to some degree clarified his 20% tax cut plan by saying that the
deductions and "loop holes" that he would get rid of would make it revenue
neutral
for those making over $250,000 dollars a year. OK, I know that the right
thinks that this will act as stimulant and will make the tax revenue come in
and that the left thinks this will create a giant deficit whose hole will
need to be filled by either raising taxes on those making less than $250,000
a year or by cutting out just about every government program...but, I
don't care, its still a bad tax policy!
Even if this is "revenue neutral" and would raise the exact same amount of
money from those making over $250,000 a year it will shift who pays how
much among those top income earners. The problem is that people like Romney
either don't get or don't like the point of tax loopholes or deductions.
Romney and most of the right see taxes as only revenue producers for the
government. Taxes aren't only about raising money for the government, they
are about changing behavior of the wealthy to benefit the country and/or
punishing them if they don't.
The tax loopholes and deductions that Romney will have to get rid of to
make this revenue neutral are mortgage interest, charitable donations and
state and local taxes. They are the only serious deductions that effect all
tax payers. Even if those deductions continue to exist for those under
$250,000 a year and not one dollar is lost in tax revenue, you don't have to be
a genius to see who it will help and who it will hurt.
If I you and I both netted a million dollars last year and I gave nothing
to charity and you gave $50,000 you paid roughly $15,000 less in taxes than
I did. Assuming all other things being equal you were able to see a tax
savings of $15,000 by making you generous donation. The Romney plan is that
by closing this and other loopholes in the tax code and it will level out.
But, it levels out because the government stops rewarding you for being a
better human being than me and helping out your favorite charity and
rewards me for being a jerk.
The US Government has ALWAYS used the tax code to try to control behavior.
The primary tax when the country first formed was tariffs. The
government taxed English and French goods coming into the country not just as
a way
of raising revenue but also to stimulate the New England industries that
were trying to compete with England and France. Get it, what made the
industrial north and the US a successful business producing country was a tax
policy that help local grown business and punished southern plantation owners
trying to buy a plow from France.
We don't need less loopholes in the tax codes we need more. In 2009 when
the auto industry was on its knees the government offered a $2,000 tax
rebate if you bought a new US car. Prior to 2009 I was leasing cars because
the deduction on the tax code made that favorable, but when the government
let me keep $2,000 of monies I would have paid them for taxes if I bought a
new car, I bought a 2010 Mustang. Loopholes work. They encourage people to
make tax deductible donations. They encourage people to invest in
municipal bonds. They reward behavior that stimulate the economy or helps the
poor.
Romney's tax plan is a bad plan even if it works.
JMONTOMEPPOF
Chuck Repke