Thursday, April 19, 2012

Bipartisan Tax Gimmicry

The Wall Street Journal of April 17, 2012 describes the political posturing that is occurring in Washington surround taxation. Taxes, one of the most fundamentally polarizing issues in American politics, are often used as means to garner support from one’s political base. Democrats, on one side, attempted to push through the so called “Buffet Rule”, which would place a minimum tax of 30% on anyone making $1 Million or more. On the other hand, Republicans are expected to counter with a “Small Business Tax Cut” which would give a tax break to businesses from 35% to as low as 28%.
            All of this political maneuvering has created a dangerous dichotomy in American politics. The language of 1% vs 99%, Main Street vs. Wall Street, and rich vs. poor are all effective political jargon, but not effective fiscal policy. The economy will operate most effectively and be more privy to investment in a scenario which long-term solutions, not one year “bridges to reform”, are discussed and implemented. However, in order for this to occur, congress will have to put aside election politics and extreme ideology in order to achieve a sustainable tax policy that offers concessions to both sides. Democrats will likely have to give breaks to small business, while also being open to discussions about cutting spending in some areas. On the other hand, Republicans need to be more open to taxing the richest 1% of America. Until compromise is reached, the economy will suffer.


  1. Democrats have passed both tax cuts and brokered budget deals that significantly reduce spending. (Some may feel they have not cut it enough. But they have inarguably been "open to tax breaks and cutting spending".) Republicans, meanwhile, will not accept any deal that raises revenue. Compromise requires two parties willing to make concessions, and for the last few years there has only been one party making those concessions. As Representative Price mentioned, the obstructionism in Congress is asymmetric.

  2. The entire notion of the premise is that the rich NEED to pay more taxes. Rather than that, why not cut spending that is wasteful. Democrats cannot come to grips with the reality that because of the entitlement programs set in place during the New Deal and Great Society, the fiscal path of the U.S. is untenable. Raising taxes (or the PC term- "Revenue increases") would not be necessary if the spending (including defense) is constrained. Raising taxes on the 1% will not help the fiscal situation of the U.S. and simply is used to score cheap political points.