associate our positions with these guys although Beck gets a little bit of exception because he is an equal opportunity basher of both parties.
Just as any fair minded person knows that not every liberal subscribes to Michael Moore
The only reason moonbats repeat what you’re saying, is because you repeat it as often as you can.
Patrick M.,myself and others have already expressed this to you.
So stop it would you ?
November 18th, 2012 at 6:12 pm
You are ignoring an important fact that is typical of Republican presidential nominees. What was THE biggest complaint regarding both McCain and Romney in these past two cycles? That they were both “too moderate.” Republicans have a tendency to steer towards the moderate candidates. There were even complaints about Bush because he put the principle of “compassionate conservatism.” We all knew what that meant, “government spending.”
November 18th, 2012 at 6:14 pm
You all should do what I do. Turn off everyone else and listen to Michael Medved.
November 18th, 2012 at 6:33 pm
Stop what?
I said, very clearly, that while these individuals may not represent you, the general electorat hears nothing else and it is influencing elections.
Ask any average voter if they think Rush is representative of the Republican party and I would guess they would say yes.
People hear the loudest people with the most outrageous comments and attribute them to the GOP.
If prominent Republican politicians don’t disassociate themselves on behalf of the party what happened last week will continue to happen.
November 18th, 2012 at 6:34 pm
“If the general electorate thinks that the GOP is only comprised by “extremists” they will never again win the Presidency or Senate seats.”
Thats pretty rich coming from a moonbat whos messiah has been the most radical president ever.
The electorate doesnt think the GOP is compromised of extremists, so dont worry about it.
The majority of the electorate by a slight margin was held hostage by freebees and also chose to ignore basic mathematical principles while a good percentage of republicans, conservatives and moderates chose not to vote at all.
Theres nothing radical about spending less than you make.
There was nothing radical about Romney unless you think him being “Conservative light” is radical
The social issues, even national security, took a back seat in all the polls. The bullsht “war on women” barely made a dent.
Most post election polls show the economy as being the number one concern, this can be confusing when liberals say the last four years has been successful.
November 18th, 2012 at 6:38 pm
“Stop what?
I said, very clearly, that while these individuals may not represent you, the general electorat hears nothing else and it is influencing elections.”
Let my try to clarify.
Stop putting words in the mouths of an entire demographic since you dont know what you’re talking about.
You obviously have not a clue how the conservative mind works.
“Radical”
What a bunch of sht.
November 18th, 2012 at 6:38 pm
That they were both “too moderate.”
Is that how you read the exit polls to this last election, that they were not conservative enough?
I think most would agree with Jindal and Christie, that the GOP has to stop being perceived as the “party of stupid”.
In fact, even though Christie was pilloried by the GOP for the crime of speaking to Obama, I wouldn’t be surprised if he is the early frontrunner for the next Presidential race.
Perhaps the candidates will stop thinking they have to have pizza with a boob such as Trump (who certainly didn’t help the cause of the GOP).
November 18th, 2012 at 6:45 pm
I don’t have a Messiah, either in political office or anywhere else for that matter.
If the GOP wants to continue to be a “niche” party, then fine, but as the voting demographics rapidly change, they either adapt or cease to be a viable component of national elections.
November 18th, 2012 at 6:47 pm
You’re freekin lost dude.
Talking to you is pointless when you base all your points on a bunch of crap thats part bullsht and the rest only you see as relevant.
Lets make it simple for you grasshopper.
The one most important thing the right needs to do is give the whole country a refresher course in conservatism.
Fiscal responsibility.
Individualism.
Private property.
The right to worship.
The sanctity of life.
Limited government intervention.
A strong foreign policy.
These are not radical qualities by any stretch.
So stop this bullsht of yours that those of us who hold these values are radical unless you chose to keep looking like you’re pinning a tail on a donkey in the Arctic.
November 18th, 2012 at 6:54 pm
“I don’t have a Messiah, either in political office or anywhere else for that matter.”
Bullsht.
He would beg to differ with you.
” the rise of the oceans began to slow and our planet began to heal”
Bwahahaha !
The guy thinks hes freeking Gawd, gimme a break !
November 18th, 2012 at 6:57 pm
As for spending more than we make, that is not going to change in the foreseeable future, so why not “double-down”.
Fareed Zakaria has a great article in Time Magazine last week (a fantastic issue that examines the election results in detail) that outlines the decaying infrastructure of our country and the “cost” of that shortcoming.
He proposes we borrow from the long line of countries that want to lend us money at historically low rates and put it into repairing bridges and water systems, etc.
As any successful business would do, borrow when rates and terms are favorable (even if said company has cash reserves) and invest it in projects that improve future profits and reduce costs (which would be the result of infrastructure improvements).
November 18th, 2012 at 7:06 pm
I never said the principles of conservatism are radical, what I said is the people that “regular” people associate with the right are radical.
And they are radical with good reason as the people I mentioned are entertainers in search of ratings.
I very clearly stated that they need to disassociate themselves with television and radio personalities that are perceived as “radical” as it is ruining the GOP brand.
By the way, you can drop the condescending grasshopper nonsense. While your at it, you may consider refraining from the “you’re losing it” and all of the other rhetoric you employ that seems to indicate we are in some competition that you are winning.
Just throwing around ideas and opinions, nothing more and nothing less.
I am always respectful, never invoke profanity or name calling. Perhaps you could extend the same courtesy.
November 18th, 2012 at 7:39 pm
“I am always respectful, never invoke profanity or name calling. Perhaps you could extend the same courtesy.”
If you’re gonna be intellectually dishonest, or make these idiotic assertions I’ll speak however I please.
Since you obviously dont see your crap as offensive in its own nature.
Rush and Hannity dont even begin to enter my spectrum and your assertion that they have/had some effect on how the right is perceived is lame.
Only you and a few idiot conservatives are running around saying ‘we need to cater to the present demographics’.
Screw that. Any conservative in his right mind (pun intended)is not thinking of catering to a bunch of liberals as a means of attraction.
November 18th, 2012 at 8:28 pm
The right doesn’t need to cater to liberals, they need to cater to independents. Until they do that, they will continue to lose. The right has turned into a group of fevered clowns hellbent on removing Obama from office (mostly based on delusion and gross exaggeration), they are so hellbent that they will even hold much of the country hostage to make him look bad.
November 18th, 2012 at 8:33 pm
You guys couldn’t even defeat “the worst president in US history” with the best thing you have to offer. That should really say something to you! But it will fall on deaf ears, you guys will continue to shoot yourselves in the foot. Eventually all your guys’ clowning around will cost you the house too (which technically you should have already, democrats had the majority by quite a bit, but gerrymandering tactics help you keep your majority… for now).