Monday, October 15, 2007

Clinton's Proposed Taxes

Hillary Clinton has mentioned several ways she plans on raising taxes were she elected. Dick Morris and Eileen McGann discuss them, and in doing so, reveal an interesting view many seem to have on the subject of taxes.

It's the usual litany of progressive taxes you would expect of a Democrat:

Increase the top tax bracket from 35% to 39.6%
increase the capital gains tax from 15% to 20%-30%
Raise taxes on dividends from 15% to 30%
Keep and lower the minimum for (broaden) the estate tax
Possibly raising or eliminating the maximum on social security taxes

and Morris and McGann summarize it this way:

"Behind her rhetoric about shared values and unity, lies the most far reaching tax increase proposals since the days of the New Deal. And, if she is elected, she will likely carry enough Democrats into the Senate (my current estimate is 58) to pass whatever she pleases. "

Now I'm as big a fan of lower taxes as anyone, and having recently joined the ranks of the top income earners in the cross hairs of Hillary's tax bazooka, I personally would not be too thrilled with the program described above.

Here's the problem though. Nowhere in Morris and McGann's article was any explanation of why we shouldn't do exactly as Hillary outlines. Nowhere is it suggested what we should do instead, and we have many problems that demand solutions. We currently have an enormous debt with a decent sized deficit (around $190B IIRC), which some argue, persuasively in my opinion, unfairly burdens future generations with the bill for what we have decided to do. We have a social security program that will soon see a dramatic increase in liabilities relative to income, and it is running in the red as it is. The so-called "trust funds" are no panacea. They are simply IOUs of income from the general funds to the social security program, which means they still have to be paid for one way or another.

So what it boils down to is this: we must, some how, some way, either reduce spending significantly, or raise more tax income, or our government will find itself awash in debt that will make what is happening now look like a picnic. Talk of not raising taxes isn't worth a bucket of spit if it doesn't come with a solution for these monetary problems that doesn't require doing so. Every politician talking about raising taxes as if it were an evil per se is an intellectual and civic coward, plain and simple.

I hate Hillary's plan. But history suggests it would work. Keeping taxes low and waiting for the Laffer fairy to come trickle wealth down on all our heads is bullshit, as history once again clearly shows. So come on Republicans and free market Democrats! If Hillary's plan is so bad, and I believe it is, then come up with something better "THAT WILL ACTUALLY WORK. It's time our country grew up and dealt with the reality that we cannot afford everything we want.

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