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From: Why are Democrats insisting on an increase in rates?


gpatt0n

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We all know that politics is more than theater ... it is often a magic show in the context of now you see it, now you don't.

 

The GOP position is that rates are fine where they are; we can deal with the loopholes and while we might claw back some from loopholes for this 'deal' we are experts in manufacturing loopholes ... some that can be very, very specific ... and these loopholes can be hidden as amendments in legislation of all kinds.

 

We all know that politics is not a game that is played fairly. With more than 40,000 lobbyists looking to gain advantage in the tax code for their special interest, playing the game on this plane is one that is has the added benefit of being so complex that it can be played openly in secret.

 

Now marginal tax rates are simple, easy for all to understand and apply to all 'players' regardless.

 

Tax rate changes, because of this simplicity, are easy to see and observe - actions involving them are by definition transparent.

 

It is this transparency and equality in taxes that is recognized by Norquist's pledge which has Republican lawmakers promise not to increase the marginal tax rate under any circumstances.

 

This document is the revolutionary document of the right which seeks to employ the starve the beast strategy to bankrupt the nation.

 

Think, for a moment, about the GOP option limiting deductions to $50,000 per person. How long do you think that will stand when you realize that this approach would primarily limit deductions for charitable giving by the wealthy. Who on either side of the aisle would stand against a charitable gift exemption when hundreds of charities go bankrupt because they no longer can get the support of big donors?

 

I should add that raising the tax rate would actually increase the incentive and encourage giving as the tax avoided by such gifts would increase from 35% of earned income to 39.5 percent.

 

And it is notable as well that the increased tax rate is only on taxes due for income OVER the $250,000 level ... i.e. the person earning $300,000 pays the same 'Bush' tax rates for net income under $250,000 as they do now and pay the higher rate only on that $50,000 above the rate break.

 

One of the options offered by the GOP would be to apply the top rate to all income meaning that the person earning under $50,000 would be penalized for earning $55,000 (and would actually take home less than the person making $49,999.) as this GOP inspired approach would 'penalize' all taxpayers for earning more.

 

This approach increases taxes on the middle class and does create a disincentive to earn more. Proposing it is an inside joke on the part of the Republicans because they would not only get their way on maintaining current marginal rates, but it also is inherently unfair because it, unlike the current stepped rates (Millionaires pay the same rate on the first $250,000 as the person making $250,000), it provides penalizes earning more. But its main purpose is it confuses the issue and keeps the tax discussion from focusing on the marginal tax rate as the way to adjust taxation.

 

It really is a matter of transparency in taxation vs. opaqueness in taxation and the latter approach benefits the current members of the Congress by giving them a way to sell 'special treatment' using the corruption of the congressional campaign finance system. And as we all know, that system overwhelmingly favors those in the professional political class for holding office for life.

 

pubby

 

Source: Why are Democrats insisting on an increase in rates?

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