Misunderstandings about Tax

by Linda Beale, A cross-post from ataxingmatter

Misunderstandings about Tax

Today I was skimming the Washington Post, a newspaper that I don’t read as regularly as the Wall Street Journal or the New York Times, but find especially useful in providing insight into both Beltway thinking and beyond-the-Beltway thinking. I read a random mix of politics, economics, and national news. Today, with Specter’s recent defection from the GOP fresh on my mind, I thought it would be interesting to read the Akers story , Smerconish, Nakedly Defending Specter, Wash. Post, Apr. 30, 2009, about the radio world’s response to Smerconish, a moderate Republican radio host who has defended Specter and criticized the radical right wing takeover of the GOP.

What I found of particular interest was a commenter, who proclaimed what he termed the key ideas of the Republican party (a litany of being in favor of life instead of death, strong defense, and the other slogans of the party that hide often contradictory leanings–after all, a key element of war and the death penalty, both of which have been “favored” in various ways by Republicans, is death). Included in his list was “fair taxation with representation.” After various responders pointed out a number of both internally contradictory statements in the list and inconsistencies between this list and the actual policies pursued by Republicans in high office from Reagan to Bush II, the commenter (calling himself “No-bama”) explained further. It’s the explanation that is most worrisome, for two reasons: because the tone is one of (usually belligerent) assertion of opinion as fact, as in “faith-based initiatives are proven to reduce government”; and because it demonstrates the way that misleading or false statements, repeated over and over, come to be considered factual, as in “cutting taxes has ALWAYS INCREASED tax revenues – look it up.”

I’m not sure how one would reach a definitive determination of the role of faith-based initiatives in expanding or decreasing the size of government. However, I do know that the concept required creation of a bureaucratic infrastructure, including a director of the Office of Faith-Based Initiatives and funding to support that office. The duties of the Office are to make it more likely that religious groups will get government funding for their projects. All of that facially suggests an expansion of government, not a diminution, as government’s scope broadens to include encouraging religious organization’s projects and their involvement in government grantgetting. The assertion, stated as a clear fact, appears likely to be clearly wrong. Needless to say, the same goes for the statement, asserted by the commenter this time in bold caps to show just how obviously true the commenter considers the statement, that cutting taxes increases revenues.

Until we stop just repeating what we hear as though it were factual, we can’t expect to hunker down and do the tough work of figuring out how to create a better health care system, make fundamental changes in the way that financial institutions work, so that they quit draining the economy into their own pockets, or revamp the tax laws so that they incorporate progressive principles that impose appropriate burdens on those who have the greatest incomes because of the enormous benefits of the system operating on their behalf. Congress, in spite of permitting trillions of dollars to go to the aid of Big Banks and their shareholders and creditors (often other big banks, as in the case of AIG’s credit default swaps), still hasn’t found it possible to pass a simple law to permit ordinary Americans to have their mortgage loans modified in bankrutpcy or to prevent the Big Credit Card Banks from continuing to charge usurious rates for credit to the least able borrowers, along with exorbitant fees for effortless services and changing rates on amounts already borrowed. A large portion of the stimulus bill was wasted in useless tax cuts, including the AMT patch for upper middle class America and more business breaks for favored industries. This has to change. How to accomplish it, however, is not easy to surmise, when people still think that Arthur Laffer’s napkin diagram is an established theory of tax law.
by Linda Beale