published Saturday, November 24th, 2012

Avoiding the fiscal cliff

Election, shmelection. When it comes to keeping the enterprise known as the United States of America solvent, a.k.a. avoiding the Fiscal Cliff, the country is right back where it was on November 5, 2012. With pretty much the same cast of characters in this practiced face-off: The President vs. Congress, specifically the Republican-dominated House.

This now annual showdown might as well be one of those daily re-enactments of the Gunfight at the OK Corral staged to entertain tourists out West, and it's getting mighty old. Even as the advance billing gets more and more alarmist as the end of the year approaches: The End is Near! The Loss of the Bush Tax Cuts! Sequestration, Automatic Tax Hikes, and a Double-Dip Recession Ahead! All is almost lost!

Who will blink first? Buckle your seatbelts, it's going to be a bumpy ride. Stay tuned -- and nervous. If this perpetual crisis is familiar, like an old melodrama with daily matinees and immediate seating, so is the obvious way out. The president says the government needs more revenue to balance its books, while the GOP says people don't need to pay even higher tax rates. Especially on capital that could otherwise get this stalled economy moving. Welcome to Impasse City.

•••

Both sides are right. So why not find a way to assure more tax revenue but not raise tax rates across the board? Here's how to do it: To raise about the same amount of tax revenue, don't raise the tax rates, just tax revenues. The voluminous U.S. tax code, perhaps the most indecipherable document since the Book of Revelation, is stuffed with special exemptions, deductions and tax breaks for just about every special interest with friends in Washington. Why not start out cutting some of those tax breaks? The federal fiscal situation would be a lot healthier for it, and the American tax structure a lot fairer.

Ah, but just which exemptions and deductions should be eliminated? Everybody's got his own favorite. So does every industry, every economic interest, and everybody with a lobby, trade association or foundation. That's the problem Mitt Romney (remember him?) ran into when he proposed cutting back tax breaks while lowering tax rates during the recent unpleasantness known as an American presidential election. Challenged to name just which tax breaks he'd cut out -- that is, just which powerful interest and bloc of voters he would offend -- he came up with an approach that's more than fair: Put a cap on the amount of exemptions and deductions any taxpayer can claim, and let the taxpayer himself choose which ones he'd sacrifice.

Want to give up the tax deduction for the interest paid on your mansion's mortgage, but keep the one on your gifts to charities? Fine. Or vice versa. So long as you stay within your limit of deductions and exemptions. The choice is yours.

•••

But would limiting tax breaks really provide enough additional revenue to reduce the federal government's increasingly unmanageable deficits? It all depends on how much of a tax break you'd allow each taxpayer to keep.

It's estimated that capping all itemized deductions at $50,000 a year would mean an extra $749 billion for Uncle Sam over the next decade. Lowering the cap on such tax breaks to $25,000 a year would raise some $1.3 trillion over the same period.

Mitt Romney had perhaps the best and fairest suggestion: Adopt an annual limit of $17,000 a taxpayer, and tax revenue would increase by some $1.7 trillion by 2022. That plan would make the country's tax structure more progressive and provide more revenue for the government. That's even after income tax rates were cut by 20 percent and the Alternative Minimum Tax eliminated. That tax has proven an increasing burden on the country's middle class as inflation eats away at the value of the dollar.

Please note that these revenue estimates come not from the Heritage Foundation or Cato Institute or some other center-right think tank, but the anything-but-conservative bean counters at the Tax Policy Center, a reliably left-of-center source of economic analysis. At last, something left and right, liberal and conservative could agree on.

Problem solved. Or would the politicians in Washington consider such a solution unspeakably sensible?

The biggest obstacle to such an approach may be the president's ideology. He seems fixated on raising tax rates for those Americans making more than $250,000 a year -- even if they wind up paying a bigger tax bill if their tax breaks were eliminated. The greatest obstacle keeping Congress and the White House from adopting such an approach appears to be the president's my-way-or-no-way pride. If he could lay it aside for a moment, Washington's wild Thelma-and-Louise drive over the Fiscal Cliff could come to a screeching halt just in time.

— Arkansas Democrat-Gazette

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conservative said...

Did you notice the absence of any words or terms relating to spending or spending less?

November 24, 2012 at 9:31 a.m.

Pretending that removing deductions isn't raising rates is just a way of trying to deceive yourself.

Why do you bother?

We had a revision of the tax code back in the sixties. Now we're back in the same place.

Yay for the treadmill.

November 24, 2012 at 10:10 a.m.

Pretending that removing deductions isn't raising rates is just a way of trying to deceive yourself.

Why do you bother?

We had a revision of the tax code back in the sixties. Now we're back in the same place. But we could at least be honest with ourselves about it.

November 24, 2012 at 10:11 a.m.
joneses said...

To avoid this lie again that the people making over $250,000.00 per year are the cause of all America's financial woes, I think obastard should just confiscate all the money anyone makes over $250,000.00 and put an end to this lie fabricated by obastard and the dishonest liberals.

November 25, 2012 at 8:40 a.m.

The Parable of Taxing Po Poor People And The Ignorant Who Are Rich (6 December 2012)

I wonder as logic passed my heart and mind that he who holds a truck or wagon load of greens would pass some around in Shanty Town. All members of the human family hunger.

The market only could consume or buy a portion of the turnips as the greens left would rot not before the trot of the horses to the dump. Much good food is thrown to an ill wind.

There was also a tax levied throughout the land. The Ghetto dwellers the shot-gun house people had very little but equity was left out of the tax scheme.

The plan was devised maintained and operated by the throw away greens and turnips man. This was before he gave anything to the poorest of the Po. Some humans did not matter but the cows did.

Sadly throughout this land that God created there was more bread for the rich and greedy and less or sometimes no meat for the needy. Could the needy be ever greedy?

The old and young cried out in hunger pains but they were many. But the few fish egg monsters drowned in cocaine, ecstasy as champagne and vintage cognac sent them a lusting after a bevy of loose femme fatale.

Meanwhile the pigs the swine groomed by the bourgeois barons went over a cliff consumed by filthy and wicked affluence measured in things rich. Over this cliff man or woman, swine or beast kept falling.

However, this cliff was physical and not fiscal. These are the times beloved whereby the greedy are never anxious but irritated as they fret not the needy who are not selfish, piggish or ravenous.

One wise man who was not a Socialist as he realized the essence of an economic analysis in race, ethnicity and all things related to money and natural or man made resources. There is for sure an economics of racism.

This man had some good sense to spread out the wealth. He was an affront to capitalist greed. All capitalist are not lusting for wealth as everyone did not have dreams of the reality of exploiting the poor.

Some would much rather eat corn bread and not cake. The turnip salad loomed large as at one time the same pig, hog or swine was not tainted. Meanwhile the greedy pleased no one not even self.

Peace and Golden Paradise, Brother Carl A. Patton writing for the FreedomJournal Press in the year of our Lord and Savior Christ Jesus 7 December 2012.

December 7, 2012 at 11:17 p.m.
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