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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My personal opinion is that only human beings should be taxed.
Santorum is right, and needs to go further right.
Income tax punishes earnings, both personal and corporate.
The U.S. should tax retail sales, not income.
.
Businesses don’t pay taxes. They are either passed on to the consumer in the form of higher prices, or passed on to the business’s owners in the form of lower profits.
I like Santorum’s plan.
America First.
For once.
Santorum’s plan is not “America first.” It’s certain Americans first over other Americans. It’s his unfortunate government tinkerer mentality. He’s a situational conservative.
Besides, it invites corruption. I’ll guarantee you every single business would “manufacture” something so that they could qualify for the zero tax on manufacturing, inviting a whole new raft of IRS rules and regs to define “manufacturing” etc. Could only be supported by someone who has never been in business.
The “service-oriented” economy has been a bust while a manufacturing based economy worked for years. Yet, this author maintains that manufacturing is better being overseas, and lowering the corporate tax rate wouldn't gain any positive results.p>
As far as raising the child tax deduction, this author has completely missed the basis of Santorum’s point of the family.
Either I'm very wrong in my education and beliefs, or this author is very wrong. Or, more likely, this is just another attempt at a hit piece.
It is a tactical mistake for republicans to bring up tax reform in this election. Unless we get the spending under control, like right NOW, the tax issue will be moot.
These tax tinkering proposals are just distractions.
The writer of this article explains why tinkering with manufacturer’s taxes and favoring it over other businesses instead of SIMPLIFYING the tax code is a bad idea:
* Investors would prefer to leave low value work of the manufacturing variety to the least productive overseas.
* We complain about depressed economic times now, but if readers really want to see a Depression, lure manufacturing jobs and their incredibly low pay as dictated by investors back to these shores. If so, lots of Americans will be working in factories; that is, if they want to work at wages far below what they’ve grown used to.
* Assuming the reverse Santorum desires is allowed by investors, are Americans so eager to work in factories once again such that they would accept a fraction of their existing pay? They might ask the Chinese how much they enjoy working in factories; factories that investors will in time move to even poorer countries in Southeast Asia. Put simply, it is the destruction of jobs wrought by computers, cars and innovations that enable the offshoring of low-value work that frees up capital for higher value work.
* If you want to pay manufacturers American level wages instead of Chinese wages, then be prepared to PAY A LOT for the finished goods you buy.
* Most scary of all with Santorum’s elevation of our not-so-grand manufacturing past are the implications for the dollar. Though the weak dollar since 1971 surely hastened the inevitable departure of manufacturing work, it’s wrongly assumed that those who “make things” stateside are advantaged by a cheapened currency. Tell that to the Big Three automakers whose fortunes fell with skyrocketing oil prices in the ‘70s that were the direct result of the collapsing dollar.
Corporate taxes should be zero since corporations don’t really pay those tax bills; we do. No company eats its taxes. The tax bill is passed on to the consumer in the form of higher prices. If beef producers get hit with a tax, they pass that cost on to McDonald’s, who passes it along to you when you buy a cheeseburger.
Bohunk!
There are other factors such as onerous regulations and oppressive union demands that are part of the mix of things that drive companies offshore but you cannot say that taxes don't matter.
I worked at a company that was in the same place since 1952 until the property taxes alone went over 900K. The company moved operations to Ohio where the tax rates were less than half that.
ALL businesses whether manufacturing, wholesale or retail pass their income taxes on in the sale price of their products. Its part of the operating expense or otherwise Cost Of Goods Sold (COGS).
The corruption is the exponential growth of the taxes that a Cato Institute study substantiated that 30-50% of the products we buy are taxes. We need a tax structure that the citizen can see the actual amount of taxes being paid and quit this ponzi scheme.
The WSJ has recently been saying that some manufacturing is coming back on its own. Wages are increasing in China. The cost of shipping and the complexities of the logistics involved of producing on the other side of the world are reducing the advantages of places like China. Throw in technology theft, lack of quality control, and producing over there is becoming a wash. Personally, I’d rather spend more for something that’s built well, and that I only have to buy once. For example, I bought some speaker stands a few years ago that were all metal except for a few plastic parts at key points. Well, once those parts broke, I pitched them all. Worthless. Most of what’s made in China is like that. Makes a buck for the moment.
I favor Replacing the current mess with a sales tax with the price before and after tax posted directly on the sales slip. However, I can see the benefit of eliminating withholding entirely and requiring each citizen to write a check to the local, state, and federal governments once a year. Perhaps on the day before any election.
I think across the board import tariffs would be far more effective at bringing back US manufacturing (and involve no “picking winners and losers”) than even Santorum’s good plan.
Let’s do both.
America First.
You are of course right, but if people understood the truth of what you said we wouldn’t have the ridiculous “tax increase” arguments we always get even on FR about the FAIR TAX or the 999 plan.
Sad that economic and tax ignorance is rampant everywhere, but having those taxes broken down on labels, etc, would be very informative.
The answer is still Huck’s 2008 Fair Tax plan which could have been eased in with Cain’s 999.
Think, folks.
http://www.fairtax.org/site/PageServer
http://www.freerepublic.com/focus/f-news/2791979/posts
It’s not a mistake to bring up, since the administration keeps peddling carp about how ‘the rich’ need to pay their “fair share.” It’s a very relevant argument to be bringing to fore.
Like it or not that is a strong argument for Obama. Wrong obviously but strong with the ignorant electorate.
It is a tactical error to play into your oponent’s strength.
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