By Other Words
By Donald Kaul
Call me a cynic, but it’s been my experience that when politicians say they’re going to lower your taxes, it’s not your taxes they’re talking about.
Take, for example, House Budget Committee Chairman Paul Ryan’s new (actually recycled) tax plan. The Wisconsin Republican proposes cutting federal income taxes, bringing down top rates from their current 35 percent to 25 percent. The lowest brackets would drop to 10 percent from 15.
He’s also suggesting lowering corporate taxes in various ways and has rejected raising the paltry capital gains tax. He’s not just for cutting, of course. He also wants to boost military spending.
When asked how he’s going to make up for the hole in the budget his plan would open, he becomes vague.
“You can’t go out there with a detailed formula until there’s a consensus that we need to broaden the base and reduce rates,” he told The New York Times. “We need hearings in the light of day, with no back-room dealings. If we can’t afford to retain certain tax breaks, then let’s have a debate about it.”
Right. A consensus in Congress. That shouldn’t be too hard to get.
He would make up for the trillions in lost revenue by trimming some frivolous government programs, like Medicare and education for example, and get the rest by closing “loopholes.”
Who is this guy, Candide?
It’s hard to take Ryan’s proposal seriously. In the first place, virtually the entire Republican membership of the House has taken a blood oath never to raise taxes. They’ve actually signed a document promising not to. And you can’t close loopholes without, by definition, raising taxes.
In the second place, Washington is home to a huge, well-paid army of lobbyists whose job it is to get subsidies, favorable regulations, and tax breaks for their clients. They’re good at their job.
Whenever their clients’ interests are in danger, they swarm to the Capitol armed with arguments, valid and specious, and ready cash. They don’t always get their way, but they’ve got a terrific batting average.
In the third place, Congress is always going to have trouble creating a fair tax structure, partly because lawmakers can’t agree on what “fair” is.
Is it a progressive system in which the well-off pay more than the not-so-well-off because they’ve benefitted from the system more? You can make that case, as the Bible does in the Apocrypha: “If thou hast abundance, give alms according; if thou have but little, be not afraid to give according to that little.”
But you can also make a case, as flat-tax advocates do, that real fairness demands that everybody pays an equal share of his or her income to support society.
If the federal government tried to institute a true flat tax, however, it would have a revolution on its hands.
Such a tax would not merely require a uniform tax rate for rich and poor; it would eliminate all deductions and subsidies, without exception.
For example, consider what would happen if the government were to eliminate the deduction of home mortgage interest. Homeowners would be outraged and the entire real estate industry would be howling as home sales plummeted.
If deductions for business meals were no longer deductible — on the theory that if you want to do business you can use your office and eat on your own nickel — the National Restaurant Association’s lobbyists and leaders would surround the Capitol, armed with pitchforks.
And if lawmakers were to take away deductions for charitable contributions, the nation’s do-gooders would rise up as one to smite every member of Congress.
Local and state governments would be up in arms if Washington tried to take away the federal deduction for the taxes they levy.
And on and on and on.
It’s hard to tell whether Ryan is a dreamer or a con man at this point. If we wanted a dreamer, Ralph Nader would be president.
OtherWords columnist Donald Kaul lives in Ann Arbor, Michigan.