Saturday, October 31, 2015

Media Discussion and Tax Policy

Rubio’s tax plan increases the deficit and relaxes the tax burden on the top 1%. Bush’s tax plan increases the deficit and relaxes the tax burn on the top 1%. Trump’s tax plan increases the deficit and relaxes the burden on the top 1%. Carson’s tax plan increases the tax plan and relaxes the burden on the top 1%.

So we can agree that all the Republicans are the same since they all want to give huge tax breaks to the rich and increase the deficit, just like that bastard Reagan and his disciple George W Bush, right?

That’s what most media would have you believe. They think the CNBC moderators engaged in some pointed, worthwhile critiques of the various tax plans.

You know, I don’t entirely disagree. If your tax plan involves blowing a massive hole in the public financial budget over the next 10 years, you probably need to offer an explanation or two.

Unfortunately, that’s different than a substantive conversation on tax policy. All the discussion focuses on the headline numbers, and, explicitly, tax cuts to the “rich.” This is a Democratic framing and a liberal narrative. The Democrats are concerned only with “increasing” the deficit, since it naturally means less money for their government pet programs, and only with the effect on the rich, because they really just hate those bastards.
There’s some other interesting discussions to be had on our tax policy that some of these plans address. The Rubio plan and the Bush plan both do away with the mortgage interest deduction: that’s because Republicans widely recognize the housing bubble is a huge problem that should be prevented again, and the tax incentives to buy a home exacerbate this issue.
There’s no discussion that.
The Rubio plan allows full expensing of capital projects in the first year of expense, which entirely alters our notion of depreciation, which has grown more favorable to businesses since the “MACRS” system introduced in the 1980s.
There’s no discussion on that.
Many of these plans demand an immediate repatriation of foreign income and move permanently to a territorial tax system.
There’s no discussion on that.
Rubio’s plan expands the child tax credit, while Bush’s plan extends the personal deduction: the first benefits families with children, the second benefits everyone.
There’s no discussion on that.
There’s simply no discussion at all on any major overhauls of the tax code, except to the extent that it “decreases” the deficit ( and enables future government growth) and soaks the rich (because screw them).

This is not a mature, substantive discussion on tax policy. This is political theater dressed up as substantive critiques, which the Liberal side of the aisle adores.

This is why liberals often talk about the “tax breaks” for oil companies and airlines for private executives, which are normal investments for many companies and which all companies are allowed to expense. Again, this is not a mature point at all, it is childish political theater to suggest that oil companies should not be allowed to deduct expenses for building an oil well while, say, GM is allowed to expense a new factory.

Don’t be fooled.

To determine how a Republican President might behave in office, look at the previous Republican Presidents. Reagan absolutely did implement massive tax cuts in 1981, which were not offset by spending decreases: in fact, Reagan super-sized the military budget, so as to give the US military all manner of advanced weapons systems. This created some massive deficits throughout the 80s.
It’s important to note, though, that the Reagan 1986 tax reform was a revenue-neutral reform that closed a tremendous number of loopholes. Additionally, Reagan RAISED FICA taxes in order to secure Social Security for future generations.
 Bush Junior did pass some substantial tax cuts as well, but the actual deficit prior to the recession, IE, our structural deficit, was a low 1.6% of GDP, much lower than the 3% an economist would consider sustainable. He cut taxes, yes, but he held spending growth enough to prevent the deficit from exploding like the Reagan years. We had a small increase in the public debt, which was manageable and no real concern.
Unfortunately, that isn’t the narrative, is it?
Any of the mainstream Republicans make an appropriate President. You only need reference the moderate record of prior Republican Presidents.

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