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December 13th, 2010

Tax Cut Compromise: Deal or No Deal?

By Sam Clovis

I am having a hard time following the logic—and the math—of this so called “deal” our Republican representatives have supposedly made with the President.  The current tax structure is continued for two years, social security employee withholding is to be reduced by two percent for one year and the death tax is being reinstated, but at a lower level than might have happened had nothing been done.  As this proposal gets passed around each chamber of congress, more and more fingerprints (read that pork barrel spending) gets added.  Of course, this all has to get done so the IRS will not have to reset their computers.  Given the Republicans only have to wait about three weeks and they can dictate terms on taxes, I am wondering why things have had to be done so quickly.  Actually, I do not wonder.  I am just disgusted.

All the arguments about raising taxes right now with the economy still on the brink of collapse are absolutely right.  In fact, taxes ought to be lowered through a total reform of income taxes in this country.  Though the fair tax system—a national sales tax—is perhaps the most elegant and economically efficient way to go, I think selling a fair tax will be difficult.  A flat tax, however, with two or three brackets, seems a lot more palatable to most Americans.   Everyone has skin in the game, to quote our vice president, and people could file their income taxes on a postcard.  We really wouldn’t need a massive bureaucracy for processing taxes, but a few clerks could check the mail on tax day and we could be done with it.  But what about the deal?

Right now, the arguments are being made that this deal will add to the deficit and debt, because revenues will not be what might have been possible by letting the current tax structure lapse.  Such assertions are pure nonsense.  First, no serious budgeting should be done based on raising taxes and expecting revenues to go up.  Arthur Laffer, through his famous Laffer Curve, clearly illustrates that by raising marginal tax rates, the government might actually see reduced revenues instead of seeing the coffers of the treasury fill.  History supports Laffer’s thesis.  One need look no further than the tax cuts instituted during the administrations of JFK, Ronald Reagan and George W. Bush to see that revenues actually take off, because the economy grows as more people are working and fewer people are avoiding taxes.

The second exception to the deal is that politicians in DC actually think this money is the government’s.  It isn’t.  The incomes earned in this country are the property of the people who earn them.  That’s right, income is property.  Unfortunately, government, exercising its ability to coerce behavior, can confiscate that property.  What the government then does with that property is where we come in.  We can certainly demand lower taxes, but most of all, we can demand appropriate stewardship of the resources ceded to the government by the people.  Continue to spend irresponsibly, and we can vote them out.  Continue to spend beyond the country’s means, and we can vote them out.  Continue to disregard the economic health of the nation to advance special interests, and we can vote them out.  Wait—I thought we just sent them that very message.

The third exception to the deal is that these folks in DC are continuing to treat the American people like we can’t add and that we are stupid.  Do these politicians actually think we are going to be grateful that our taxes did not go up?  I want to know why we are not all marching on DC to let them know that the Congress, as it is currently configured, is going to be altered forever.  The Democrats have flunked and the Republicans are on probation.

This tax deal stinks to high heaven and we ought to let every single elected representative from the State of Iowa know that we are paying attention.  Take care of the American people and the citizens of Iowa or we are going to continue the rehabilitation of the country in 2012.  The next general election will make the most recent mid-terms look like a Sunday School picnic for the elite machine politicians who are now broadening their backsides on the chairs (owned by the People by the way) in the House and Senate.

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About the Author

Sam Clovis
Sam Clovis is college professor, retired Air Force fighter pilot and former radio talk show host. He has been active in republican politics in Iowa for quite some time and is a highly visible and outspoken conservative. He has run for office in Iowa and remains a popular conservative figure.




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