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Luis Palau
There You Go Again………..
In borrowing a phrase from Ronald Reagan in the second presidential debate with Jimmy Carter on 10/28/80 (corrected) I will apply it this time to the tired strategy of the Democrats proclivity to raise taxes every time they get in control. You may also recall that at least partial credit has been given for Reagan’s win during the second presidential campaign to the debate with Walter Mondale where Mondale stated that he would raise taxes on Americans if he won, he lost big time.
Now the Democratic Chairman of the House Ways and Means Committee, Charles Rangel, is planning broad and sweeping changes to the tax system with the centerpiece being a 4% to 4.6% surtax on earning in excess of $150,000-$200,000. You know the “rich” that they keep talking about that are not paying their “fair” share. [I am not going to debunk this here again today with that endless stream of statistics that demonstrate that this is a lie.] This tax increase will also have the impact of raising taxes on investments. Now that is a real smart move and all this is just a test for an additional slew of taxes that they will propose after they win the Presidential Election of 2008. The scariest thing is that they will probably start spending that post election money now since they are so sure they will win it.
Another thing is that this is being falsely touted as a Surtax (which would be a percentage increase to the normal tax). What this amounts to is an additional two tax brackets in the existing tax structure. It also has the negative effect of further increasing the “marriage penalty” built into our tax structure.
But let me say this. I believe that Economists and Statisticians (at least the honest ones) understand that raising taxes doesn’t always produce more income. It is a more reliable precursor for provoking a recession.
I want to shout this from the rooftops once again……….You don’t establish income tax policy in order to fund what ever projects you are desirous of. You establish tax rates to maximize federal revenue without regards to spending preferences. After you establish the rate that will optimize economic growth and consequently revenues you can turn to the budget side of the matter and debate spending priorities with the income that tax policy will produce, again understanding that not all spending is equal in terms of its simulative effect on the economy.
I really think it is time for the Democrats retreat from this age old political strategy that only serves to insure the “economic cycle” of boom and bust and cause greater deficits in the long run turn to a consistent and simulative tax philosophy. Even their constituency would be much better off if that were to happen, but the Democrats ace in the hole is that their constituency really doesn’t understand this. This is all about protecting their incumbency. Hence they again turn to divisive political rhetoric and wrong headed tax policy. For a deeper explanation of this overall tax proposal by Rangel go HERE.
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8 Responses to “There You Go Again………..”
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i wonder what mathematical steps it takes to determine what side of the laffer curve one is on with respect to current tax policy? how do we not know that we are not near the top, but still on the left side fo the curve?
also, whenever this topic is raised, why dont both sides begin by stating where they will cut excess spending in their own districts. i propose that all memebers of congress be obliged to trim a set number from their spending programs, cut all earmarks and begin the debate with home to best serve their people rather than their chance for re-election.
sounds to good to be true. a big concern is that the reps. have lost currency on this topic since they are becoming tax-cut and spend thrifts. i know there might be credible explanations for it, but surely bush 43 has seen some bills he would have vetoed rather than passed. i dont know his spending veto record, but i bet most things passed his desk.
hoepfully both sides of the aisles will think of the people and not their special interest groups
Hi Matt……..I am not sure how the computer models would look at it, but those would be dependent on the programmers (i.e. GIGO) but I guess it is fair to say that we should look to results. Even against Democratic screams to the contrary, the most recent tax reduction by Bush were simulative and enhanced revenues which was evidenced by the continual stream of shrinking deficit recalculations. So this along with many other tax cuts would stand as evidence that the current tax structure has not necessarily reached the optimal point yet. Again this comes to dynamic scoring and I believe that there is evidence that further cuts would be helpful to the economy, deficits, employment and stimulation, especially in Long Capital Gains. [I know the reference to “long-term” would not be that helpful to most of your activity, but I think that is the dictum of sound tax policy.]
One thing that will tip you off is when the Democrats announce their desire to raise taxes and they justify it by claiming that they need more money to finance welfare, health care, military, etc. you fill in the blank. That is to me proof positive that you have a bunch of amateurs evaluating tax policy.
Ha…don’t count on these guys voluntarily surrendering their earmarks. This is not likely with either party in control and certainly not during Democratic control. ……..steve
As a small businessman, things like this provide a negative incentive to succeed. I just can’t find motivation knowing that the results of a bang-up year will end up going to a bunch of cheese-eating, prius driving surrender monkeys in DC.
Bd…….Hi, some would say the profit motive is the root of all evil, but it is a beautiful thing that has provided best for the most at the least cost. Every other system, especially the egalitarian systems fail miserably by comparison……….steve
Money Money Money Money Money Money Money Money Money Money Money Money Money The root of all ….
M2……………..Evil.
Small but critically important distinction, folks. It’s not money itself that is the root of evil, but the LOVE of money.
1 Timothy 6:10 (Modern King James Version - Bible, New Testament, caseyadinknow) For the love of money is a root of all evils, of which some having lusted after, they were seduced from the faith and pierced themselves through with many sorrows.
Hi Plodon…….you are correct here. And the Conservative philosophy on taxes really doesn’t in my opinion have much to do with lusting after money, but in the political spectrum providing the best for the most at the least (cost). That is why Capitalism and Free Enterprise against a backdrop of low taxes has proven itself world wide over a long period of time to be the best system in the world (no matter how you divide it: East/West; North/South; Political/Non-Political; etc. Even Germany (divided vertically) prospered in the West and collapsed in the East except for 1/2 of a city in the East (Berlin) that was not Socialist but Capitalist. Even take a country divided horizontally such as Korea and look at the results there. Some would say what about China that lion of economic growth today. I’d say their economy is 1/5th the size of the USA and their population is 4.4X the size producing a differentiation factor of 22X and still they accomplish what they have on the backs of their people who still have a standard of living far south of Taiwan (the anti-thesis of China) and even Hong Kong which is a part of mainland China, but carved out under the evil Capitalist system. Don’t even bring up Cuba…………You have to wonder how these facts have escaped the socialists in our own Congress, which leads you to wonder…..”are they smarter than a 5th grader.
………steve
small change in the date being 8/7/1979. not that big of a deal.
as far as tax structure goes, i wonder if there is a way to be practical about how money gets spent rather than argue over who is paying what.
an ex. is that SCHIP bill. It is a destined for a veto if other things unrelated are attached. Say there was a democrat at 1600 penn ave and a clever rep. attached a hefty iraq/afghanistan mil spending measure to it. the dem would probably shout from the roof top how this is getting a veto due to the attached mil spending and name names. they woudl follow it up with “you send me an schip bill without attachments and i will sign it.” for some odd reason, i see the american public buying into this “honesty” from someone other than bush. so, why does bush not try the same when legislation necessary for those in need gets the veto? i think it would behoove him to call out the sponsors of added spending to politically charged topics.
Hi Matt………..Oops, don’t know why, but I typed the wrong date. I basically got the backup from the attached link and a simple look back at my own link shows the actual date of the 2nd Presidential Regan/Carter debate to actually be 10/28/80. Don’t know how I carried it forward with the wrong insert. But we all know it is the debate season of the 1980 election.
You are exactly right about the bill configuration and the schip issues. Why doesn’t Bush shout it from the rooftops??? I think the answer to this is very easy and clear and one that continues to escape the Democrats and that is Bush isn’t running for anything. The more they posture themselves against Bush for no reason, the more they entrench themselves on issues that will make them less flexible when they get around to trying to out flank the actual Republican candidate. I think that on balance continuing to politicize everything Bush does only hamstrings and hurts them. It is amazing to me how stupid they can be when they are driven by their hate of Bush, but they have all that ratified by the media and for now that anesthetizes them from this mistaken political calculation……….steve
Yep. What I was trying to address was the post in front of mine (Money Money Money The root of all ….)
Plodon………Oh yeah, I knew that. M2 probably knows that too……..steve
“It is amazing to me how stupid they can be when they are driven by their hate of Bush, but they have all that ratified by the media and for now that anesthetizes them from this mistaken political calculation”
I’d say that’s all the Dems are driven by. Well, that and their desire to stay in office which works better with more people needing to use their programs.
Bd………of course……steve
Go Huckabee