It is the start of a new week in Washington. Thank goodness. The prior “lost week” is now over. Lost because of the infernoesque heat, power outages, store closings, a metro derailment, an airplane getting stuck in heat-induced soft asphalt tarmac, traffic signals out- just a few of the circumstances facing local residents in the past week or so. Glad it is over
Oh, there was a dismal jobs report last week also. It reflected for the third month in a row the anemic job growth in the national economy. The 80,000 new jobs added only accounts for population growth, thus the millions of unemployed are still frustrated, out of work.
To illustrate how things are back to normal this week is the fact President Obama-off his last Romney bashing trip to multiple locations- wants to change to subject. He wants to skip the economy and go back to the old tried and true, taxes. A subject he loves to raise. (Pun intended)
Mr. Obama is promoting again an extension of the Bush-era tax cuts for another year for those making under $200,000 annually. The other way to look at it, he wants to raise taxes from current law on everyone above that group.
In an elaborate staged appearance around noontime today complete with human props in the White House, the President gritted his teeth, snarled and screeched about “tax fairness”. I am not sure even after all the years of being involved in tax policy even how to define fairness. Is it fair almost half of people who earn income do not even pay income taxes? Is it fair that even people who do not pay taxes get money back from the government in the form of all types of refundable credits and gimmicks that do not belong in the tax system and are based on what they earn but do not pay?
On the other hand, what is the rate upper income taxpayers should pay? Under the rates suggested by Mr. Obama, and including the “investment surcharge” imposed by the Affordable Health Car Act”, is it fair to tax dividends received at a 44 percent rate after the income has already been taxed at the corporate level? Should someone making $20 million year-like professional athletes, film stars, investment bankers, and high tech gurus pay the same rate as someone making $200,000 a year?
In any event, none of this is about the substance. It is all about politics. If the Administration and the Congress were really interested in addressing any of these issues, then they would have done so. Merely debating the tax rates for political purposes without making fundamental changes in the tax system to make it fairer for everyone, simpler for everyone, eliminating ill-advise subsidies withhout having a system that collects adequate revenue without penalizing and distorting the economy is a waste of time. The problems are much greater than the simple solutions of the misguded notion of tax fairness, which will not create one additional job.
Mr. Obama's push will pit him against Republicans, including Mitt Romney, who wants to extend all the Bush tax cuts for another year.
I may have missed it but I did not catch anything about the payroll tax two percent reduction set to expire at the end of the year. For those who do not pay income tax but do have to fork over Social Security taxes, this is a bigger deal. It is a big deal anyway, about $120 billion in increaed taxes next year if left to expire.
I also missed the best parts about the deficit in the Obama dialogue, running at about $4 billion dollars a day. How will that ever get under control? One thing is for certain; it will never, ever be addressed by current Administration. I doubt it will be addressed by the Republicans who talk a good game but when it comes to making real progress (like the sequester) seem to lose their convictions.
The pundits love the politics of all of this but I would welcome some progress. The election may help decide the fate of the furture of the tax system but Mr. Obama in no longer the hope and change artist, wanting to bring all sides together for the good of the country. He is just another politician who cannot transcend a difference of opinion, and has decided, it is his way or no way. Given his track record; I can understand the desire to change the subject.