Happy Tax Day (Plus One) to all my fellow debt slaves. For those of you who have made a reasonable attempt to chip away at your household’s (now $130k) pro rata share of the federal debt, I both congratulate and commiserate with you.
Of course, since roughly half of your fellow taxpayers are doing nothing (or much, much less) to help bear that load, your “share” of the debt is correspondingly much larger, isn’t it? Alas, there’s nothing quite as discouraging as the wheels falling off the wagon you’re pulling as more and more climb into the bed. Today I feel your pain. Perhaps death isn’t such a bad thing.
Also in the news today it may be noted that the Senate has defeated (for the moment) the latest – dare I say it? – progressive hope to further divide the nation on the basis of envy, oops, surely I meant to say “fairness”. As some suggest, this latest attempt to close the barn doors after the horses have fled, merely adds further complication and, in all likelihood, even more unfairness to an already impossibly complex tax code. (Note: Those of you filling out your 1040EZ “claim check” probably don’t know what I’m talking about.)
As I’ve noted in the past, the best (though not sole) reason to have a flat tax is also the most practical, in oh so many ways. For one, the surest guarantee of future deficit spending (and the eventual – or imminent – implosion of our economy) is the pandering (aka “vote-buying”) that is inevitably produced by any progressive taxation scheme.
For a political process that might hope to “preserve the union” or, at least, find some manner of acceptable compromise, it seems that some factions expend an awful lot of effort trying to develop a powerful enough base to pick clean the bones of a weakened minority – one on whom we all depend. How might we expect that to turn out?
Hey, sorry, but that’s just the way it is. Fostering an entitlement culture is a form of social suicide, pure and simple. Beyond such practical considerations, I fail to understand what form of delusion might justify the forcible redistribution of wealth under the guise of “fairness”. Hey, now, that’s not very neighborly.
(We might hope this prompts our Mr. White to offer up an anarcho-capitalist prescription for an a la carte government?)
Alas, these particular horses – in my opinion at least – have already left the barn. As any reasonable person would know, the attraction of risk capital (and, thus, economic growth) is largely a function of reasonable taxation, reasonable regulation, all commensurate with the usual risk/reward considerations that any investor undertakes. Increasing risk while decreasing reward does have it’s consequences.
If it is our collective hope to foster investment and natural, organic, endogenous growth in our economy – rather than merely continuing to bleed our capitalistic benefactors into the grave – we’d better start thinking out end-game consequences, and right quick. The rate and extent to which we’re imposing higher risks and costs on an already “over-taxed” engine could serve as a model for unsustainability. There is such a thing as a point of no return, one which we might already have passed.
So, it may well be a matter of simple math from here on out. But, if only in the interest of theoretical discussion, I’ll submit this contribution from our dear (and occasionally caustic) friend Mysterious X, who believes he’s got the political solution to our “collective debt” problem. Feedback is encouraged. – HT
The “X Plan”
Everyone who has ever been on the economic edge knows that the first thing you do is cut spending. You might eliminate the premium channels on your cable TV. You might cut out cable TV completely. You skip some entertainment (skiing, a trip, the movies, whatever). Every financial piece of advice I’ve read says stop eating out to immediately cut costs. If things get tighter, you cut even more (generic brands, no treats, less smoking, less drinking).
Everyone who has been to the edge knows that if it goes on long enough, you have to bring in more money. You work some overtime. You take some extra shifts. Maybe you do some work on the side (and often under the table!). You might even take on a second (or third) job. Sometimes things are dark enough (no extra hours, no additional jobs) that you sell some assets (with no cable you don’t really need a TV).
So, and I know that this might enrage my conservative compatriots, here is how I think any sane Representative or Senator (and at this point I don’t care which party takes the lead) can take control of the situation and get this done:
Each $3 of spending cuts (to be completed first) will be followed by $1 of tax increase.
Here’s how I’d work it to try to prevent any shenanigans:
1. NO tax increases can be consider until the spending cuts have passed the House and Senate and accepted by the President
2. Once the spending cuts are enacted tax increases (at a 1:3 ratio) can be worked out. Personally, I’d try to force the debate to cutting subsidies (which count as a tax increase and not a spending cut…it’s my plan and my definition.
a. Cut Subsidies (pick your least favorite: ethanol, sugar cane, green energy, etc)
b. Close Tax Law “Loop Holes”
c. Maybe a one time repatriation of overseas profits?
d. Finally, and only if there was no where else to turn, would I consider a tax increase on any American (from the top 1% to the bottom 1%). I’d drag my feet before doing a straight rate tax increase (because hey, I’ve already got me spending cuts done!).
I say we start with $ 3 trillion in spending cuts. This plan can be easily pitched to the American people, “In hard times, you tighten your belt first”. See the first paragraph for some ideas. You can lambaste any naysayer in Government as a privileged leach who is too stupid to get it. Here’s a great commercial…a teenager telling Dad and Mom that they both have to get second jobs because he/she isn’t doing without: cable TV, a cell phone, a car (new, not used), unlimited money for restaurants, movies…cut to a picture of the capital with a voice-over: Tell your “teenage” representative that America isn’t getting a second job until they cut spending.
Of course, there might be a reason I don’t write commercials or create national policy.
– Mysterious X