Friday, September 15, 2017

Democratic Surveys, the Tax Code, and Economic Silliness

Not long ago I wrote a column critical of Republican fund raising “surveys.”  I noted the many ways in which they assert blatant falsehoods about the state of the nation, while appealing to unreflective visceral responses from potential donors.  Sadly, the same can sometimes be said about Democratic fund raising “surveys.”  

One popped up in my inbox from my own senator, Maria Cantrell, whom I admire and trust as an effective representative of the people of Washington State.  But her fundraising “survey” employed some of the misleading tactics the GOP has honed to a fine art.  Hers said she wanted to know what constituents think are important issues to be addressed in tax code legislation.  By asking rhetorical questions in the right way using the right words, it implied that:
  • Medicaid, Medicare, and Social Security are being threatened.  
  • Middle income and working class families are heavily burdened by over taxation and need relief.
  • The business tax code is outdated and too complicated.
  • Tax code revision would make home ownership and college education more affordable.
  • The super wealthy don’t pay their fair share of taxes.
  • Tax code legislation is needed to keep the U.S. from defaulting on its debt.

No doubt the “survey” author would object, saying it doesn’t assert any of those things, but of course it does, by clear implication in wording they hope will trigger a favorable response from potential donors, who will not bother to examine the issues in any depth.  

For instance, while Medicaid is financed through appropriations from the general fund of the federal government, in combination with state appropriations, Medicare and Social Security are financed through FICA (Federal Insurance Contributions Act), which is separate from income taxes paid into the general fund of the nation.  Tax code revisions can happen in many ways without affecting Medicare and Social Security, and, at least for now, there is no serious threat to either on the horizon.

At least in my opinion, middle and working class families are not burdened by over taxation at the federal level.  They may not like paying taxes, and complain a lot about having to do it, but taxes are the collective investment in the future of our lives together as a nation.  If anything, it's the huge burden of defense spending that we should be concerned about, but defense has become a holy cow no one dares to touch.  

As for taxes on business, large corporations are pretty good at evading them altogether.  It would probably be a good idea to lower the maximum rate by some significant measure, and eliminate a few bushel baskets of special loop holes.  How that would come about eludes me. 

It’s true that some Republicans have floated the idea of repealing the deduction for home mortgage interest payments, but few take it seriously.  It faces enormous opposition from left, right, center and every flavor of special interest out there.  In any case, the problem of affordable housing, which is serious, cannot be solved, by fiddling with the tax code.  Affordable housing is a function of many issues that have little to do with federal taxes, and a lot to do with state and local regulations.  The same is true for the cost of college education.  Various deductions and other tax code incentives merely poke at a problem that has its center elsewhere.  

And do the super rich one percenters not pay their fair share of taxes?  What is a fair share?  How about taking another approach.  If we were to dramatically increase the marginal rate on very high earned incomes to, say, something over 70%, it would probably not generate much additional income from the super rich.  But it would eliminate the incentive to pay super salaries, redirecting monies toward higher pay for middle and lower income earners.  It would both boost the economy and increase revenue flow to the government to help pay for the good things we want out of government.

Finally, are we in danger of defaulting on our debt?  It seems like we might be every time congress has to vote on the debt ceiling; an idiotic idea written into the law in 1917.  In practice, after all the political posturing and chest thumping has died down, we raise the limit and continue on our way.  In the meantime, we’ve raised generations of ordinary people who have no idea how national debt is managed, and have been lied to by scare mongering politicians yowling that we are selling ourselves into financial slavery.   No!  We are not in danger of defaulting!  We’re also not going broke.  We are in danger of mismanaging spending and debt, and need to hold congress accountable, but that’s another matter. 

Having said all of that, the tax code is in serous need of revision.  However, between Trump and Ryan we have been flooded with messages that we need to get the economy going again, when it’s going just fine, thank you very much.  We’re told we need to get people back to work, when unemployment is at an all time low.  And yes, the participation rate is low too, but messing with the tax code can’t fix that.  So to fix non existent problems they propose legislation that would do two things:  cut taxes on those whose taxes should be raised, and increase the deficit claiming it will be paid for by future economic growth that seems highly improbable.  As a sop, they suggest a modest tax decrease for the middle class that, in my opinion, they don’t need and it would’t help the economy anyway.  I don’t get it.  It baffles me altogether.



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