Bowles-Simpson truth destroys “conservative” lies
The US tax system is supposed to work so that hedge fund managers earning fees of $10,000,000 a year should pay about 30% and have to somehow to scrape by on only $7,000,000. Imagine what people would say if they learned that the government was then also giving these people an additional one and a half million dollars a year, tax free, as a gift. But the hedge fund managers have smart lobbyists. Instead of getting Congress to directly give them a bunch of money, they get Congress to give them a special tax rate. Instead of getting a check for $1,500,000 from the Bureau of Gifts for Multimillionaires, they get a “tax deduction” worth $1,500,000. They end up with the same money, but in a complex way that makes people’s eyes glaze over when it gets explained. And they also hire a bunch public relations hack to make silly arguments like “he’s just keeping his own money”. Bull.
Tax deductions for the rich cause taxes to go up on the middle class
Because, if the government did not need that one-and-one-half million, it could have lowered everyone’s tax rate instead of giving the hedge fund managers a special gift. And so the “chairman’s report” of the Bowles-Simpson deficit reduction commission uses “tax expenditure” to describe ways in which the tax laws are used to give gifts to people. When the tax laws let Exxon make deductions that a family grocery store cannot, or allow the Koch’s to make deductions for funding political campaigns, that’s a tax expenditure. A tax expenditure uses the tax system to give public money to private individuals or corporations in a hidden way. So even though the Simpson-Bowles Chairman’s report gave the GOP all sorts of things they claim to want - like a freeze on domestic discretionary spending, they reacted to it with fear and horror. Because of stuff like this
In the quarter century since the last comprehensive tax reform, Washington has riddled the system with countless tax expenditures, which are simply spending by another name. These tax earmarks – amounting to $1.1 trillion a year of spending in the tax code – not only increase the deficit, but cause tax rates to be too high. Instead of promoting economic growth and competitiveness, our current code drives up health care costs and provides special treatment to special interests. The code presents individuals and businesses with perverse economic incentives instead of a level playing field
Why can’t solar energy compete with oil/coal? How about those tax dollars being siphoned off to the coal and oil industries? Why is it so much more profitable to run a financial casino than a steel mill? Could it be those - “tax expenditures” aimed at financial company managers?
The commission chairs recommended that all the special deductions go away, that people who make money from investments don’t get their taxes subsidized by waitresses and auto mechanics, that people who get million dollar mortgages do not get government help paying interest and so on. If Mitt Romney wants to give $4million to the Mormon church or David Koch wants to give $10million to the Cato Institute for Explaining Why Rich People Need More Money, that’s great - but people who make $40,000/year don’t need to help pay for that.
And that’s why there is no possible compromise on Bowles-Simpson. The Republicans/Conservatives are willing to make “hard choices” that involve throwing old people out of medicaid paid nursing homes or not feeding lunch to poor school-children, but they cannot ever accept taking a dime of “tax expenditure” away from their sponsors.