Human Events Blog

High taxes are never simple

Everyone’s gushing with debate advice for Mitt Romney tonight.  The Wall Street Journal offers some exceptionally good suggestions for Romney to recapture the tax policy debate, advising him to invest debate time in shredding the laughably false Obama claim that Romney’s proposals would raise taxes on the middle class.

This phony Obama talking point is based on a thoroughly discredited study from the left-wing Tax Policy Center, which has even backed away from its own conclusions – but the Obama campaign continues to cite it as gospel, and the media raises not a peep of protest.  The Tax Policy Center simply concluded that Romney’s stated goals are impossible, using a flawed model that better economists tore to pieces… and then conjured a fantasy of what they imagine he will actually do.  Romney calls for a 20 percent across-the-board tax cut, combined with fewer deductions in a simplified tax code.  In the Tax Policy Center’s dreamscape, he’ll actually raise taxes on the lower brackets by $86 billion.

“In a recent paper,” the Journal editors note, “Alex Brill of the American Enterprise Institute pointed out errors that – by the Tax Policy Center’s own reasoning – would take that figure down to $41 billion, then to $12 billion, then to a net tax cut.  Numerous other critiques have forced the Tax Policy Center to walk back its assumptions or disavow them entirely or change the subject, even if the Obama campaign continues to quote them and the press corps plays dumb.”

The Wall Street Journal goes on to criticize Romney for allowing this scurrilous attack to roll across swing states unchallenged for far too long.  They advise Romney to clearly and aggressively sell the benefits of his proposal during the debate.  “According to the Census Bureau, U.S. median income has fallen by 4.1% since the recession ended three years ago,” the editorial points out.  “Simply increasing after-tax take-home pay would help, but so would improving the incentives to work, save, invest and create jobs.”

Romney should also warn America about the inexorable transformation of Obama’s towering debt from an embarrassing failure of presidential leadership, into an irresistible rationale for even larger middle-class tax hikes than Obama has already put on the table.  You know this is coming.  In the very near future, most likely during a prospective second Obama term, Americans will be told that the debt crisis has grown so profound that broad-based tax increases on everyone are “regrettably” necessary.  There’s no way to get the amount of money Obama-style spendaholics need by taxing the Evil Rich, not even if all of their income is confiscated.  Today the flabby bulk of the national debt is deposited as a barrier between America’s job creators and tax relief; tomorrow it will be dumped on the middle class, to pin them down while their pockets are picked.

The Journal concludes with a very intriguing point that Romney would be well-advised to make: “As for ‘fairness,’ Mr. Romney could point out that high tax rates inevitably lead Congress to pass loopholes that the wealthiest are best able to exploit.  Middle-class Americans can’t afford lobbyists on Capitol Hill, but Mr. Obama’s rich friends at Solyndra and Goldman Sachs can.  Tax reform will improve growth and fairness, which is what happened after Ronald Reagan and Democrats in Congress united to pass reform in 1986.”

High tax rates and tax complexity go hand-in-hand.  Just as there are no honest, transparent Big Governments, there are no simple, transparent high-tax regimes.  Special exemptions are always introduced to cushion the blow of high nominal tax rates, at the behest of politically-connected special interests.  Also, the political class sees the prospect of offering targeted relief from high rates as an irresistible source of power for social engineering and vote-buying.  And by keeping tax rates high, politicians like Obama get to have it both ways: they can boast about their determination to soak the rich, while raising big bucks from their friends by selling them special deductions.

Do you seriously want to reduce the power of special interest lobbies in Washington?  Do you really think there’s “too much money in politics?”  Are you weary of watching your future get traded away behind closed doors in Washington?  Have you had enough of the economic stagnation brought on by central planning?  Then you want to move in the direction Mitt Romney has outlined, toward a regime of lower rates, and a simpler tax code which exerts less control over American citizens.  There is no other solution.  The tax code is supposed to efficiently fund the minimal duties of government – not serve a weapon against the political enemies of the ruling regime, an instrument for controlling the populace, or a social welfare program.

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