Congressional End of Year Ahead: Taxman at the Door

The tax man’s taken all my dough,

And left me in my stately home,

Lazing on a sunny afternoon.

And I can’t sail my yacht,

He’s taken everything I’ve got,

All I’ve got’s this sunny afternoon

Sunny Afternoon by the Kinks

Tomorrow is December 1 and all is not well, or, at least, not finished on Capitol Hill. Congress in the mess left after the failure of the supercommitee to make even a cent of deficit recommendation has a considerable amount of unfinished business before the end of the year.

It is not worth the effort to list of the pending items such as continuing to fund the government due to the failures to pass appropriations bills. It is never pretty to witness these mad dashes to the legislative finish and the laws passed in the waning days of a session are usually what you would expect—rushed, ill-conceived, secret and ugly.

This Congress is all about politics, visual, nasty politics. All year the two political parties have bumped heads, bickered and muddled through. The results show, particulary in the disfunctional Senate. Of course, this process is not new and not always unwelcome. However, it is getting tedious, counter productive, and tiresome. The fact the elected head of the country has given up and only thinks and acts with his re-election in mind is not, as I like to say, helpful.

As the year draws to the end, it is now, as Ray Davies’ song says, all about the taxman who has taken all my dough. Or what dough we have or may have left.

Democrats and the Administration (if they are relevant any more) have made a crusade out of raising taxes, particularly on higher income taxpayers. I do not know if the quest for more revenue is a recognition of the unbelievable level of federal debt that exists, the desire to shift further up the scale the tax burden of the 50 percent of taxpayers who do not pay income taxes, a method to continue to fund a bloated government or some other political reason.

Wait, you say, aren’t the Democrats proposing an extension of the reduction of employment taxes enacted last year? Isn’t that a tax cut? Indeed they are. The Senate is scheduled to take up a bill to not only extend the payroll tax cuts from last year but to expand them by reducing the payroll tax paid by employees and the self-employed by half, to 3.1 percent of wages from 6.2 percent. Employee payroll taxes were reduced by 2 percent to 4.2 percent of wages this year under a law set to expire. There is more—employers would also be a reduction on payroll taxes paid. Wow, if it were that easy.

The problem is all of this would increase the Federal deficit by about $265 billion. Of course that is child’s play for the "ignoring the deficit" Democrats but in this case they propose to “pay for” the reduction by imposing a new tax on incomes over $1 million. A concept tried and previously rejected by their brethren.

The scheme is typical of most tax policies, as well as other policies, designed by Democrats. It is based on wealth transfer. One group pays for the other group.

I think the employee payroll tax cuts enacted last year should be extended as is and have advocated the notion since last spring. The extension is not particularly good tax or economic policy and I thought at the time it was enacted that concept was flawed and ill advised. However, at this point and with the genie out of the bottle, it is prudent to give it another year. This scheme cannot go on forever but another year is acceptable until tax code and fiscal restraints are in place.

Republicans should support the extension but are right to question the cost, its effectiveness and how it can be accommodated considering the federal deficit. The Democrats insistence on the millionaires tax is silly, a waste of time, political and just another example of Majority Leader Harry Reid’s (D-NV) inability to do anything constructive. There should be other ways to offset the cost and he knows that but then again, this is all political. I am not so sure, Senator Reid is even interested in realistic solutions.

In spite of all the rhetoric, both sides know failure to extend the cuts will be bad for the economy and Senator Reid and the Democrats understand blowing this up to score some cheap political sound bites will not be good for them or the economy. The President knows it also as his re-election is tied to the economy and further deterioration will be be blamed on him, no matter how many fingers he points or how many times he blames the evil Republicans for absolutely everything.

At the end of the day, hopefully, the sides will come up with something more palatable but it will not be pretty to watch or listen to.

Beside this drama, the real work of coming up with a fair, less burdensome tax system remains to be done. Not this year, probably not next year but essential to accomplish.

Comments

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Je ressens le besoin de se rappeler les détails de votre localité. Envoyez-vous la question peut faire plus de données et d'améliorer sur ce moi? J'ai franchement, quelle valeur je pouvais donner. Très apprécié!

Posted by: casino | 12/06/2011 at 07:56 AM