Taxes

Democratic Rhetoric on GOP Tax Law Is Just Silly

Your money is yours, not the government's.

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An acquaintance who owns a large California business likes to talk about the negligible impact of the tax code on his personal life. As he puts it, well-off folks can afford the homes, cars and vacations they enjoy. Their lifestyle is static. When the government taxes them at a higher rate, that simply means they have less money to expand their business. It won't force them to subsist on macaroni and cheese, sell the Tesla or feel any personal discomfort.

That's a key point to consider when you listen to the rhetoric from Democratic leaders about the supposed evils of the recently passed Republican tax plan. The left wants to punish the rich, but defending higher taxes mainly punishes everyone else.

House Minority Leader Nancy Pelosi referred to the bill as a "rip-off, this plundering, this pillaging of the middle class." Sen. Bernie Sanders (I-Vt.), whose leftist rhetoric almost gained him the Democratic presidential nomination, said: "Today marks a great victory for the Koch brothers and other billionaire Republican campaign contributors who will see huge tax breaks for themselves while driving up the deficit by almost $1.5 trillion."

Sanders' words were particularly foul by suggesting that these donors—people who fund myriad libertarian causes, including some such as criminal-justice reform that should appeal to liberals—are trying to stuff more dollars in their pockets. But Sanders probably is right that the tax plan will add to the nation's appalling deficit. That's an apparent flaw in a Republican tax bill that lowers tax rates in an attempt to jump-start economic growth, but Democrats (through the Byrd Rule) have made it virtually impossible to cut spending. Better half a loaf than nothing.

And how can Democrats seriously complain about deficit spending? Their political platform is all about spending more government money. Massachusetts Sen. Elizabeth Warren even compared the bill to robbery, yet all such spending is taken from current taxpayers—or from future ones in the form of the growing national debt. That said, many observers—even conservative ones—don't believe that the bill's myriad breaks will pay for themselves.

"Most Republicans say that the tax cut will generate so much extra growth that it will increase revenues," opined the editors of the conservative National Review. "No economic model of the tax cut, not even any of the models produced by conservative economists, backs this claim." It lets Republicans, however, "offer tax cuts to various constituencies without having to impose any restraint on spending."

The last sentence sums up my problem with every tax bill I've written about in my adult life. Despite Republican rhetoric about cutting government, no one ever cuts government spending. Indeed, the Trump administration wants to invest in military and national-security programs, build a border wall (that Mexico is definitely not going to pay for), and even push NASA to send astronauts back to the moon. Those things aren't free, either.

Nevertheless, many of us object to the Democratic concept that cutting taxes for individuals and businesses is the same as "spending" more money, as writer David French pointed out. That's only true if the government has a claim to our entire paycheck.

A lot of attention has focused on the political ramifications of the bill. Indeed, the plan was the first major legislative victory for the president—one he desperately needed. But that's neither here nor there in terms of policy. (As an aside, if Donald Trump spent more time on such substantive matters and less time tweeting nonsense, perhaps Republicans would have a better chance of passing other substantive measures.)

What matters is whether the bill's provisions are good ones. Mostly they are. It does some constructive things. For instance, most Americans—not just the wealthy, despite Democratic claims to the contrary—will have lower tax rates. Most parents will benefit from a doubled child tax credit. It repeals the individual mandate penalty for health care, which was a noxious portion of Obamacare. It lowers the corporate tax rate to 21 percent and reduces myriad tax penalties for businesses. It also doubles the exemption for the hated death tax.

Unfortunately for those of us living in high-tax blue states, we'll get hit with some higher taxes given that the plan caps the deduction for state taxes and reduces the mortgage interest deduction on large home loans. But why should the rest of the country subsidize our state's foolishly high income taxes or our sky-high home prices, which are driven by liberal slow-growth policies? If Sacramento Democrats were seriously concerned about this problem, they could, you know, give Californians a tax break to ease the pain.

At least the bill pushes in a lower-tax direction and rebukes the Democratic class-war nonsense. Who really cares how rich people spend their own money? We should all be more concerned about encouraging them to invest in their businesses.

This column was first published in the Orange County Register.

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  1. “Your money is yours, not the government’s”

    While I certainly agree with this headline liberals do not.

    Strange how they think when they take my money and spend it on what they want they believe it will be popular. When I am able keep that money to spend on the things I need and/or want they think it will be hated policy.

    1. Can we stop using the term liberal to identify leftists?

  2. “The last sentence sums up my problem with every tax bill I’ve written about in my adult life. Despite Republican rhetoric about cutting government, no one ever cuts government spending. Indeed, the Trump administration wants to invest in military and national-security programs, build a border wall (that Mexico is definitely not going to pay for), and even push NASA to send astronauts back to the moon. Those things aren’t free, either.”
    Didn’t Trump’s budget proposal want to cut some spending and move some of that spending to defense and border security, creating a net decrease in federal spending?

    Didn’t Trump’s tax reform push create a net spending decrease because ending Obamacare mandates reduces government spending for Medicare?

    1. No. Eliminating the ACA mandate actually is a tax decrease but also is a revenue decrease.

      1. There’s a revenue decrease from the loss of ACA penalties, but also a spending decrease from not paying for subsidies for people who decide to opt out of coverage. The net effect of dropping the ACA mandate is a revenue increase, which was the whole reason for including the ACA mandate repeal in the tax bill. It saved deficit space for other tax cuts.

        1. “There’s a revenue decrease from the loss of ACA penalties, ”

          I doubt the feds ever collected all that much from the ACA penalty in the first place.

          No one actually had to pay the penalty if they were not due a tax refund. Taking it out of tax refunds is the only way the IRS was allowed to collect it. All that anyone had to do was change their withholding allowances and/or estimated tax payments and they could refuse to buy health insurance and the IRS could not make them pay the penalty.

          1. Very true Gilbert, but most people were completely unaware that the IRS could only collect out of excesss withholding.

  3. Sounds like you don’t really get it. The caps on mortgage interest and state/local taxes combined with new taxes on large college endowments are a direct attack on the Blue State Donor Model, with far-reaching implications.

    1. The real purpose of the endowment tax is to recapture some of the corporate tax cut. If you cut corporate taxes and increased after-tax profits flow through to shareholders, that’s additional dividend or capital gains income which is taxed on the individual side–except for stock held in the accounts of non-profit entities. For them, the corporate tax cut is a huge windfall, all cut on the corporate side and no tax when the profits flow through to the individual side.

  4. “hat’s an apparent flaw in a Republican tax bill that lowers tax rates in an attempt to jump-start economic growth, but Democrats (through the Byrd Rule) have made it virtually impossible to cut spending. Better half a loaf than nothing.”

    It’s not an “apparent flaw”, it’s an obvious one. Paul Ryan originally planned to make the package tax neutral but big business complained, so he changed it. The Trump Administration proposed spending cuts, but the Republican Congress refused to make them. Republicans limited the SALT deduction for individuals, but retained it for corporations. Republicans have long hoped to eliminate the estate tax, which would be worth billions to the Koch family. About half of all inherited wealth consists of increases in value of properties and securities, which is never taxed (and which should be). According to Forbes, Charlie and Dave were each worth $19 billion back in 2008 and are each worth $41 billion today. More Kenyan socialism, please.

    1. (and which should be)

      [citation needed]

      1. It’s an astonishing loophole once you know about and understand it.

        Most of us unlucky types don’t inherit real estate and stock portfolios. Most of us, we buy real estate or stock, and we pay capital gains taxes on any increase in value when we sell it. (The exception being our homes, if we live in them for long enough.) But if we should happen to die before we manage to do so – so that we never pay taxes on those gains – our heirs get this nifty thing called “stepped-up basis,” which means that any capital gains they have to pay taxes on is based on the value of what they’ve inherited, on the date they inherit it. No one ever pays taxes on gains prior to inheritance.

        So why should this be? If we’re going to tax capital gains, why should we have this strange distortion when property is inherited? Why couldn’t we at least say, to inheritors, that – okay, you’ll get this huge break on the estate tax, and in return, all we ask is that you pay this low capital gains rate on a carry-over basis?

    2. The purpose of the estate tax is straight out wealth redistribution, not revenue. It should be opposed based on a defense of property rights as a matter of course.

      1. Don’t talk to me about natural rights and then tell me that dead people have them.

        1. The dead person’s heirs have rights. That the legal niceties may take some time to sort out beyond the departed’s death is irrelevant.

          1. This country was founded on a rejection of monarchy, which is another word for inherited wealth protected by the state.

            1. Um… no. Not even close. Monarchy is inherited just right to rule (if you accept such a thing). It has nothing to do, necessarily, with property.

              But the estate tax simply says that a living person does not have the right to property in their, well… property. If they did, they could grant ownership of their property at a designated time under agreed to circumstances with the recipient. In other words… “I’m exercising my property rights and transferring ownership to another person upon my death (not AFTER).”

              To accept the estate tax is to say that the state can insert a claim on your possessions in the middle of you passing them, as per your property rights allow, to another individual or group. It would be no different than me simply snatching your paycheck as it is being transferred from your employer to you.

              Because the transfer occurs UPON death and not after, there is no time frame in which the goods in question are without an owner allowing the state an opportunity to state a claim on an otherwise unowned good. Thus, the estate tax requires them to state a claim on property that ALREADY has a just claim upon it. That means the only way they can obtain just ownership is if the current owner freely relinquishes it. If the current owner does not, then the state’s taking of the goods, backed with a threat of violence to ensure the state’s physical possession, is theft and unjust.

            2. It’s well known that the revolutionary war was faught almost exclusively over the lack of estate taxes.

              The famous revolutionary battle cry was “No taxation without estate taxation!”

              You can read all about it in my new book: The SJW’s True History of the American Revolution.

              1. Foreword by Oliver Stone?

            3. “This country was founded on a rejection of monarchy, which is another word for inherited wealth protected by the state.”

              So by the transitive property of legal plunder, The State has dibs on everyone’s stuff when they die?

    3. Republicans have long hoped to eliminate the estate tax, which would be worth billions to the Koch family.

      Billionaires have numerous ways of circumventing the estate tax. Billionaires also don’t tend to care that much. The estate tax is mainly an issue for small family businesses, whose money is bound up in the business.

      Democrats and progressives care about the estate tax because it’s a good way of demonizing “the Koch brothers” and because small business owners overwhelmingly support smaller government so the Democrats like to screw them as much as possible.

      Your obsession with the Koch brothers is pathological and your suggestion that Republicans want to repeal the estate tax because the Koch brothers supposedly stand to gain billions is laughably ignorant.

      1. Bingo. The Kennedy’s are a perfect example of this. They use LLC, trusts and other shelters to prevent paying estate taxes.

    4. The estate tax, I believe, was passed during the Wilson administration as a temporary measure to pay for WWI. It’s when increases in national debt had to be approved by Congress and when the vote was somewhat meaningful.

  5. Comrade Pelosi urges all who get a tax break to send it back to the IRS!! That’ll show ’em!! Give em hell Comrades !!!

    1. I’m going to guess the number of progressive shitbirds that actually follow through on her urging is zero.

  6. So this is our Links thread, huh? Hihn vs. shreek? I’ll take it, i guess.

    1. RETARD FIGHT!!

    2. “Hihn vs. shreek?”

      Toss in Vanneman, and call the folks with the restraints.

      1. I thought we had all agreed not to mention Vanneman again. Someone brought up missing Hihn a couple weeks ago, and, alas, you can’t read a single article without him arguing in circles with everyone again

        I do enjoy his ramblings though, makes me feel much better about myself

  7. Sen. Sander’s quote could just have easily been:

    “Today marks a great victory for Tom Steyer and other billionaire Democrat campaign contributors who will see huge tax breaks for themselves while driving up the deficit by almost $1.5 trillion.”

  8. Its pretty simple economics that economic growth will increase revenues, and tax cuts will speed up growth. I dont know if it will be more than at higher rates over 10 years, but certainly in the long run. Under the Bush tax cuts, within 5 years, the govt was taking in more revenue than before, even adjusted for inflation. So the govt gets more money, and everyone pays less individually.

    1. Under the Bush tax cuts, within 5 years, the govt was taking in more revenue than before, even adjusted for inflation.

      Can you post a reference for that?

    2. Read econ 101, there is a production function that has capital and labor for inputs, the factors of production. If these inputs are not changed and there is no increase in productivity, there will be no increase in growth.

      Of course, if we were in a recession, a stimulus might help, but we are pretty close to fully utilizing the factors of production so we should just see inflation and the fed will deal with this problem by raising interest rates and slowing the economy.

  9. Hihn vs PB

    that was worth the cost of the popcorn

    1. With John Williams ‘Duel of the Fates’ playing in the background.

  10. When the government taxes them at a higher rate, that simply means they have less money to expand their business.

    Why is this not obviously bad? Expand business = hire more people.

    1. Expanded business = more profits, and profits (unlike taxes) are theft.

      Taxes are how the people get their fair share back from capitalists who rob people with their goods, services, and jobs.

      That is why no tax is too big and no tax is too big. Government is THE PEOPLE, so taxes are THE PEOPLE taking back what capitalists stole.

      1. Great, and helpful, username, man.

      2. “That’s not theirs. That’s a national resource!”

        -Michael Moore, on wealthy people’s money

  11. Good luck cutting spending when so many people don’t pay income tax. They pay payroll taxes but the impact of that is largely hidden from them since their employers cover a percentage and they don’t have to fill out a tax return for payroll taxes reminding them how much was taken out of their pay.

    Get rid of the payroll tax and bring more people into the income tax pool while reducing the overall tax burden. But good luck making that work politically.

    1. Yes, it would take a lot of luck to make that work politically, because the dynamic that sold SS is still operating, in more force than ever. Combining it with the general budget just isn’t going to fly.

      And maybe that’s a good thing now, because hearing separately about its budget imposes a little more discipline on Medicare & SS spending. For now the payroll tax is a cash cow, but the surplus is gone soon.

    1. but Hihn did have excellent points

      1. He often does, always did. His style I never went for much.

      2. I enjoy his style. It makes for enjoyable reading.

  12. Damn kochsuckers trying to sell borrowing from the millennials’ grandkids to fund their crony capitalists.

  13. This would make sense if the Republicans actually cut your taxes and cut spending. What they have done is borrow money on your credit card, give you the card and money back, and say that you got free money. Of course, you know that you still have to pay it back with interest.

    God, do Republicans think that you are dumb.

  14. The left wants to punish the rich? I COMPLETELY DISAGREE. The left believes in “crony capitalism” (much better identified as crony socialism) and makes pragmatic deals with most of the billionaires of the world (Gates, Buffet, Bezos, Soros, Bloomberg, Zuckerberg etc). These billionaires don’t want their wealth seized by the government, so they support Democratic causes and candidates in exchange for good press, good tax shelters and specialized treatment. The left wants to punish rich people with conservative or libertarian ideas, not because they are rich, but because of their ideology. It is important to distinguish the REAL IDEAS of the left from the rhetoric and propaganda.

  15. I think republicans are still better than democrats. Although that is getting very difficult to say about congressional republicans and their pals on the beltway. Although they still have the advantage of not being Stalinists.

    That being said, nearly the entire comgress isn’t worth a shit anymore.

  16. A corporation may write its check to the Internal Revenue Service for payment of the corporate income tax, but that money must come from somewhere: from reduced returns to investors in the company, lower wages to its workers, or higher prices that consumers pay for the products the company produces. Understanding the mech- anisms through which those tax burdens are transferred is crucial in determining the economic effects of the corporate income tax.

    CBo report

  17. Dan Mitchell at CATO has said in the past that “Starve the beast” could be the best way to go. I agree!

  18. This is strictly power politics by the democrats. They are employing “fear tactics” gain the support of the economically illiterate voters. One of their favorite slogans is “soak the rich”. And if asked, every economically deprived person would love to be “one of the rich people.”

  19. Silly to you, not to the Democrats, it garners them votes.

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