“In Shocker, GOP Proposes Cutting Taxes For The Wealthy”: Don’t Believe The Baloney About Tax Simplification
For some time, I’ve been saying, perhaps naively, that we ought to have a real debate about tax reform, and maybe actually accompish something. Sure, Democrats and Republicans have different goals when it comes to this issue—Democrats would like to see the elimination of loopholes and greater revenue, while Republicans want to reduce taxes on the wealthy—but there may be a few things they could agree on somewhere in there. You never know.
So today, Representative Dave Camp, the chair of the House Ways and Means Committee, is releasing the latest incarnation of Republican tax reform. And it’s…exactly what you’d expect. Unfortunately.
In fact, though we’re waiting for details, it looks almost exactly like the plan Republicans released two years ago. The centerpiece is an elimination of most tax brackets, leaving only two, at 10 percent and 25 percent. In a total shocker, that means a huge tax break for the wealthy! I know—I too am amazed that Republicans would propose such a thing.
But they’ll make up the revenue, they protest. How? Well as always, Republicans say they’ll eliminate loopholes, but won’t say which ones. The reason for that is simple: everyone hates loopholes that other people benefit from, but everyone wants to keep their own loopholes. As long as you never say which loopholes you’d eliminate, nobody has reason to fight against your plan, since they don’t know whether the ox being gored is theirs or someone else’s. Furthermore, the really big loopholes are ones that lots of people love, like the mortgage interest deduction, a largely middle- and upper-class entitlement that cost the Treasury $82 billion in 2012, or the deduction for employer-provided health insurance, the largest tax expenditure at a whopping $184 billion. Think anyone’s going to eliminate those? Not on your life. But that’s where the real money is.
There is one new thing in this Republican proposal, a surtax on certain incomes over $400,000 a year, which would assumedly recover some of the money we’re losing by cutting those people’s taxes. But there are some devilish details. First, some kinds of high earners, like those in manufacturing, are excluded. And most importantly, it would only apply to wages over $400,000, and not investment income. In other words, as is usually the case with Republican proposals, they reflect a particular value: that work should be taxed at a higher rate than investments. And of course, the higher you go up the income scale, the greater the proportion of their income the wealthy get from their investments.
One final note on this. The part of the plan that will get the most attention is reducing the number of tax brackets to two. This is always offered in the name of “tax simplification,” but the truth is that the number of brackets is just about the least complicated thing about the tax code. Kevin Drum has it right:
I’m not encouraged by the fact that reducing the number of tax brackets is apparently a key feature of this “simplification” plan. That doesn’t simplify things by even an iota. The hard part of calculating your taxes, after all, is figuring out your taxable income. That takes about 99.9 percent of your time. Once that’s all done, the final step is to look up your tax rate and then multiply the rate by your taxable income. That part takes about 30 seconds.
In fact, we ought to have more tax brackets, not fewer, particularly at the high end. There’s no reason that someone making $400,000 a year should pay the same marginal rate as someone making $400 million a year.
Anyhow, the most consequential feature of this Republican tax plan, like those that came before it, is its attempt to relieve the nation’s wealthy of their burden of taxes, so terribly weighed down as they are. Maybe I’m forgetting something, but I can’t recall there ever being a Republican tax plan that didn’t propose precisely that. Ever. And they wonder why Democrats have so much success characterizing them as the party of the rich.
By: Paul Waldman, Contributing Editor, The American Prospect, February 26, 2014
“Don’t Bother Us With Governing”: With Caucus-Wide Sentiment, House GOP Pushes Distractions Over Policy
At the start of every Congress, the leadership of both chambers generally set aside bill numbers as a way of designating their biggest priorities. The House Republican majority, for example, will set aside H.R. 1 through H.R. 10 for their top 10 most important bills – the ones they’re most eager to pass.
And in this Congress, H.R. 1 has nothing to do with immigration, health care, energy, or security. Rather, it’s tax reform.
For the last several months, House Ways and Means Committee Chairman Dave Camp (R-Mich.) has been quietly meeting with Senate Finance Committee Chairman Max Baucus (D-Mont.) on a major overhaul of the federal tax code – the first in a generation. It’s no easy task, and Camp has made clear he considers this the most important project of his political career.
The general proposition is pretty straightforward: if Congress eliminates unnecessary deductions, closes loopholes, and scraps superfluous tax giveaways, the result will be a simpler, streamlined tax code that produces more revenue. The benefit would mean more deficit reduction, lower rates overall, or both. The trouble, of course, is that those deductions, loopholes, and giveaways have their champions and they’re hard to get rid of, compounded by the fact that Democrats and Republicans disagree on what to do with the new revenue.
But that’s not the only trouble. Brian Faler had a report this morning on an angle I hadn’t considered.
[Some of Ways and Means Committee Chairman Dave Camp’s] fellow Republicans now don’t want him to release his long-awaited tax reform bill for fear it will allow Democrats to change the subject. They want the public’s focus on people who have lost their health insurance and those having trouble signing up at healthcare.gov, and not on what will surely be a controversial tax-reform bill.
It’s a cruel bit of timing for Camp, who’s spent three years, almost since the day Republicans took control of the House, trying to build support for the first tax overhaul in a generation. He’s repeatedly promised his panel would take up legislation this year, and if it doesn’t soon, Camp – who faces term-limit restrictions on his chairmanship – may never get the chance.
Got that? Camp believes he’s finally made progress on H.R. 1 – ostensibly the one thing House Republicans actually want to pass in this Congress – and he’s eager to move forward. Camp, however, is effectively hearing from his own allies, “Don’t bother us with that now; we’re too busy raising a fuss about health care.”
Indeed, the Politico report added that lobbyists involved with the process believe House GOP leaders will “pressure Camp to pull the plug” on his tax-reform measure.
This reminds me a bit of a story from March, when Rep. Mike Kelly (R-Pa.) said he wanted to tackle legislation regarding loan guarantees to clean-energy companies, but he dropped the legislation because “he chose to focus more” on Benghazi and Fast and Furious.
In other words, the congressman had a policy priority, but it was abandoned – a partisan crusade got in the way.
Seven months later, it seems Camp is running into a similar issue. He wants to follow through on years of work on tax reform – for the record, I have a hunch I won’t care for his plan – but his effort is getting in the way of Republicans’ anti-healthcare fun.
And since it’s a post-policy party, the conflict between governing and gamesmanship isn’t much of a contest, at least with the House GOP majority.
Don’t forget, just last week Rep. Pete Sessions (R-Texas) boasted that the House Republicans’ top priority should be “messaging,” not problem solving. As Dave Camp is apparently realizing, this is a caucus-wide sentiment.
By: Steve Benen, The Maddow Blog, November 13, 2013
“Doing More With Less”: Outgoing IRS Chief Blames Underfunding For ‘Foolish’ Mistakes
Testifying in front of the House Ways and Means Committee, acting IRS commissioner Steve Miller apologized for his agency Friday.
“I want to apologize on behalf of the Internal Revenue Service for the mistakes that we made and the poor service that we provided,” Miller said. “The affected organizations and the American public deserve better.”
Agents at the IRS decided to take a shortcut in 2010 that has created an uproar, “centralizing” a number of factors that could raise suspicions that these fledgling non-profits might not be focused primarily on ”social welfare.” One of those factors — and here’s where they made their biggest mistake — was focusing on groups with “Tea Party” or “Patriot” in their names. Later they revised this policy to focus on “political action-type organizations involved in limiting/expanding government, educating on the Constitution and Bill of Rights, social economic reform movement,” according to the IRS Inspector General’s report.
The result? Some 300 groups were identified for extra scrutiny — among them, 70 were Tea Party groups. It’s not clear how many groups were turned down, yet it’s clear at least one Democratic group was.
Miller — who is stepping down from his position at the request of the administration — insisted that the actions were not intended to target conservatives.
“I think that what happened here was that foolish mistakes were made by people trying to be more efficient in their workload selection,” he said. “The listing described in the report, while intolerable, was a mistake, and not an act of partisanship.”
Under questioning by Rep. Paul Ryan (R-WI), Miller pointed out that though progressive groups were not identified by name, the IRS actually collected more information on left-leaning groups than Tea Party groups. The lifelong bureaucrat even rejected the notion that his agency was “targeting” anyone, insisting that was a pejorative term to describe the “listing” the agents were doing.
Republicans continually tied the scandal to attacks on the IRS in general, often citing audits by their supporters as proof of the agency’s overreach.
“The reality is this is not a personnel problem. This is a problem of the IRS being too large, too powerful, too intrusive and too abusive of honest, hardworking taxpayers,” said Rep. Dave Camp (R-MI).
But Miller had another explanation for why his agents pursued such questionable practices — funding. The commissioner asked the committee to increase funding to his agency, citing budget constraints as a major reason why agents sought shortcuts to identify questionable applications.
“In the last 10 years, the budget of the IRS, adjusted for the size of the population and inflation, has come down 17 percent,” according to tax expert David Cay Johnston.
Committee members offered several examples of groups being denied 401(c)(4) status or delayed endlessly. However, there’s no evidence that suggests Republican spending was hindered by this IRS’s shortcut.
“Of the 21 organizations that received rulings from the IRS after January 1, 2010, and filed FEC reports in 2010 or 2012, 13 were conservative,” writes OpenSecretsblog‘ Robert Maguire. ”They outspent the liberal groups in that category by a factor of nearly 34-to-1, the Center for Responsive Politics analysis shows.”
By: Jason Sattler, The National Memo, May 17, 2013
“Making A Commitment To A Lie”: Republicans Are Invested In Undermining Innovation
Remember in “Seinfeld” when George Costanza got a new job and his employer thought he had a physical disability? He loved the benefits and attention, so he fully committed himself to the lie — and intended to keep it up indefinitely.
The episode reminds me a bit of how Republicans treat their 2012 welfare reform lie.
As you’ll recall, a bipartisan group of governors asked the Obama administration for some flexibility on the existing welfare law, transitioning beneficiaries from welfare to work. The White House agreed to give the states some leeway, so long as the work requirement wasn’t weakened. It inspired Mitt Romney and GOP leaders to make up a shameless lie, accusing President Obama of weakening welfare work requirements.
The blatant falsehood didn’t make much of a difference, and I assumed the issue would disappear once the election ended. But like George Costanza, Republicans have become so invested in the lie, they’re afraid to let it go.
Prominent House Republicans are relaunching efforts to stop the Obama administration from giving states waivers under welfare reform.
GOP leaders of several committees reintroduced a bill Thursday that would block the policy, which Republicans say “guts” welfare’s work requirement.
“This legislation makes it clear — the Obama administration cannot undermine the work requirement that has resulted in higher earnings and employment for low-income individuals,” said Ways and Means Committee Chairman Dave Camp (R-Mich.) in a statement.
That the Obama administration never undermined the work requirement — and has no intention of doing so in the future — apparently doesn’t matter. What’s necessary, apparently, is to keep the lie alive, even after it’s been exposed as untrue.
Yesterday, the White House criticized the House GOP bill, which has 23 cosponsors, as standing in the way of “innovative” state-based programs that could help more welfare recipients into new jobs. The administration called the bill “unnecessary.”
Which it is, though that doesn’t seem to matter.
By: Steve Benen, The Maddow Blog, March 13, 2013
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