Jay Reding.com

Shrinkage Of A Different Sort

U.S. News‘ Capital Commerce blog notes the Democrats’ radical plan to skyrocket American tax rates. The Rangel plan would not only repeal the Bush tax cuts, but would create the largest tax hike in history, adding increased transaction costs to nearly every activity. The effect of such a reckless plan would be disastrous for the American economy. As economist and former White House advisor Lawrence Lindsey notes:

What’s more, if you eliminate the income cap on Social Security taxes—as some Democrats have proposed—Lindsey explains that “then we’re 60 percent.” The top tax bracket when Ronald Reagan took office in 1981 was 70 percent. Reagan then cut it down to 50 percent with the 1981 tax cuts and then to 28 percent with the 1986 tax reform package. “And remember,” Lindsey continued, “$200,000 was the cutoff for the 70 percent bracket back then, which would be like $400,000 today. And they would be taking the 60 percent bracket to income levels well under half that number.” Lindsey, who once wrote a fascinating book while at Harvard University about the Reagan tax cuts called The Growth Experiment, went on to joke that Dems were planning to run the “Shrinkage Experiment.”

The Rangel tax plan demonstrates the Democrats’ pathological love for raising taxes. It returns the death tax, it removes capital gains tax cuts, it raised taxes from the cradle to the grave. If it moves, the plan adds more taxes on it. (If it does nothing, there’s probably a subsidy involved somewhere.) It repeals over a quarter-century of growth-sustaining economic progress to return the country back to the days of stagflation and moribund economic growth.

Cutting the Alternative Minimum Tax (AMT) is not in itself a bad idea. Replacing it with equally misguided alternatives isn’t any better. The AMT phase-out can easily be offset by reductions in spending, corporate welfare, and subsidies. Unfortunately, Congress runs on spending, corporate welfare handouts, and wasteful subsidies.

America does not need higher taxes, it needs government that stops consuming all it sees. It needs less bureaucracy and more innovation. It needs an education system that actually works. It needs fewer roadblocks to saving and investment. Raising taxes not only doesn’t provide for those needs, it actually contradicts them. We don’t need more government spending, we need fiscal discipline in Washington. Giving Congress more money to play with is about as responsible as having Mark Foley lead a Boy Scout troop.

The Democrats keep proving that they’re one-trick ponies. The Rangel tax plan has been described as a wonderful gift for the GOP, which it would be if the GOP were smart enough to capitalize on it by tying the abolition of the AMT to reductions in wasteful spending and entitlement reform. However, that would take a measure of political courage, and no one in Congress seems to have that anymore.

We need a saner tax system in this country, one that does not punish productive economic activity. Saner does not equate to “more,” no matter what Rep. Rangel would think. The Democrats are once again showing their cards, and this is a warning sign to the country of what we could expect if the Democrats dominate in the 2008 election. The GOP needs to get a plan out there, push it hard, and set the tone for a more responsible fiscal agenda. Not only would that be good politics, but good policy as well.

18 responses to “Shrinkage Of A Different Sort”

  1. Mark says:

    I seem to remember how Charlie Rangel was supposed to be the guy who kept Congress in GOP hands last year at this time. Now you guys would have us believe that Charlie Rangel’s October 2007 tax plan ensures that whatever theocratic buffoon the Republicans nominate will be elected President. I will say this…..running against Charlie Rangel may prove at least nominally more successful than running against Markos Moulitsas, the other guy you insisted would help the Democrats snatch defeat from the jaws of victory last fall.

    The Rangel tax plan undoubtedly has pitfalls that would need to be ironed out before taken seriously and enacted as law, but it’s only a sneak preview of the kind of tax increases this country will be looking at when the bill collector comes knocking on the door to pay back the massive debt incurred under the artificially low tax rates we’re currently fooling ourselves with.

    And I’d love to hear you explain why there should be a ceiling on the income eligibility for payroll taxes. What possible defense can you invent for that?

  2. Aaron says:

    We dotn need new taxes…what we need it fiscal responsibility by our elected officials….billions on pork projects…billiosn on pure waste, billiosn spend fraududently…..the Government has more than enough money….the problem isnt revenue…its waste.

  3. Eracus says:

    I always admire the genius of financial analysis by those who have no idea how our financial system actually works, let alone our tax code, but here that’s really beside the point. I think you guys just can’t see the forest for the trees.

    Charlie Rangel’s “tax plan” is just another simple fabrication. It is no different from the Charlie Rangel “bring back the military draft plan.” It’s all a charade. In good time, Mrs. Clinton will bravely disavow and vanquish this evil menace to Americans’ pocketbooks so as to appear more conservative, more “centrist” to that soft, mushy middle of an ignorant, gullible electorate.

    The entire Democrat campaign is an orchestration. The Wellesley radical and Black Panther step-n-fetchit girl will soon ask us to believe that she’s seen the light, that she’s really a fiscal conservative now, and that she’s willing to fight her own party. See how brave and strong she is?? And she’s against raising taxes!!

    At least until after the election.

  4. Aaron says:

    Yes, but democratic voters are buying her charade. I just dont understand how these people dont see her for the fraud she is? What the hell is the matter with these same democrats who are demanding change? As for the GOP….I stand by what I said…I see alot of same old, same old….its not the party I bought into 23 years ago…

  5. Jay Reding says:

    Yes, but democratic voters are buying her charade. I just dont understand how these people dont see her for the fraud she is? What the hell is the matter with these same democrats who are demanding change?

    I have a feeling that they realize just how bad Hillary is, but they want to win first and foremost. Hillary, for all her faults, is a political Terminator, and even though half of the country hates her, she just needs 50.1% to win.

  6. Aaron says:

    Hell as we already know ya dont need the popular vote……I agree they just want to win at all costs…….its like signing ARod for $30 million….your selling your soul….

  7. Mark says:

    The Democratic Party and its voters continue to cluelessly take their marching orders from Republican demagogues. For nearly three years now, Jay Reding was one voice among a chorus of partisan Republicans expressing their fear of facing Hillary as a nominee in 2008, winkingly biting their fingernails over contending with Hillary’s unparalleled political acumen…..and Democratic voters are buying the hype, preparing to nominate one of the few Democrats in all of Congress who could lose to the stooges on the GOP side. If it wasn’t for the clever reverse psychology that Republicans have employed to talk Democrats into Hillary, she wouldn’t be having nearly the success she is now among clueless Democrats. Regrettably, it’s what we can expect from the party of incompetents like Harry Reid and Nancy Pelosi. I had hoped that a taste of power would improve their gamesmanship, but they’re getting rolled by political opponents with 25% approval ratings just like they did when they were in the minority.

  8. Eracus says:

    “The Democratic Party and its voters continue to cluelessly take their marching orders from Republican demagogues.”

    Egad!! Who knew?? Mark, you’re such a pip!!

    Hillary Clinton is the Democrat nominee, of course, nowadays just going through the motions of a Hollywood-managed, mainstream media campaign. Her candidacy, as the American image of the international communist movement, will not withstand the scrutiny of even the least curious public. She will have to explain why the Communist Chinese are so interested in her campaign, as they were her husband’s. And we all know how that turned out Hillary is no Hsu-in, that’s for sure.

    America is not ready for a woman president anyway. MAYBE if it were a woman like Jeanne Kirkpatrick (may she rest in peace) or someone like Great Britain’s Margaret Thatcher, but certainly not some radical leftover hippie two-bit Ivy League lawyer who has never tried a case or acquired anything in her life that somebody else didn’t provide. The True Believers might vote for her, but the nice ladies down at the beauty shop will never vote for a woman with so many different hair-dos, trust me. And if you let your own man treat you like a dog all your life, well………

    Harry Reid, Nancy Pelosi, and Hillary Clinton are all three peas in a pod. Not a one of them has ever done anything that did not ultimately redound to their own benefit. Hillary is not electable. On the other hand, no one ever went broke over-estimating the stupidity of the American people…

  9. Seth says:

    it raised taxes from the cradle to the grave.

    Except that it cuts corporate taxes from 35% to 30%, for starters.

    Look, it’s simply irresponsible to call this a tax increase across the board. There are some places where there are increases, and some places where there are decreases.

    The Bush tax cuts were simply irresponsible. No nation in the history of the world has ever cut taxes in a time of war, and George Bush has done it twice. Shouldn’t a true conservative learn from the past?

  10. Jay Reding says:

    Except that it cuts corporate taxes from 35% to 30%, for starters.

    Which, even though it’s smart policy, is hardly good politics. Especially when it raises taxes elsewhere.

    Look, it’s simply irresponsible to call this a tax increase across the board. There are some places where there are increases, and some places where there are decreases.

    It cuts the corporate income tax rate and gets rid of the AMT. It raises taxes everywhere else. It’s still not a good plan.

    Cut the corporate rate? Fine. Ditch the AMT? Even better, Raise taxes elsewhere? No. If the plan was to make both those cuts and finance them through earmark reform and a reduction in wasteful corporate subsidies, I’d be all for it. However, the biggest problem we have now is not as much tax rates as it is wasteful spending, and we need to cut spending as a critical priority.

    The Bush tax cuts were simply irresponsible. No nation in the history of the world has ever cut taxes in a time of war, and George Bush has done it twice. Shouldn’t a true conservative learn from the past?

    President Kennedy slashed tax rates in the 1960s during the height of the Cold War. So did Reagan in 1983. We don’t need to raise taxes to pay for this war we need to get our spending priorities straight.

    It would be irresponsible if government had been cut to the bone and couldn’t fight without raising taxes. However, we’re nowhere near even close to that.

    I’ll buy the argument that we need more taxes when every member of Congress wouldn’t even consider adding another couple million in pork to their district. When Congress is fiscally responsible, then they can ask for more money, but right now giving them more money is like giving Ted Kennedy whiskey and car keys or giving Larry Craig an Abercrombie and Fitch catalog — it’s only going to make the problem worse…

  11. Eracus says:

    The reason Congressional spending is out of control is because tax revenues have never been higher. War or no war, if government allows the consumer to keep more of his earnings, he distributes the extra money a thousand times more efficiently than government ever could.

  12. Seth says:

    It cuts the corporate income tax rate and gets rid of the AMT. It raises taxes everywhere else.

    Which still isn’t true. It would actually cut taxes for most people earning under $200,000. It expands tax breaks for low- and middle-income people. It widens the EITC, which you’re a big fan of.

    You and your Republican shills are not even being truthful about the plan. You can’t have an honest debate when all you want to do is lie.

    President Kennedy slashed tax rates in the 1960s during the height of the Cold War. So did Reagan in 1983.

    Except I’m talking about a real war with actual casualties that requires actual supplemental expenditures and one that features actual bullets and bombs being shot.

    The bottom line is that we’ve got a plan. A real plan, that involves something other than “cut taxes all the time every time no matter what we’re spending.” When the Republicans come up with a real plan, we can talk about how bad this one is. Until then, quit crying, or at least quit lying.

  13. Eracus says:

    “Except I’m talking about a real war with actual casualties that requires actual supplemental expenditures and one that features actual bullets and bombs being shot.”

    It’s a certainty the 58,000 Americans whose names are inscribed on the Vietnam Memorial would dispute your infantile, ignorant characterization of what a real war is, Seth.

    JFK sent the Green Berets in 1961, he cut taxes in 1963.

  14. Seth says:

    It’s a certainty the 58,000 Americans whose names are inscribed on the Vietnam Memorial would dispute your infantile, ignorant characterization of what a real war is, Seth.

    What is it about Republicans that says they need to be ridiculous when an argument is right in front of their faces? To be clear about Vietnam, there were about 16,000 military advisors in Vietnam when Kennedy was killed. The Gulf of Tonkin incident, which Johnson used to gain the authority to begin conducting military operations, happened in August of 1964. Operation Rolling Thunder didn’t start until 1965.

    But let me spell it out for you:
    1.) Jay Reding and his Republican quacks are outright lying about this tax bill.
    2.) Jay Reding and his Republican quacks have no tax bill of their own.
    3.) Jay Reding and his Republican quacks have no new ideas about tax structures and they only care about whining about Democrats.
    4.) It is absolutely insane to go to war (which costs a lot of money)and cut your revenue (which leaves you with less money).
    5.) It is so insane that no society in the history of the world has actually been in a war while cutting taxes. Except for ours, and we’ve done it twice in the last 6 years. And hot damn, look at what great shape our budget is in!

    I’m getting dumber just thinking about what you will say in response to this.

  15. Jay Reding says:

    1.) Jay Reding and his Republican quacks are outright lying about this tax bill.

    And Seth and his Democratic hacks have to resort to the same old strategy of juvenile name-calling because they can’t make a legitimate argument.

    If you can’t stop the personal attacks, I will. And that goes for everyone.

  16. Seth says:

    And Seth and his Democratic hacks have to resort to the same old strategy of juvenile name-calling because they can’t make a legitimate argument.

    I apologize. Jay Reding and the rest of the right wing are outright lying about this bill.

    How’s this for a legitimate argument:
    Jay Reding said:

    it raised taxes from the cradle to the grave.

    And that was a lie.

    Then Jay Reding said:

    It cuts the corporate income tax rate and gets rid of the AMT. It raises taxes everywhere else.

    And that was a lie.

    Given that the Republicans just had six years of complete power and didn’t do anything but run us into a debt, it seems as though Jay and the Republicans would rather hide behind some smoke and mirrors, get in the way of any progress for political purposes, and go back to some familiar talking points (that recent polling shows doesn’t really resonate any more) because the right is bankrupt of ideas when it comes to meaningful tax reform.

  17. Jay Reding says:

    Seth:

    And that was a lie.

    The Rangel tax plan would raise taxes on married couples, raise taxes on small businesses, and bring back the death tax. Calling that statement “a lie” is the sort of fourth-grade tactics that we’ve come to expect from you. When you make a categorical argument like that you’d damn well have incontrovertible proof that there’s not even a reasonable basis for belief in that statement. And guess what, once again your own inability to do any research on the facts shows why you can’t make a real argument.

    It raises taxes from the cradle — by reducing the earnings threshhold of the Refundable Child Tax Credit from $12,500 to $8,500 and reducing the amount of the credit which is refundable.

    It raises taxes from the grave by returning the death tax to its pre-reform status rather than phasing it out as under current law.

    Given that the Republicans just had six years of complete power and didn’t do anything but run us into a debt, it seems as though Jay and the Republicans would rather hide behind some smoke and mirrors, get in the way of any progress for political purposes, and go back to some familiar talking points (that recent polling shows doesn’t really resonate any more) because the right is bankrupt of ideas when it comes to meaningful tax reform.

    More silly partisan talking points.

    In the last six years this economy has added millions of new jobs. It’s produced 24 straight months of economic growth. Unemployment is at historically low levels. The only way that the Democrats get any traction on economic issues is by frantically trying to scare the hell out of the American electorate. The party that once said that “we have nothing to fear by fear itself” is now the party of fear itself.

    Meanwhile, Rep. Paul Ryan (R-WI) has a plan which would eliminate the AMT, radically simplify the tax code, and provide greater benefits for average Americans. But it won’t go anywhere because Nancy Pelosi is in the pockets of special interests who see every loophole in the tax code as money in the bank. Rep. Ryan’s Taxpayer Choice Act is about simplifying the tax code, Rep. Rangel’s plan is about adding further complications and keeping the same unworkable mess in place.

    You can shill all you want, but it’s just more empty bluster. You don’t have the facts, you can’t back up your own arguments, and all you’re doing is looking like yet another mindless partisan.

    When you’re in a hole, it’s a good idea to quit digging.

  18. Seth says:

    You’re still lying.

    The bill would cut taxes for most people earning under $200,000.

    It would lower taxes for many people earning as high as $500,000 a year.

    There are tax breaks for low- and middle-income people.

    It expands the EITC.

    Those, unfortunately for you, are all facts. Each and every one.

    Therefore, to say: “It cuts the corporate income tax rate and gets rid of the AMT. It raises taxes everywhere else” is not even close to truthful. As I put it, a lie.

    As to your friend from Wisconsin who suddenly wants to reform the tax structure, where was he when the Republicans were in power? Or maybe it’s just a political game.

    Side note: It gets really funny to hear you whining about people using personal attacks and then put up a post full of them. Either put the skirt back in the closet and quit whining or practice what you preach.