Blogs » Politcs Plus » The Politics of Taxation



It's that time of the year and when a lot of taxpayers are angrily writing out that check to the Internal Revenue Service. The Democrats thought that they could play on that emotion, and voters would call their senators and urge them to pass the Buffett Rule. Despite that 72% agreed that the 1% should pay more, the bill was defeated on ideological grounds. Today, Congressman Eric Cantor will introduce a bill to give businesses that employ 500 or more tax cuts but that also will be defeated on ideological grounds.

It's funny how the parties look at the tax code and come away with economic theories that are different as night and day. Right now, several Republicans are bound by the Grover Norquist pledge stating that they will not raise taxes no matter what the circumstances. I remember the Republican presidential debate where the candidates would not raise taxes even if it was $10.00 of spending cuts to $1.00 of revenue. It all goes back to a theory of making government so small that you could drown it in a bathtub. When the economy revives, it will be time to use fiscal restraints to get the deficit, and the debt headed toward a downward trend but that can’t be done fairly without revenues.

On the other side, the Democrats want to maintain the safety net and the entitlement programs, so increases in taxes is the only way to keep those programs going. Democrats didn't use to be supportive of Keynesian but now the party sees the advantages of that economic theory when consumers and businesses are not spending. They also see advantages that can't be put on a spreadsheet, such as infrastructure repair, while material and labor is still low, and investing in education and alternative fuels. The Democrats will have to make concessions on the entitlements, but they shouldn't enter any agreement that does not include revenues because it's not fair for the same people to shoulder the cost while the top 1% will not pay their fair share.

States have found a new way to provide incentives to corporations into keeping their jobs in their state or to bring in new ones.

"Across the United States more than 2,700 companies are collecting state income taxes from hundreds of thousands of workers – and are keeping the money with the states’ approval, says an eye-opening report published on Thursday."

"Public records show that large companies often pay little or no state income tax in states where they have large operations, as this column has documented. Some companies get discounts on property, sales and other taxes. So how to provide even more subsidies without writing a check? Simple. Let corporations keep the state income taxes deducted from their workers’ paychecks for up to 25 years."

This morning Joe Scarborough, host of "Morning Joe said “despite the polls, America is an aspirational country, so people don't buy into the "tax the rich" theory. As always, I disagree with Joe because I think people are beginning to see the light. They have seen 30 years of income inequality, and the polls show that the GOP's message of “no taxes" plays well with the voters, so the Dems will always lose that battle. This year is different because the 2012 democratic message is "tax fairness."

The Super PAKs will pay gazillions of dollars in influence to keep their taxes low, but it might not matter, even if Mitt Romney wins the election. On December 31st of this year, the Bush tax cuts will expire unless President Obama resigns an extension. I've always said that letting the Bush tax cuts expire, would lower the deficit and debt and start us on a path toward fiscal responsibility. President Obama will once again use the Bush tax cuts as a bargaining chip. On the other side, it doesn't really matter what Romney said at his $50,000 a plate fundraiser when he didn't know that a microphone was amplifying his remarks, because next week, he'll be on the other side. I've been keeping up with politics for a long time, but I have never seen as much video evidence showing the changing of positions, like I have for Mitt Romney.

We can’t really have a discussion on tax policies or the budget until we see the results of the Supreme Court decision on health care. The debt ceiling vote will probably be delayed until after the election, so all Congress and the political candidates can do is make empty promises for now but things have to be different in 2013 because we are running out of time and options.