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Posted on 01/10/2012 6:27:28 AM PST by SeekAndFind
Any attempt to analyze the economic programs of the Republican presidential candidates is fraught with danger. While some have some interesting ideas, none measure up in total.
Certainly Ron Paul's desire to truly cut spending recommends him economically, Newt Gingrich presents an interesting plan for taxation (Mitt Romney's taxation scheme is certainly the weakest), and then many of the candidates at least pay lip service to the notion of ridding the Fed of our economic ball-and-chain of a Chairman, Ben Bernanke.
And then there's Rick Santorum. While it's very likely that the Iowa caucuses will easily represent the high water mark of his nascent campaign, what he stands for is truly scary. A conservative in the anti-classical liberal sense whereby he would use the power of government to dictate winners and losers, his main policy proposals, if implemented, are retrograde in such a way that the U.S. would unquestionably be made worse off economically if he were to be elected.
On income taxes, Santorum isn't awful, but then thanks to a bipartisan rush away from the '50s-‘70s tax consensus which said the top tax rate should be above 70%, no candidate of either party could ever credibly mount a run for office if seeking any kind of major increase in the nominal penalty on work. Though not ideal, both sides today see the semi-virtue (true virtue would involve a very low consumption or flat tax) of fighting out minor changes in tax rates, and seemingly none would suggest bringing the top rate anywhere past 40%. The latter is still way too high, but it's progress.
The problem is that Santorum doesn't stop there. A career politician who believes that tinkering among the political class will bring prosperity to the masses, Santorum views the tax code as a way to achieve the behavioral outcomes that he desires.
Assuming for a minute what's not true, that his command tax system would bring us happy results, not considered by the alleged candidate of the moment is that much as his tax proposals might foster positive activity, future politicians could follow his lead on the way to very unfortunate behavior.
Indeed, if we ignore for a moment how very bad it might be for some families and their children if his tripling of the child tax deduction is implemented, why should families who delay procreation, or who don't procreate because they cannot, pay more taxes than those who can and do? Furthermore, has Santorum considered future officeholders who might choose to penalize the fertile under Malthusian or climate change pretenses, and how they might reverse his supposed positive tinkering?
After that, what is remotely conservative about giving the government and its taxation powers even greater control over how families go about their lives? Shouldn't conservatives promote policies that minimize the government's involvement as much as possible, particularly considering the constitutional reality that at best (more likely, worst) Santorum would only serve two terms?
Santorum promises tax rate simplification of the 28%/10% variety, but as his aforementioned child tax deduction makes plain, under his interventionist leadership even more Americans would be excused from paying taxes altogether. Tax simplification is ideal from an economic perspective for releasing numerous bright minds from the lawyering and accounting professions, but it would also bring greater fairness to a taxation system that is the opposite.
There it would be interesting to hear Santorum (Romney too for that matter) explain why it is that the most productive in our midst owe a greater percentage of their earnings to the federal government than do those with lesser commercial instincts. For a politician who purports to be a man of the people, Santorum might explain how the poor and middle classes are advantaged by higher rates of taxation on the very individuals who, by virtue of their wealth, are most likely to offer economic opportunity through company formation and investment in others who might build successful businesses.
Even scarier is Santorum's plan to zero out the corporate income tax for manufacturers. Politicians as a rule seek to appear "in touch", but here Santorum reveals a staggering misunderstanding of the commercial direction of the world. It's not high corporate tax rates that have moved manufacturing jobs overseas, rather manufacturing jobs have moved because the very investors who confer capital on productive entities no longer see manufacturing as a remotely profitable way to deploy their capital.
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Walk AND chew gum!
RE: The other problem with Santorum’s proposal is this: How do you determine what is manufacturing?
Companies that provide some sort of services will not be classifying themselves as manufacturing companies.
MacDonalds and Burger King and even Hamburger joint will not call themselves burger manufacturers.
Starbuck “manufactures” coffee.
Heck even a software development company that makes “factory objects” will label itself a manufacturing company.
That’s what you get when you try to favor one segment of business over the other.
Better to simply CUT CORPORATE TAXES to one LOW, COMEPTITIVE LEVEL and get out of the way.
If I am not mistaken, that was the point, manufacturing requires employees who produce products.
Furthermore companies that manufacture products pay no tax, only the consumer that buys their product pays the tax. This seems to be an impossible concept for many.
I would like to see common sense applied to problems without the help of lawyers, but I likely won't get my wish. Too much money to be made by the lawyers.
I just won a big class action suit against NetFlix, my share will be a gift certificate which I can obtain by only filling out the twelve page form. The lawyers probably worked ProBono.</sarcasm>
Low should be Zero. Tax the owner's salary leave the corporation alone let them to reinvest or else pay out to salaries where it will be taxed.
Well, if you know of a common sense way to resolve this issue without (a) creating a rule that would be easily gamed, (b) coming up with a completely arbitrary rule that has nothing to do with what’s good for the country, or (c) leaving it up to the unpredictable whim of IRS bureaucrats or tax judges, I’d be interested to hear it.
The truth is that there is no way to implement Santorum’s proposal that wouldn’t provide a lot of work for lawyers. Even though I am a lawyer, as a citizen, I don’t want that kind of system.
Since you are a lawyer, I doubt you could accept common sense answers. The easiest idea to dispel with is the notion that anyone pays a tax other than the person who produces the wealth. If you can grasp that concept then you may be open to the idea that tax lawyers are not indispensable.
Your hard on for lawyers aside, I think I see what you are saying and agree with it. That’s why I think the corporate income tax ought to be eliminated - corporations should be “pass through” just like partnerships and most LLCs. There is no reason for the double taxation of income just because it is earned in the corporate form, other than rank populism.
On a thread elsewhere is mention of Binder & Binder the thieves that have colluded with the government to extract 88 million dollars for themselves from the tax payer, since they seem to be the only people that can get disability retirement from SS approved.
You won’t get any arguments from me about fraud mills like Binder & Binder. They managed to get through a rule years ago where they could use “qualified” non-attorney representatives to represent people in disability procedings before the administrative law judge. In fact, the vast majority of Binder & Binder’s work is done by large numbers of low-paid non-attorneys “supervised” by a couple lawyers. Needless to say, it’s a mess.
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