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Tax Debate Is Political Ploy of Election Season

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Monday, 27 Sep 2010 09:20 AM Current | Bio | Archive

Every TV news show seems to endlessly pummel us with the debate over tax rates on the “rich.” Lost and forgotten is that progressive tax rates are merely the mechanics of the income tax system.

Even worse, nearly the entire tax debate by politicians uses complex statistics and data which relies on the opinions of economists for its credibility. Has there ever been a successful company whose chief executive is an economist?

Economics is no more scientific than political science. Theoretical academics aren't science. For a real debate on budgets, taxing and spending, we don’t need academics. It isn't all that difficult to calculate "cash in" versus "cash out."

Do you know why the tax code is such a massive monstrosity? I think it is because politicians realized right from the start that with the ability to manipulate the tax code they can generate campaigns contributions. Massive, perhaps better described as obscene, amounts of money to spend to buy votes

What both the politicking Congress and administration want to do is keep the focus on arguing over who is or who is not rich — and how much “they” should pay.

What they don't want to do is present what a balanced budget would actually look like, debate the best means of cutting governmental spending to get there, and what is the most efficient means to raise money to do it.

It is a mathematical certainty that raising the marginal rates of tax can't, under any possible or conceivable scenario, make even a dent in the budget deficit. (Forget the off-budget and unfunded guarantees.)

It is also a mathematical certainty that the budget deficit can't be solved by economic growth or modest changes to existing spending and tax policies. There is no possible way.

There is only one way to sustain the United States and maintain a functioning government. That is to dramatically reduce the cost of government payouts. This means payments for bureaucrats as well as transfer payments.

Growth in the economy comes only from productivity. Government payments are a cost — an expense. It is true that capital expenditures which facilitate productivity are necessary; and a safety net for those who are in dire need is also part of a compassionate society. Those are legitimate functions of government. But legitimacy has limits.

I am of the absolute belief that the progressive income tax system itself is a dangerous economic game. Raising marginal rates in a recession even more so. The likelihood of gain from this to the United States economy is statistically insignificant. The severity of the resultant catastrophic harm is virtually assured.

This endless debate by politicians merely over marginal rates of tax as their hot topic for the news cycle is something they do at every election time.

It is a crass electioneering façade and diversion from having the real debate on tax and spending when their election to office is actually on the line.

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Kleinfeld
Every TV news show seems to endlessly pummel us with the debate over tax rates on the rich. Lost and forgotten is that progressive tax rates are merely the mechanics of the income tax system. Even worse, nearly the entire tax debate by politicians uses complex statistics...
denis,kleinfeld,tax
487
2010-20-27
Monday, 27 Sep 2010 09:20 AM
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