Tax Rates

Not to be overly political, but ...

I do not agree with lower tax rates for dividends and capital gains. My feeling as a voter and a citizen is that it is all income, and it should be taxed as such. And, of course, while there is a ceiling for tax rates, there is also a floor.

Thus, rates of 10/20/30% with fewer exemptions in the top rate ought to do it. The lowest rate should begin above the poverty level, and exemptions should be greatest at the lowest level. Of course, that would give some people lower rates on dividends/cap gains, while it would not discourage investment at any level. Additionally, the cap on FICA should be lifted to $250K, and both Social Security and, especially, Medicare should be means tested in terms of payout.

That should about do it. And, I can't imagine the arguments against it.

S&P Blames GOP

Interesting insight in a quote from the S&P Ratings Board on why they downgraded US Treasury debt - "Compared with previous projections, our revised base scenario now assumes the 2001/03 tax cuts, due to expire, now remain in place. We have changed our assumptions because the majority of Republicans in Congress continue to resist any measure that would raise revenue."

Strangely, that hasn't been getting much press. I would have guessed the liberal media would have heavily promoted that. And, it looks like a moot point anyway, because in the sell-off investors continued to go to T-bills, even though other countries still have AAA-ratings. Guess we still are the big dog. At least the market got up today and regained some sanity. Overall, the Dow has way too much influence on our psyche anyway. Even as the market moves along - fast or slow - wild swings in daily trading bring about talk of doom and gloom. And even as the Dow was rising the last two years and companies were posting record profits - which in turn drove up their stock prices - unemployment and the misery index remained high.

Thus, I am curious the proposal to put a minor - like .0025% - tax on stock transactions? Some are proposing it as a way to cut down on speculation and the wild swings in the market. It could raise some revenue at the same time it regulates the uncertainty. Ultimately, it'll be a no-go - but it's a reasonable idea.

Are Taxes Wrong?

One of my favorite bloggers, Darren at RightOnTheLeftCoast, occasionally posts about how the safety net programs of the US government are not Christian. In this post, which links to an article of similar mindset, he argues it again. If you check the comments, you'll see Darren and I have hashed this out on various occasions, and we simply disagree. However, I am somewhat baffled by his line of thought in some areas.

For example, I am curious about his occasional references to taxes as money "taken forcibly" or under the "threat of violence." This sentiment has been voiced by longtime TeachersView commenter Steven, who opposes all taxes - and pretty much all government - on the basis that it stems from threats of violence and confiscation. In his recent post, Darren says taxes and social programs are "not Christian" and other times he's said taxes, because they are taken against some citizen's wills are "not moral." I am wondering about the issue of taxes and morality.

Of course, Darren argues it's not Christian for the confiscated money to be given to the poor. Is it then also "not Christian" and "immoral" to use that money to inflict violence against other nations and peoples? Is using tax money to fight wars that not all people support wrong? Immoral? Un-Christian? Or are we just picking and choosing what we think is OK to use that "forcibly taken" money?

Darren also wondered what the Pope would say about taxes and social programs in terms of morality and Christianity. The pope has publicly condemned the War on Terror. So, clearly, using taxes to fund that would seemingly be un-Christian - especially since man was called upon by Christ to "turn the other cheek." However, the Pope hasn't publicly condemned "taxes" or "Social Security" or "unemployment compensation" or "food stamps." And, of course, Christ never said that "individuals" should be charitable but governments shouldn't. He made no distinction. I have a hard time believing that Christ would have admonished the Roman government if it had a safety net. He said pay your taxes.

Are taxes, as I believe Darren is arguing, immoral? If so, is by nature the Constitution immoral. For one of the first and primary powers given to the government in the Constitution is the authority to "levy taxes." The people went a step further with an amendment to specifically "levy taxes" on income. Thus, the authority to collect taxes is a founding tenant of the Constitution. And, as I've argued before, Christ had no opposition to taxes. Though he did exhort corrupt tax collectors to not take more than was due.

Just wondering.

Haters on My Tax Argument

As you can probably imagine, the email responses to my article on taxes in Colorado were heated. Sadly, many people felt that because I am an English teacher, I have no right to voice an opinion about tax policy - or that my argument could have merit. Many called me a "union thug," though I am not in a union. Others charged me with corrupting the youth with liberal propaganda - though my piece was in a newspaper and not even during the school year. The reality is I made a simple argument about one temporary tax increase proposal and its effect on Colorado.

I wonder if any people bothered to read the study commissioned by the CSPR whose findings I challenged I read the study. I also called the economist and quizzed him on his conclusions for more than an hour. The "economist" predicted that this 0.5% income tax increase and 0.1% sales tax increase - for an expiring limited three-year window - will cause thousands of wealthy Coloradans to literally pack up and leave the state. Do you seriously believe that? He extrapolated their exodus - including any businesses and personal money they spend - to have a subsequent effect of additional tens of thousands of job losses. Do you seriously believe that? If so, then we can dispense with much conversation - because it is an absurd conclusion that thousands of Coloradans will move out of state to avoid these minor taxes that expire in three years.

I challenged the "study" by the CSPR precisely because of the lack of causation that it was "a proven job killer. This point which was conceded to me by the economist when, after reading the actual study, I called him and had an hour-long conversation with him. During this conversation, he acknowledged my point about the lack of causation. He could, in fact, provide no justification in terms of his algorithms, and he backed away from the assertions made by the CSPR. Thus, I'm pretty confident in my criticism of the study.

After my research, I composed my credible argument by citing specific facts about economic growth and taxes during the past forty years. As I noted in my commentary, tax policy cannot be expected to influence the economy in any predictable way. Case in point about those most responsible for stimulating the economy - In 2004, corporations were given a one-year tax amnesty program to repatriate billions of cash reserves held abroad with the expectation that they would "stimulate the economy" by hiring people. Pfizer brought home more than a billion dollars, and then proceeded to cut 10,000 jobs in the next two years. That was two years before the '08 meltdown. GE did the same thing. They dropped their tax burden to effectively zero and cuts thousands of jobs. After the recent 66% tax increase in Illinois, United Airlines moved 1300 back home to Chicago - many came from their offices in "no-tax" Houston. It's not so simple - and thus my point about a lack of causation is pretty indisputable. Wouldn't you agree?

Colorado is not heading the same way as California or Illinois with a modest and expiring tax increase - for our government spending is still quite limited, and no one in the GOP could identify cuts. Thus, I ask my critics: where are your facts? What is your model? Where is the causation? We can go tit-for-tat on states that add and cut jobs, but as I argued very effectively, that is a fallacy about correlation and causation. The economy is far more complex, and you can't count on companies to hire simply because taxes are low - or stop hiring if they go up. It doesn't work that way. Thus, voters and politicians should consider the needs of the community and stop trying to play the "grow the economy" game.

I made a basic argument about how an incredibly small sales and income tax increase for a couple years in Colorado won't cause a determined number of job losses - especially a 150,000. I stand by my assertion.

GOP is Not Normal

David Brooks points out some depressing absurdities among that GOP in its approach - or lack of one - to the debt ceiling talks.

Republican leaders have also proved to be effective negotiators. They have been tough and inflexible and forced the Democrats to come to them. The Democrats have agreed to tie budget cuts to the debt ceiling bill. They have agreed not to raise tax rates. They have agreed to a roughly 3-to-1 rate of spending cuts to revenue increases, an astonishing concession.

Moreover, many important Democrats are open to a truly large budget deal. The Senate majority leader, Harry Reid, has talked about supporting a debt reduction measure of $3 trillion or even $4 trillion if the Republicans meet him part way.

If the Republican Party were a normal party, it would take advantage of this amazing moment. It is being offered the deal of the century: trillions of dollars in spending cuts in exchange for a few hundred billion dollars of revenue increases.

A normal Republican Party would seize the opportunity to put a long-term limit on the growth of government. It would seize the opportunity to put the country on a sound fiscal footing. It would seize the opportunity to do these things without putting any real crimp in economic growth.

The party is not being asked to raise marginal tax rates in a way that might pervert incentives. On the contrary, Republicans are merely being asked to close loopholes and eliminate tax expenditures that are themselves distortionary.

But we can have no confidence that the Republicans will seize this opportunity. That’s because the Republican Party may no longer be a normal party. Over the past few years, it has been infected by a faction that is more of a psychological protest than a practical, governing alternative.

And then there is this - which is exactly what I argued in my last piece of commentary in the Post:

The members of this movement have no economic theory worthy of the name. Economists have identified many factors that contribute to economic growth, ranging from the productivity of the work force to the share of private savings that is available for private investment. Tax levels matter, but they are far from the only or even the most important factor.

These harsh realities are what make it so difficult for rational and pragmatic moderates and independents to support the GOP these days. This ideological rigidity - one which has basically made the Republican Party subservient to the demands of one man named Grover Norquist - is not good for America. While it is easy to simply criticize spending and cross their arms over their chests about taxes, the GOP leadership is ignoring the role of governing. The government needs to govern - not refuse to do anything.

Taxes Don't Cause Job Losses

In response to a recent "study" about taxes and jobs in Colorado, I composed the following piece of commentary, which was featured today in the Denver Post.

Let’s be clear: taxes have one purpose – funding government responsibilities. Period. Taxes aren’t meant to manipulate the economy or employment, and don’t reliably impact either. Thus, Colorado voters shouldn’t try predicting potential job gains/losses from the small, temporary sales and income tax increase proposed by Senator Rollie Heath. Despite warnings from some conservative groups, tax rates don’t influence job choices or migration for average Americans.

When I relocated my family to Colorado from Illinois, the primary reasons were lifestyle – outdoor living, great schools, and cultural experiences. So, while statistics indicate we moved from a high-tax to a low-tax state, taxes had nothing to do with our decision. In fact, as I consider the migrations of many former Illinois residents I know in Colorado, the reasons were education, employment, and lifestyle. Taxes were never a factor.

Recently, the Common Sense Policy Roundtable, a local think tank, published a study warning of job losses in Colorado if Senator Heath’s proposal succeeds. However, the conclusions are hardly definitive. Voters should remember that correlation doesn’t equal causation, and the CSPR study proved no causation between tax increases and job losses. Illinois passed a 66% income tax increase last year, yet its unemployment figures are comparable to Colorado’s. Florida and Nevada, with no state income tax, are in worse shape. Additionally, studies confirm that infrastructure and education spending are far more significant in business location than tax rates. Thus, Colorado could see more growth by sustaining its infrastructure and schools than by cutting funding.

In a desire to connect low taxes and economic growth, many conservative pundits praise low-tax Texas for leading the nation in job growth. Actually, it leads the nation in minimum-wage jobs with no benefits, as well as the percentage of children without health insurance. Texas has one of the worst education records, its unemployment numbers are rising, and it’s facing a $20 billion deficit. Even when jobs and population grow, a myriad of factors are involved. Texas, for example, has lower property values and cost of living, and much of its growth is linked to oil reserves.

Economic systems are far more complex than any single tax rate, and voters are naïve to think otherwise. The Bush tax cuts produced a “jobless” recovery and no net job growth after a decade. By contrast, Clinton’s tax hike coincided with America’s greatest economic expansion. Neither situation resulted from tax policy. The 1980s saw two tax cuts and six tax increases. Yet, drops in inflation, interest rates, and oil prices predominantly influenced the decade’s growth. And the Reagan Era also saw a Wall Street meltdown, a housing bubble, a major banking scandal, and a subsequent recession. Clearly, tax policy was not the primary factor of these events.

Voters should make tax policy decisions based on one priority – the needs of the community. Colorado’s strained state budget resulted from revenue drops – not out-of-control spending. In fact, in the last gubernatorial election, Republican candidates couldn’t identify any specific cuts to the Colorado budget, despite repeated media requests. In reality, Colorado’s modest government requires more revenue to meet its communities’ needs. In this regard, Senator Heath’s minor tax increase is actually quite pragmatic precisely because it expires, allowing time for economic recovery. By maintaining well-funded schools, Colorado can continue to promote itself as a great place to relocate businesses and families.

Despite the wishes of conservative groups, government cannot cease functioning when the economy struggles. Regardless of Wall Street drops or rising unemployment, children still go to school, crimes still occur, roads still wear down. Natural forces don’t wait for good economic times, and nature doesn’t limit snowfall based on budget projections. So, even in a downturn the forest department might need more funds for firefighting or CDOT might need more funds for plowing and repairs. In fact, when the economy tanks, the government often needs to sustain spending until the private sector rebounds.

Despite the ideology of groups like the CSPR, tax policy doesn’t drive the economy. And in reviewing predictions about job growth from the economist commissioned by the CSPR, voters should recall the tongue-in-cheek wisdom of Nobel-prize winning economist Paul Samuelson – “Economists have successfully predicted nine of the last five recessions.”

The ideological debate about taxes and economic growth is not going to end - I'm just seeking to promote reasoned and well-informed discussion.

GOP Shift on Anti-tax Zealotry

When I saw the tagline GOP Shifting on Anti-tax Ideology run across the bottom of my TV during the 9:00 news, I felt a small shimmer of hope rising in my heart. This, as I've noted, is one of the areas where I simply haven't been able to find common ground with the GOP. And, whenever I talk about the truly pragmatic Republicans like Judd Gregg or Tom Copburn or Lindsay Graham, I am always disappointed by the RINO label from the un-thinking and naive ideologues.

Yet, there may be hope. Perhaps the Grover Norquist wave is fading just a tad. In Colorado the Douglas Bruce anti-tax zealots have been voted down on their most recent referenda on "no tax increases ever" and "gut government till we look like Somalia."

So, yes, there may be hope. Keep watching.

Austan Goolsbee and the Truth about Taxes

In news today, Austan Goolsbee, one of President Obama's top economic advisors, is leaving his job at the White House to return to his position as an economist at the University of Chicago. Goolsbee is probably best known for his "White Board" speeches in which he sketched out economic policy of tax cuts - criticizing the GOP plan for continued tax cuts - in a short videotaped speech. Here's a look:

Sadly, far too many Americans are naive to even the simple truths of this two-minute video. And if that sort of thinking continues, the US economy will continue to be mired in the backwaters of ideologically produced debt and deficits.

Taxes and Growth

In response to the budget plan by Paul Ryan and the GOP which cuts taxes by $4 trillion, both Charles Blow in the New York Times and Walter Mondale in the Washington Post attempt to clarify the issue of taxes and growth. The question is whether Americans can do the math, or whether they are still deluded by either sound bite ideology or simple ignorance of economic facts, rather than theories.

The TEA Party likes to claim that Americans are "taxed enough already." Yet, as Mondale points out, taxes are at their lowest rates in forty years - and, consequently, is government revenue which leads to deficits and debt at both the state and federal level. Sadly, too many voters don't see the connection, and they are reluctant to pay for what they want ... and that's precisely because politicians and leaders have convinced them they are already paying for what they don't want.

Obama versus Ryan

Let's be clear - I am not enamored of Obama's deficit reduction plan and budget for 2012. While the message and philosophy of his speech was honest and fundamental to promoting "the general welfare" of the United States, the plan falls short in several areas of necessary spending cuts and tax revisions. However, while Obama's plan disappoints me, Ryan's plan is, in my opinion, far worse. The Path to Prosperity is a specific budget cutting proposal, no doubt. However, the assumptions it makes about future growth and prosperity are ideological and naive at best, but more likely reckless.

The audacity of crying bankruptcy and slashing social spending is simply wrong when it is being balanced by $4 trillion in tax cuts. If the problem is being broke and not having enough money, the answer is most definitely not to cut revenue further. Of course, the Ryan plan is taking that course on the misguided notion that the US can't tax the "job creators" as Colorado representative Mike Coffman calls them. Keeping the 01/03 tax cuts has no definitive impact on job and economic growth. It simply doesn't. That ideology has been discredited time and again. Increased demand grows jobs, and investors create new businesses whenever they want. There is no shortage of investment capital right now, and no shortage of business who could hire people. And it's not taxes that are preventing that from happening.

Obama's plan on the other hand is not clear enough on the tax increases that need to happen. But the deductions problem is pretty clear. Deductions are meant to ease the tax burden of people whose living allowance margin is thin. And the more deductions they have, they greater chance they will buy a house or purchase consumer goods. That's simply not the case with people earning more than a million dollars. They need no incentive to spend their extra cash. They spend whenever they want. Arguing that fewer deductions means these people have less money to hire people and start business is simply wrong and ideologically bullheaded.

Thus, I predict that Obama can win the next election with this plan - and I think the Democrats can even take back some lost seats. But that doesn't mean I think it's a great plan. It's simply not the disaster that Mr. Ryan presents. As I've noted before, you can't trust economic policy from a man who rants about the high corporate tax rates and seems willingly naive to the idea of corporate tax deductions.

Economics Plans

The White House says President Obama is set to release his budget and/or deficit reduction plan sometime this week. If that's the case, then both David Brooks and Fareed Zakaria are correct about the Ryan Plan forcing the discussion and throwing down a gauntlet on government budgets that must be addressed. Yet, I still far that Zakaria and Brooks are far too generous in identifying the bill as courageous and forward-thinking. It's still too naive in terms of growth and the role of tax rates, and it is simply unconscionable in terms of the faith it plays with the free market and insurance companies concerning health care for the elderly.

Yet, my gut instinct tells me that the President's plan is going to be equally naive concerning spending. And he is going to lose the battle on taxes if he keeps targeting as low as earners making more than $250,000. While I do feel that amount is comfortably wealthy, it is not an vast sum of money, especially in places like New York and California. He could certainly argue for higher rates on people in the million dollar tax brackets and address the revenue problem more rationally. Better yet, it should, as both the Wyden-Gregg and Ryan Plan argue, focus predominantly on the deductions. Certainly, we can come to consensus that the mortgage deduction is a reasonable tax break for many Americans, but it is unnecessary for people making more than 500 Gs, or for purchasing more than one residence.

So, if we could focus on that. We'd be getting somewhere. Broaden the base, flatten the rates, narrow the deductions for all, end them for the top 20%, and be done with it.

Tax Rates

I get the arguments on both sides of the '01/'03 tax rates. Lower tax rates can have a stimulative effect and they should be able to limit government spending in some way. At the same time, they were not asked for and were sold as both "refunds" from a government surplus and "stimulus" for a struggling economy. And the Tax Policy Center has pretty accurately explained how they are the predominant cause of both the expanding deficit and the astronomical debt.

So, here's an idea:

Extend all the tax cuts for exactly twelve months, and then let all of them expire, or "sundown," as they were supposed, but to with this caveat: Sundown the sundown of all the tax cuts after another eight years. Since this debate tends to swing back and forth with the decades, and tax rates go up and down as we seek "optimum rates," let's make that policy. The Dems agree to extend them for a year. Then the GOP agrees to let them expire, as they were intended. But the Dems agree to allow them to fall again in eight years - when the economy is in better shape and the deficit has been closed and the debt paid down.

Seems like a pretty damn good Ronald Reagan-Tip O'Neill compromise to me.

What do you think?

Deficit Dithering

The cold, hard reality is that the United States government has accrued $12 trillion in debt. Most of that came in six years when the Bush Administration proposed and passed two unfunded tax cuts, two unfunded wars, and a huge unfunded expansion of the entitlement system with a prescription drug plan for Medicare - one that is now being asked to expand to close the "doughnut hole." While the debt went from $3 trillion to $10 trillion during that time, government spending did not increase by $7 trillion. Thus, any competent middle school math student can conclude that the budget deficit has ballooned the debt primarily through a cut in revenue. However, spending most certainly played a role. It played a huge role. In no way should this post be construed as absolving the Democrats of responsibility, especially for wasteful spending.

Thus, as David M. Walker and the Concord Coalition have argued since 2003, the debt and deficit will not be addressed without spending cuts AND tax increases, and significant entitlement reform. It is that simple. It's so simple. It's astoundingly obvious. Cut spending AND raise taxes while reforming entitlements. That is what the proposed Fiscal Responsibility Committee would have done. That's what a new bill in Congress to re-institute "Pay-as-you-go" would have done.

Yet, the GOP has vowed and voted to defeat these attempts because it will raise taxes. Of course, it will. It has to. And, then, Senator McCain responded to ABC news today by claiming the spending freeze might be OK, but he would "cut taxes" so that revenue would increase. Even though cutting revenue is the majority of the problem. Ugh! Does everyone in the GOP misunderstand the lessons of the 1980s and 2000s, and the inherent flaws in supply-side economics. Or are they just that pathetic in their fear of PACs and "think tanks" that threaten to derail the career of any Republican voting for tax increases.

It's $12 trillion.

I want to see taxes at the 1992 and 1983 levels. That's where the economy can be strongest. That is absolutely the goal. And, to do so, spending will have to be cut and entitlements reformed. I know that. I get it. I want the spending to go down, so the taxes can go down. But the debt and the deficit have to go, too. And taxes will have to go up, for some time, in order for that to happen.

This is our problem. There are no, or few, fiscal conservatives in the Republican Party. No one is willing to be pragmatic about this. Fiscal conservatives are not conservative if they think the deficit and debt can be handled without tax increases. Just crunch the numbers. Really. Do the math. Lower taxes are preferable. Less wasteful spending is the goal. But do the math. Be honest with yourself.

It's $12 trillion.

Taxes and Society

So, here's a thought, as I continue to debate my Burkean conservatism with the voices of "Libertarian Populism." As I've mentioned before, Edmund Burke effectively argued that "the revenue of the state is the state." Little or no revenue = weak or non-existent society.

Consider this:

Alabama and Mississippi - and many southern, or red, states - have low tax rates. They also have poor quality education, poor health, poor roads, less industry, less wealth, lower quality of living, higher crime, weaker family structure, fewer college educated people, and they accept the highest levels of federal aid.

Connecticut and Massachusetts have higher tax rates. They have high quality education, better health and health care, better roads, more industry and finance, more wealth, higher quality of life, less crime, less divorce/social problems, more colleges and college educated people, and they pay the most in federal taxes at the same time they accept the least amount of federal aid.

Where would you want to live?

Taxes Ceiling and Floor

As we come into 2010, the telling statistics of the decade are that the Dow is almost exactly where it was ten years ago and the decade amounted to almost zero job growth. Yet at the same time, families earn less overall and are worth less overall, at the same time they are more vulnerable to economic crisis due in no small part to lack of security in terms of health care and health care costs. This is taking place at a time when, overall, America's tax burden is about as low as it has ever been, across the board.

And amid this, Sarah Palin told Greta Van Sustren last night that America needs to learn the lessons of Ronald Reagan and the Eighties by cutting personal taxes to free up the private sector to create wealth and easing corporate taxes so they won't export jobs. Sadly, Van Sustren completely ignored the opportunity to ask the reasonable but tough questions. For example, have Palin and Van Sustren forgotten that when Reagan cut taxes the marginal rate was 89%? Have they failed to notice that taxes are at historic lows? Are they not aware that the average American corporation pays no corporate taxes and those that do average about 5%, which is far below the countries that Palin thinks are taking American jobs. Do they not know that payroll is the primary expense of any company, and that is the reason they move and offshore jobs? Do they fail to note there is no specific identifiable link between taxes and job growth? Have they no knowledge of the impact of the oil embargo and the Fed's breaking of the inflation cycle? Are they really that ignorant, or just that partisan.

As a Burkean, fiscal conservative, I sympathize with many concerns about government spending and growth. However, the one thing I cannot cop to is outright ignorance of historical facts. There is both a ceiling and a floor to revenue for the government - that is the greatest lesson for current state budget crises. Thus, while I am still too disgruntled to be a Democrat, I will remain a recovering Republican.

Tea Party Silliness

As thousands of people across the country hit the streets (apparently with no jobs to distract them) to protest taxes, columnist Debra Saunders offered insight into the odd appropriation of the "Boston Tea Party" allusion. As she clearly noted:

There is a world of difference between 1773 and 2009. Two hundred-plus years ago, Americans risked life and limb protesting a distant and oligarchic system of government that did not represent the good people of Massachusetts.

No doubt many who show up at the Tea Day rallies will argue that they didn't vote for Obama and should not have to pay for his programs. I have news for you folks: Conservatives lost. American voters elected a big spender and, one way or another, Americans will have to pay for his agenda. The Obama tax hikes on Americans earning more than $250,000 have yet to materialize — but when they do, they'll be taxation with representation, a campaign pledge made good.

Even though both Saunders and I disagree with much of Obama's policies, there is something unseemly, even absurd, about current objectors aligning themselves with patriots who risked their lives to achieve representation and the right to protest.

We currently have representative government - thus there is no connection to the Boston Tea Party.

Why I'm Not a Republican

Uuuuuggghhhhhhhhhhh!!!!!!!

For once and for all can we agree that there is a difference between tax rates and taxes paid? The intentional blurring of this line is a fundamental reason while I am not a member of the GOP, though I am fiscally conservative and support many of their policies.

In today's press conference for the GOP's alternative budget, Congressman Matt Ryan was making some very valid points about spending, entitlement reform, and taxes, and then he drove the bus right of the cliff with the standard "Sean Hannity-like" rant about corporate tax rates. Sticking to the standard mantra, Ryan and the GOP proposed lowering the corporate tax rate from 35%, "which is the highest rate in the industrialized world," to a lower 25% which is the average. This sort of statement on taxes is disingenuous, if not outright deceitful and dishonest, and it is designed to to manipulate fiscally conservative people who are less than informed about tax policy.

There is a fundamental difference between tax rates and taxes paid, and it is disingenuous to argue that America’s tax rates are responsible for downturns in the economy or the movement of business abroad. No one pays the top rates in the American tax code, as it allows for generous deduction. While I may be in the 20% tax bracket, I pay no more than 11%. Incidentally, the GAO report found that between 1998 and 2005, two-thirds of American companies paid no income tax. This finding complements a similar study of the boom years of 1996 to 2000 which also found that 90% of the companies that paid any taxes paid less than 5%. Corporations in other countries may be paying a lower rate, though they often pay more taxes because their tax codes do not allow the generous deductions and massive loopholes that America allows.

A reasonable student of finance - which Ryan is clearly not because he's too busy being a politician - would understand that accounting practices allow companies to show no actual profits because of expenses such as salaries, interest, and investment. In fact, the model by which a company shows no profit and no loss is the most efficient business model and an optimum goal in terms of tax responsibilities. Certainly, the government should address the loopholes that allow companies to hide money overseas. However, to argue that Corporate America is overtaxed simply isn’t true.

No Taxes for Teachers

Ten years ago, when I was teaching high school in Illinois, a colleague of mine and I came up with what we believed to be one of the best ideas in addressing issues of the teaching profession and public school reform - no income taxes for teachers. It seemed to be the perfect plan, considering school districts often struggle to pay competitive wages while balancing budgets, people constantly claim teachers are dramatically underpaid, and critics lament the ability of education to draw the best and brightest of students. While I've never complained about teacher pay - I'm actually quite comfortable with the income I earn - and I don't agree that money is the reason the best people don't enter or remain in the profession, I think a lot of good could come from the no-taxes-for-teachers plan. Now, someone has said it in a larger forum than teachers' lounges and my blog. Thomas Friedman's commentary in the New York Times today proposes investment in education - including an exemption from federal income taxes - as an integral idea for the stimulus plans of the Obama administration.

There are some problems with this assumption, notably the idea that we want the kind of people who would be primarily motivated by this incentive to become teachers. In fact, there is much to argue that "the best and brightest" don't always make the best teachers, and financial compensation shouldn't be a motivation for educators. However, the kind of investment in education that Friedman proposes has a lot of relevance, in that any stimulus plan should create a stronger society with motivated innovators like Steve Jobs and Bill Gates who are inspired by their math and science classes. Obviously, this doesn't simply come from modifications to teacher pay - Friedman makes other salient points about who is teaching and how and why. Yet, I am pleased that my idea is gaining some tractions. Can't wait for my windfall.

The Right and Wrong of Taxes

To follow up on my assertion about taxes, I'd like to re-print my letter printed in the community section of the Denver Post on May 9, 2008.

I was disappointed by Mr. Lou Schroeder's groundless anti-tax rant against the proposed budget and bond issues of the Cherry Creek School District. Sadly, his argument that CCSD should prove they need the money, as well as dispel any concerns voters have about "waste, fraud, and abuse," has revealed him to be uninformed and ignorant of the district's budget issues. Informed voters already know the reasons given by the district, and they also know that no school district ever proposes an increase without explaining why. In fact, that's what a proposal is; it's an explanation. Cherry Creek School District's budget is extremely transparent, as is the explanation for the necessary budget and bond election. If Mr. Schroeder wants the information, he merely needs to show up at school board meetings, check the information on the website, or call the district. Secondly, if he wants to accuse the district of misusing funds, he should back up his claims with detailed evidence.

Thomas Jefferson said we need an "educated electorate" for representative government to succeed. For Mr. Schroeder to base his opposition to the referendum simply because it is his "own money," is to claim no responsibility in the needs of the community. To oppose all taxes simply on principle with no understanding of the issues is immature and irrational, as was his shameless analogy to "uneducated rodents." Thus, I urge voters and Mr. Schroeder to actually become educated about the issue before issuing blanket statements of opposition. Oliver Wendell Holmes said, "taxes are the price we pay for a civilized society." In comparison to the citizens of other industrialized countries, Mr. Schroeder keeps a large percentage of his money. However, the money he does pay goes for our roads, our parks, our clean water, our police and fire departments, our public sanitation systems, our military, and the education of our children.

Lou Schroeder lives in Greenwood Village, which is an incredibly safe community with great roads, extensive community events, effective law enforcement, and a beautiful network of well-maintained parks and trails. These bountiful services are a direct result of the huge tax base of the Denver Tech Center, as well as the surrounding neighborhoods. Lou also lives near Cherry Creek High School, which Newsweek has ranked as one of the top 250 high schools in the country. With nearly 20,000 high schools nationwide, it appears the residents of Greenwood Village are being well served by the Cherry Creek School District.

Pragmatic Effective Government

Taxes - curse or necessity? Is the government just stealing the common man's money, or are taxes "the price we pay for a civilized society"? Is government the problem, or is it the solution. The answer to all these questions is "both." And, the problem with all these questions is the word "or." Clearly, there are no absolutes in questions like government, and that's why I am unaffiliated, having been a registered Republican and a registered Democrat. Now, I am looking for some common sense answers to common problems, and I've realized that pragmatism is the key. P.J. O'Rourke was fond of saying that Republicans campaign on the idea that government can't work, and when they get elected, they prove it. At the very least, I know a reasonably large government is a necessity, so I'd hope to elect the most efficient people to run it.

In terms of taxes, I've concluded that I'm neither for nor against taxes on principle. As part of the "educated electorate" that Jefferson envisioned, I know I must look at each tax individually and weigh its merits. There is a clear wisdom to the idea that more money left in the private sector is a boon to the economy. There is also a logic to an individual, or individual communities, knowing how to best spend his/her/their own money. However, voters must also understand that individuals don't build highways or aircraft carriers and those things cost a lot of money.

The key to effective government is leadership, and when the government is not working as it should, we can do nothing but blame whoever is in charge. Our best leaders have always been the most pragmatic. For example, tax hikes might have been anathema to conservatives, but Ronald Reagan raised them four times between 1982 and 1986. When Bill Clinton proposed tax increases in 1993, conservatives swore he'd wreck the economy. Instead, the economy responded with the largest economic expansion in history. Currently, the nation is $9 trillion in debt, and there's no way to argue that's good. At this point, I'm looking for a pragmatic group of people who can simply solve the problems.