Mike Rowse A voice from New Mexico

26Apr/170

This discussion about tax reform isn’t about us; it’s about retaining power.

As we have watched the “debate” about tax reform over the last few weeks, it’s become apparent that changing things in Washington DC is going to be more difficult than anyone thought. There are many reasons for this but of course the underlying theme is that it’s all about power and control. We here in the mainstream media which parents the liberal mantra is that we can’t cut taxes because that will increase the deficit. For that the poor, the elderly or some other subgroup of Americans will be devastated because of the increased deficit and possibility that spending would be cut. Then there’s the old saw about giving tax breaks to the rich. The other consistent theme to this whole argument and discussion is that our political elite with their friends in the media ignore history.

We’re told that tax reform is complicated because people make decisions based upon the current tax laws and tax treatment of certain situations. They act like as if no alternative plans have ever been tried or proposed. Certainly people do make decisions based upon tax policy but a large majority of these deductions or so-called loopholes affect a small percentage of the population. A few years ago the Republicans put forth again a very simple and straightforward solution. It was basically a tax filing form that fit on a large postcard. This applied to individual income taxes. Basically you filled in a few boxes that included your gross income, then a lot of deductions for mortgage interest, child tax credit, charitable contributions, college tuition tax credit, and the earned income tax credit. Little bit of simple math and you either owed taxes or got a refund. Not only is that simple but it covers the vast majority of common deductions that people currently take. It would also reduce the size of the IRS saving hundreds of millions of dollars a year potentially.

Reforming corporate and business taxes would not be much more difficult. Certainly there are a lot more deductions for expenses that could be allowed. It’s not uncommon for most businesses to have capital expenditures for example or even research and development expenses. But limiting a lot of other specialty deductions that don’t apply to a majority of the corporate and business filers would be easy to do although politically difficult and of course that’s what this is all about.

Ignoring history is also part and parcel of the political elites modus operandi. Every time our government has cut taxes, revenue has grown. Whether it was Dwight Eisenhower, John F Kennedy, Ronald Reagan, or Bill Clinton, revenue has grown every time. Lowering the tax rate on businesses and individuals has stimulated the economy which not only means there are more sales and revenues to tax, but more people are in the workforce which means there are more individual taxpayers. And many of these corporations will repatriate money that has been sitting in foreign bank accounts because they don’t want to pay double taxes on that income.

When Ronald Reagan first took office the highest tax rate was 75%. He cut the top tax rate to 28% and everything else below that was similarly reduced. Revenues to the federal government double. Now I know some of you will say that the deficit grew under Ronald Reagan and it did. But that’s because Tip O’Neill and the rest of Congress went back on their promise to cut spending or even keep spending level. Once they saw the extra money coming in they spent it rather than using it to pay down the deficit.

The simple fact is this if you want to grow revenue to the federal government, or any government for that matter, cut spending. And get rid of baseline budgeting which is just as big of a culprit in growing the size of government and the deficit is anything else.

If this 'discussion' truly was about us and the taxes we pay or growing the economy or reducing the deficit, then it would be easy for Congress to come up with a plan and take action. But because this discussion is more about retaining power in Washington D.C., it's complicated; the politicians and bureaucrats are trying to figure out a way to pull the wool over our eyes once again and not do the job we said we wanted done with our votes in the last election.

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