Tuesday, November 13, 2012

Digg's Tax Policy: I Won't Make Friends With This Post


I was disappointed watching the Ed Show this evening.  For a party that claims to be pro math and science, for a party that loudly applauded Bill Clinton’s “People ask me all the time how we delivered four surplus budgets.  What new ideas did we bring? I always give a one-word answer: arithmetic”, and for a party that chided the Republicans for holding America hostage, the liberal wing of the Democrat Party certainly are singing a different tune.  A tune that may whip them into a frenzy, but a tune that doesn’t help the country.

You see, I too think that the rich are getting off way too easy with respect to effective, not marginal, tax rates.  I am disgusted that Mitt Romney only pays 14% effective tax rate because his capital gains and dividend income rates are so low.  Tell a Reagan loving Republican that his hero RAISED the capital gains tax rate to 28% and they will look at you incredulously.  Today’s 13% rate is hurting this country as it robs the Treasury of funds and those that claim raising that rate will curb investment are arguing with themselves if they believe Reagan recovery is fact.  In 2013 – increasing the capital gains tax from 15 percent to 20 percent and more than doubling the top dividend rate from 15 percent to 39.6 percent will happen when the Bush tax cuts expire.  Republicans claim that this increase hurts everybody, and to some degree it does, but those that are hurt the most are the Romneyites whose income is derived from dividends.  For the middle class, the impacts will be far less impactful.  

But to think that raising taxes on the rich, those making >$250k/year, will make the Treasury’s coffers suddenly flush are not using basic arithmetic.  I hold those on the right that think we can cut spending to achieve the same in equal contempt.  Our $16Trillion in debt is money we already spent and we continue to run $1Trilion annual deficits.  Sorry folks the debt is real, deficit spending cannot continue.  When I hear Ed Schultz say scuttle the long term plan for a two year plan for political gain, I am reminded once again why I am now a nonaligned citizen.

Economists, politicians, and mathematicians will come up with a plan.  The plan will include a mix of short, mid, and long term tax policy changes affecting ordinary, dividend, and capital gains rates for different income levels at different times.  The plan will also include changes to deductions but these changes will have to be equally progressive like the marginal rates.  What I can tell you is I equally mistrust a RW and LW economist’s theories on tax policy.  When in doubt, I will always chose growth over austerity.

But above all, what disappoints me the most is the rhetoric.  The right wing talk about lazy Americans taking the hard earned money of the successful and the left talk about punishing the rich.  Yes we use terms like fair share, job creator, progressive, free market, middle class, etc.  But what is so disappointing is as a nation we are still divided and in order to win we not only have to beat the other side, we need to do so convincingly.  I ask those on the left to not seek some political vengeance against the right. I ask that they refrain from seeking to make the other side pay, literally and figuratively.

Tax revenues will be going up , the rich will see an immediate increase in effective rates, and spending will be cut.  Now can we get onto the business of creating a true 21st century economy.  An economy not built on bubbles, debt, and speculation?

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