Taxes and the Real World

Kevin Baker tells it like it is on the state of US tax policy.

His point is straightforward. And, if I may elaborate a bit ---

The Republican religion (aside from Religion) has become "no tax increases of any kind --only tax cuts!" This makes it impossible to have a serious discussion about what kinds of adjustments ought to be made to a tax system that has become, some would argue, both a drag on our economy and an inadequate tool to support the operation of a modern state.

The system is a drag on the economy because political considerations have produced enormous imbalances, like direct government subsidies to gigantic oil companies that, year in and year out, are the most profitable organizations in the world; subsidies to corporate agribusiness --they were sold as, and maybe even meant for, help to the mythical "family farm--; artificially low tax rates to pharmaceutical behemoths who end up paying 5%.

The irony of this is that the Republican chant is always "small business;" yet small businesses, if they are profitable, and if they are operated as regular, taxable corporations, actually pay the highest rates, much higher than, say Eli Lilly or Pfizer.

In another arena, individual taxes, the imbalances are equally stark: a marginal tax rate of 28% on a doctor or small businessman who earns, say, $200,000, and a tax rate of 35% on an athlete or big-time Wall Streeter with earnings of $10 million. No rational person would say that this makes sense.

The trouble is, because of the no-tax religion, the Republicans are always in the position, even when they agree with the above, of saying that the only solution they will even discuss is to lower all rates.There's never an appropriate tax.

In other areas where sensible tax regimes would strengthen the country from a geopolitical perspective while helping reduce deficits and spurring "innovation" --another Republican totem--, sensible policy runs up against the same "no tax increases" refrain. So we have the lowest gasoline tax in the world, outside Saudi Arabia, and we consequently have huge barriers to change of any kind in the economic system that imports billions of gallons of gasoline, millions of barrels of oil, per day at enormous cost in terms not only of absolute dollars but also in terms of an unfavorable balance of payments, the support we provide to fundamentalist, autocratic regimes around the world who sponsor active hostilities against us, and the stifling of development in promising alternative technologies, which are being developed for sale to the world by China, instead.

Mr. Baker does a service by pointing out, from a relatively conservative vantage point, the destructive influence of the current Republican fixation on the status quo. Unfortunately, he is up against a force that is probably insurmountable: the need to get re-elected, and, in the process, to nurture the illusions of millions of self-styled (but inaccurately labelled) conservative voters, while doing the bidding of Big Oil, Big Pharma, and others who support the Congressional lifestyle.