Tax Day – A Look At Tea Party Tenets And Tax Realities

Posted in General by TBartine on April 15, 2010 No Comments yet

If you’ve been following the news at all, you know that today is “Tax Day,” the primary deadline for filing one’s taxes.  You have also heard that Tea Party groups have chosen this day to hold a number of rallies across the nation, including one in my city: Nashville, Tennessee.

So, as a service, I thought we’d take a moment to examine a couple of key elements of these protests…

With regard to Tea Party principles (as published by the group most closely associated with being the “central, organizing entity”), as well as what seem to be the group’s primary tax-related complaints, let’s focus first on those ideas that most of us can probably agree upon:

1- “Require each bill to identify the specific provision of the Constitution that gives Congress the power to do what the bill does.” This, in effect, states that each bill should state the clause of the Constitution that allows Congress the power to create the legislation in question.  The framers of the Constitution were in general agreement that Congress (and the Executive and Judicial Branches for that matter) have only the powers explicitly granted in the Constitution.  So it seems a good idea, and not at all unreasonable, that each law passed by Congress should be able to state which part of the Constitution grants.  I will note, however, that these powers are fairly BROAD…examine this study of Congressional powers, and you’ll see what I mean.

2- “Create a Blue Ribbon taskforce that engages in a complete audit of federal agencies and programs, assessing their Constitutionality, and identifying duplication, waste, ineffectiveness, and agencies and programs better left for the states or local authorities, or ripe for wholesale reform or elimination due to our efforts to restore limited government consistent with the US Constitution’s meaning.” Can we all agree that all of our government agencies should be operating within Constitutional parameters?  Sure.  Can we all agree that there is far too much waste when it comes to the way our government spends our tax dollars?  Certainly.  However…I will point out, that this kind of regulation, of auditing…costs lots of tax dollars.  That’s certainly not a reason we shouldn’t do it…it’s simply a fact I state because so many people overlook it.  I just fear sometimes that people don’t realize that it “costs money” to determine and implement measures to “save money.“  The payback is definitely long-term and “big picture“…but it can be a very good return on the investment.

3- “Place a moratorium on all earmarks until the budget is balanced, and then require a 2/3 majority to pass any earmark.” Are we all tired of seeing a good bill pass the vote…only to find out that a bunch of legislators managed to “sneak in” a few costly, unrelated projects in their home state?  Do we all cringe when we find out that those projects involve things like building a museum to honor the history of the peanut, or to study the effects of flashing lights on chicken libido?  Yeah…I think we all do.  Setting a “balanced budget” as the trigger to “re-enable earmarks” is perhaps the only flaw in this proposal…see item 2 below.

Ok…so there’s the short list:  we all want Congress to act within the confines of the Constitution, we want them to waste a lot less of our hard-earned dollars, and we’d like them to stop earmarking inane expenditures into our laws.  That being said, a number of other “Tea Party principles and complaints,” are at a minimum, debatable…or are at worst, reflect a distinct separation from real-world data:

1- “Stop costly new regulations that would increase unemployment, raise consumer prices, and weaken the nation’s global competitiveness with virtually no impact on global temperatures.” Wow.  So many assumptions in one sentence.  Assuming that taking steps to protect the planet from climate change would cause overall hikes in unemployment…seems to ignore the number of jobs created by green technologies and other, related new industries (such as those to create the equipment needed in the “green” factories of tomorrow).  Assuming that it would raise consumer prices seems to offer a similarly narrow and simplistic understanding of economics.  Assuming that it would weaken our “nation’s global competitiveness” ignores that we would not be the only country implementing such measures AND neglects to consider that, if we can develop these technologies/industries/services faster and better than other countries…we will capitalize heavily from the endeavor.  And the assumption that whatever measures will be taken will have “virtually no impact,” without even knowing what all of the measures will be, and with total disregard for the science or studies relating to currently proposed measures and measures yet to be proposed…well, that seems more than a little presumptuous.

2- “Begin the Constitutional amendment process to require a balanced budget with a two-thirds majority needed for any tax hike.” A “balanced budget” is a bit of a political “unicorn.”  You might as well ask for there to be “money trees” or “beer lakes.“  There has never been a balanced budget in your lifetime…nor will there be.  Simple fiscal fact: as long as there is a national debt…the budget CANNOT be balanced.  And if you arguing that there should never, EVER be a tax hike (which is the equivalent of this argument)…then you’re not making much sense.

3- “Adopt a simple and fair single-rate tax system by scrapping the internal revenue code and replacing it with one that is no longer than 4,543 words – the length of the original Constitution.” This is a cute suggestion, and it’s likely that we agree that the current tax code is excessively convoluted.  HOWEVER, so are today’s finances.  There are today, in existence, a multitude of businesses, investments, and assorted financial instruments that cannot be covered by some “simple” tax system.  It’s like saying, “we should get rid of our complicated system full of little loopholes…in favor of a simple system that only has a few gigantic loopholes.“  Additionally, the term “fair single-rate tax system” is an oxymoron.  Do you know why the wealthy favor such a tax?  It would slash their taxes by an estimated third, and remove taxes on savings, investments, inheritance, and capital gains…giving them an INCREDIBLE windfall.  Who would pick up the slack in this system?  Everybody ELSENote to working class: Stop letting the rich people tell you which tax system YOU should be in favor of…

4- “Impose a statutory cap limiting the annual growth in total federal spending to the sum of the inflation rate plus the percentage of population growth.” I don’t have a particular criticism of this point…nor does anyone else.  Why?  Because everyone knows it won’t happen…because we are unlikely to stop having wars, recessions, and natural disasters.  Seriously – it would be great if Congress could anticipate EXACTLY how much they need to spend each year, and then EXACTLY budget those amounts.  Unfortunately…just as they think they’ve done so, someone says, “let’s invade Iraq.

5- “Defund, repeal, and replace the recently passed government-run health care with a system that actually makes health care and insurance more affordable by enabling a competitive, open, and transparent free-market health care and health insurance system that isn’t restricted by state boundaries.” The “recently passed” system they refer to…is not “government-run,” and is every bit as “competitive” and “free-market” as the previous system…which is why it will still fail to make health care and health insurance “more affordable.“  All the new system does is give MORE customers to the existing PRIVATE companies through mandating coverage and subsidizing premiums for the poor.  If anyone thinks progressives are celebrating its passage while anticipating a new socialist era….then they haven’t read the bill.

6- “Authorize the exploration of proven energy reserves to reduce our dependence on foreign energy sources from unstable countries and reduce regulatory barriers to all other forms of energy creation, lowering prices and creation competition and jobs.” Ok…at the risk of over-simplification…here goes: those “proven energy reserves” are not that proven, will not provide enough energy for independence, and don’t constitute much of a reserve.  There is a FINITE amount of consumable energy sources in the planet, and only a small portion of what there is…is located in United States territory.  So stop arguing over patches of coal/oil/et cetera, that wouldn’t serve to support our energy needs for anything more than a very modest period.  Say it with me: “explore new, renewable energy technologies.“  That way lies freedom and independence from foreign energy…while simultaneously addressing environmental concerns.  We call it a “win-win.”

7- “Permanently repeal all tax hikes, including those to the income, capital gains, and death taxes, currently scheduled to being in 2011.” See item number 3 above…and how this serves the wealthiest Americans best.  Also consult the tax facts below…

Overall, what we see represented in the anti-tax passions of the Tea Parties seems to ignore the following data:

- Sarah Palin pointed out at a Boston Tea Party rally that Americans, on average, work 90 days out of every year “for the government,” that is to say, to cover their tax obligation.  This is down from when Bush was president – back then, the average American’s taxes equated to nearly 140 days of income.

- The top marginal tax rate on the wealthiest Americans stands at 35%.  From the Great Depression to the 60′s…it was 90%.  In the 60′s it was lowered to 70%.  In short:  the wealthiest Americans face A LOT less taxes on their “above and beyond” income.

- 40% of Americans…won’t be paying ANY income taxes this year.

- For middle-income Americans…Income taxes are at their lowest point in their lifetimes.  They are, in fact, the lowest they’ve been since 1955.

- The Stimulus Bill…lowered taxes for 98% of working Americans.

If we give the Tea Party the benefit of the doubt and assume that their membership is representative of the nation (an assumption that is dubious at best) then we have to assume that 40% of THEM will not be paying any federal income taxes this year, that 98% of them have seen a reduction in their taxes…despite the fact that polls show only 2% of them believe their taxes have gone down and a full 64% believe that Obama has raised taxes.  There are only two possible conclusions: either a disproportionate amount of the Tea Party protesters are wealthy…or many of the Tea Partiers are just, plain mistaken about THEIR OWN taxes.

So what could be sadder than people with lowered taxes complaining about how their taxes have “skyrocketed,” complaining about a socialist president who hasn’t managed to socialize anything, complaining about a “radically liberal” president whose positions on issues and proposed legislation consists nearly 50% of Republican ideas (from healthcare, to Wall Street reform, to energy, to wars abroad, to the economic stimulus…most of the contents were originally Republican ideas)?  What’s sadder?  That they are being used by the very people they think they are challenging

That’s right.

The “Tea Party Express?” It was created by a PAC to fund the campaigns of Republican candidates.  Donations made by well-meaning Tea Party supporters…donations that they think are going to support the “movement” and candidates who espouse their movement’s principles…are actually going to your garden-variety, tax-cutting, wild-spending, deficit-ballooning Republicans.  You can read the PAC’s proposal here.  It outlines how Fox News will be utilized, not just to cover events…but to promote them.  It outlines how the Republican Party and the PAC will attempt to disguise their involvement so as not to compromise the “grassroots image” of the Tea Party, and so that the Tea Party participants will not realize they are simply being used as a mechanism to profit the GOP’s campaign coffers, and to defeat Democrats so that they same Republicans who spent us into the current financial debt and devastation…stay in power.

The original Tea Party…they knew what they were fighting for.  The same colonists who fought in the French and Indian Wars…were not represented in England’s parliament.  They had no say in declaring war.  They had no say in funding the war.  They had no say in the treaties after the war.  But…they did have a TON of new taxes to pay, so that England could cover the costs of the war.  Their demand of “no taxation without representation” was a fair, defensible, and accurate one.  Since today’s “tea partiesARE represented…by people elected through votes that THEY were allowed to participate in…and they had no problems when these elected officials were spending MORE and taxing them MORE while increasing the deficit, but now protest as they are taxed LESS and legislation is structured to decrease the deficit…and they now contribute their time and money to a group that serves to elect those SAME politicians…

…I guess I just wonder what they are fighting for.  Or against.