Liddick: This is no time for tax hikes
September 20, 2010
Let’s talk Federal income taxes. After all, they’re just as inevitable as death, unless you’re among the 44percent of Americans who don’t pay a penny of ’em …
There’s been a lot of heat lately about the “Bush Tax Cuts” and whether they should be repealed, retained, or sliced-and-diced in a way that would make Dr. Frankenstein proud. Everyone ought to step back and take a breath.
First, we need to get the definitions right. This is not about “tax cuts” or “tax increases.” It is about increases or cuts to marginal tax rates on incomes and capital gains; exemptions, exclusions and credits. It’s not really simple, but expedience demands that it be made so, if Democrats are to couple it to class envy to serve a political end. “Tax cuts for the rich” has such a nice sans-culottes feel, no?
Who responds to this language? Those who reply to suggestions that raising taxes on small businesses might stunt our still-anemic economic recovery with screeds like “Tax the (hell) out of the rich. I mean take it all from them so that they don’t have time to think – let’s call it the flash-tax! Then let them work their big asses off to supply us with more …” before lapsing into profanity. Yes, that’s a real comment.
What is forgotten is that poor people don’t employ anyone, and middle class folks rarely do. We are going to have to go up the income scale to find those able to bring the unemployment rate down, and giving them the “Or else, and maybe even then” treatment is not likely to improve their mood. Money is fungible. If it doesn’t like its surroundings it can pack its bags for India faster than Baba Ram Das in search of the lost Ganesh.
Second, what the president proposes is not a “tax cut” for anyone. It is a plan to put substantial tax increases on the back burner – for now. Perhaps this bit of verbal trickery can be forgiven a government that calls a reduction in the rate of spending growth a “spending cut” – and no, they aren’t the first to use this chicanery – but it’s still reprehensible. Bottom line: your tax bill will not go down.
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While we’re on that subject, a preview of coming attractions. If the president persists in pursuing his class warfare option in the teeth of growing opposition even from his own party, among the results will be: an increase in the lowest tax rate, from 10 to 15 percent. The per-child standard deduction will be cut in half. The standard deduction for married couples will drop. Capital gains rates will rise and if you dare die, the taxman will appear with the undertaker.
In this “back to the future” tax regime, an average family of four with an income of $50,000 will pay $2,900 more in taxes, according to the accounting firm of Deloite Tax LLP. If the family makes $100,000, the bill jumps to $4,500. Can you afford this sort of hit at the moment? That latter figure will buy a lot of food, pay some rent or – if Xcel and the Green Energy Fanatics have their way, will almost cover an annual power bill.
Think about what a small business with an income of $500,000 will do, faced with a tax increase of $10,900. Double the income to a million dollars and the increase rises to $53,200. In some industries, that’s two salaries. Nicely done.
Third, yes, the deficit is a problem and there are going to have to be increases in parts of the tax code to address it. More importantly, there are going to have to be profound changes in expenditures – including entitlement programs. Yes, including Social Security. If we continue to fund handouts like General Motors funded union retirement plans, we’re going to end up in the same place. And no, that doesn’t mean bailed out. I don’t think China will be as sappy or craven as our politicians when faced by such a risky investment.
Senator Bennet, that includes you. The use of necessary talk about Social Security reform as a spook-the-elders ploy against Ken Buck is a prime example of why the mess we’re in keeps getting worse. You’re part of the problem.
Then there are the massive amounts given away in grants, no-interest loans and other emoluments to politically connected organizations. Individually these may be small, but in the immortal words of Senator Everett Dirksen, “A million here and a million there, and pretty soon you’re talking real money…”
Money we can ill afford to confiscate from those whose ideas, initiative and labor create it, only to fritter it away. $275,000 to the Restaurant Opportunities Center United for “ergonomic guidelines for the restaurant industry?”
Summit County resident Morgan Liddick pens a Tuesday column. E-mail him at firstname.lastname@example.org.