Stop! If I hear a presidential candidate, the Rhode Island First and Second Congressional district contenders and/or the United States Senate opponents say one more time that they want to simplify the tax code, I am going to send them a Whopper. Of course, they don’t need one since they are already full of, well, ground beef!
These politicians, including the Rhode Island contingent, don’t act to curb excesses in the taxation laws because it serves their purposes and helps them raise campaign contributions, despite their rhetoric of reform to the contrary. Here are the facts.
Complaining about the inequities of the tax code has been, at least, a 60-year exercise. Study after study and speech after speech have waxed eloquently about the need to reform the tax code. Average folk are aware of the inequities occasioned by tax loopholes for various constituents but the politicians only want to eliminate the “other guy’s” loopholes that give the opposite party an election advantage.
Actually, many of the incentives and exemptions are wrongheaded. Both political parties engage in social engineering for their respective supporters. Fairness has nothing to do with it. Here’s one example.
Taxes for 163 million workers will go up on Jan. 1, 2013. That’s when a temporary reduction in Social Security payroll taxes expires. Neither Republicans nor Democrats in Congress are pushing for its extension so the worker who makes $50,000 a year will lose $1000 by a renewed tax, whereas a worker making $100,000 will dish out $2000 a year.
The point of the reduction was to stimulate spending by average people in order to gin up the economy. While some studies substantiate that it did that somewhat, the lost revenue to Social Security became a problem. The reason is that Congress was supposed to cut spending or raise taxes to supplement the Social Security loss, but failed to find the respective $103 billion in 2011 and $112 billion in 2012 to offset the loss revenue. Congress borrowed the money instead, since they didn’t want to sacrifice any sacred cows.
By contrast, look at the fight over extending the Bush tax cuts. This will be addressed after the election. If anyone reading this column thinks the cuts won’t be extended, then you do not know much about the people holding office in D.C. Most are millionaires and there is no way they will take a hit on their income. It’s just your income, buddy, that will dip.
In this tax-sensitive culture, politicians have gloomed onto promises to “get the tax laws done to 100 pages,” eschew the multi-millions of words in the code, make the tax burden more equal, etc. When asked exactly what the respective think it is window-dressing for democrats to assert that they want the “Buffett” rule. It’s easy to make a campaign slogan but the fact is they will not tax their own pocket. Republicans avow the trickle-down theory by dissing tax increases. Again, history shows that this theory doesn’t work.
Both parties are in a game they trot out every election. You’d think that after 60 years of speaking about reform, you’d see it. The whoppers they speak about aren’t all at Burger King.