Tax Code, Stanley Johanson, Certainty and Simplicity: Republican Betrayals Go On and On

You say that Republicans (politician kind) don't really believe in small government: that they only believe in their kind of Big Government? You say that Republicans don't really believe in lower spending by the Federal Government: that they believe in spending, but in their kind of spending? You say that Republicans dont realy believe in true control of our debt or our deficit: that they only blieve in the kind of debt and deficit that they want, which may end up just as large as the kind of debt and deficit that Democrats want? Well, you are right, and the way so many Republicns have embraced the Bush tax cut compromise proves it. But you are leaving out a primary Republican betrayal. Republicans (politicians, except for a few True Believers) do NOT believe in a simple tax code. This is shown not only by the embrace of this tax cut "compromise", but by the "alternatives" Republicans have proposed ever since Obama took office.

No, general income tax rate reductioins--much less failing to INCREASE such rates, as the present Bush tax cut debate is about--do NOT represent "spending" which needs to be "paid for". Indeed, an increase of taxes is unlikely to raise government revenue (especially now), while a decrease in taxes (general income tax rates) may actually RAISE REVENUE. Ronald Reagan proved that, and a thought experiment will show you it is true.

Do you agree with leftist Democrats that no one should make over $250,000 (or $500,000 or a million dollars or whatever)? Ujbiw tget dib;t put it hat way, but they are clearly saying that all money a person makes beyond a certain amouint belongs to the GOVERNMENT, which the government allows a person to keep only as a matter of grace. The dirty little secret, of course, is that ALL money people make, and have, belongs to the government, but let us stay with the present thought experiment. Okay. let us accept that all money people make over a million dollars (with higher rates up to a million) is there for the government to use if the government NEEDS it. You are certainlly being told that people don't NEED to earn more than a million dollars to have a nice life. In fact,you are being told that there is something obscene about people earning more than that--so much more than others---and that those people should certainly not object to "sharing" (in the manner of Robin Hood) with the rest of us when we are in need. And why should people be able to pass on more than a million dollars to their children, when the rest of us NEED it?

Okay. We have established no one needs more than a million dollars. In better times, maybe we could let Alex Rodriquez keep all of that extra money (wel, some of it), and Steve Jobs (Apple). But these are not normal times. Let us, therefore, confiscate (condemn--as in eminent domain) all of that money. We NEED it, and the rich can afford to lose it. It is their civic duty. Plus, let us confiscate ALL of every estate--to the extent the estate exceeds one million dollars and is not given to the spouse. Does not the logic of the present Democrat position lead to the conclusion that this is perfectly all right, as a means of reducing our debtg and deficit? After all, we are DESPERATE, and this source of funds is there for the taking (not needed for the peoiple who have it to live well). Think of the STIMULUS, as we redistr\ibute all of that money to people who will actually spend it, and don't rluin our future by borrowing from China!!!!! What is wrong with this picture?

How much money (revenue) will a 100% tax on all income above one million dollars raise? On all estates (death tax) over one million dollars? Remember, one million dollars is more money, or at least about as much, as people earning minimum wage will earn in their entire working LIFETIME!!!! And we NEED the money. No brainer, right? Well, it is a no brainer. Such a tax will raise NO revenue. The government will LOSE revenue (no matter what the CBO says). The government will LOSE a LOT of revenue. This is not even an opinion. It is an absolute fact.

In our hypothetical perfectly fair tax world (from the leftist point of view), no one will earn over a million dollars (as soon as they can arrange it, and it will be soon). no one will die with over a millioin dollars, and they won't pay it in gift tax either. How will they do it? Taking it easy is one way. Why kill yourself, for the government? Moving out of the country is another way. Maybe the "rich" will recreate the United States of America (now dead) in another place. If only, of course, the "rich" had not already mainly lost the principles upon which this country became great. It would not be possible for me to even itemie all of the ways in which the rich will make certain they do not pay this confiscatory tax to the government. Elizabeth Barrett Browning could not count the ways ("How do I love thee; let me count the ways"). But you know, and I know, that NO ONE will pay these taxes (no one who is sane, which may leave Warren Buffet out). The government revenue from the rich will approach ZERO, and the OTHER taxes on EVERYBODY will have to go up (a vicioous cycle which represents a death spiral for what used to be the United States of America). One way or another, even if they have to make their life a non-stop party, NO ONE will die with over a million dollars. And, in a significant way, the left will not care, because (as Obama told Joe the Plumber,), for the left it is not really about government revenue. It is about redistributioin of the weath and the leftist idea of "fairness". Of course, the country will be destroyed, but you often get the feelig that the left would prefer that to giving up their own power and control. We will end up with full scale economic fascism ("state capitalism"--the state totally determining the winners and losers) before the final collapse. We are already way down that road.

This concludes our thought experiment, where we have PROVED that a confiscatory tax ratre LOSES revenue. "But", you say (fool that you are), no one really proposes a 100% tax rate." That does not change the principle involved once you take the positiion that the government owns all of a person's money--even if you limit that to money above a certain amount (a limit true leftists do not recognize). What about a 90% tax rate? Believe it or not, we actually tried that. No one paid the rate, because there were so many loopholes that all but the terminallyu stupid avoided the rate. Why do you think JFK (yes, a DEMOCRAT) got rid of that rate? 80%? Remember state and local taxes also have to be considered. 70%? People will NOT pay any of those rates. They will avoid them.

Further, and leftists will never understand this one, the OPPORTUHNITY to earn more than a millioin dollars a lyear, even if most people will never do it, is part of the essence of the United States of America. It is more than undermining the economy, and destroying the very revenue we profess to be trying to raise for the government. The idea that it is all about what the government "needs", and taking it form the "rich", is contrary to the very founding principles of this country. If we accept that idea, as leftists do, then we are no longer the United States of America--the democratic republic more successful than any in history, and which has come to dominate the world. The attitude seeps down to every person, and we are lost. What is funny is that I think more ordinary PEOPLE are able to understand this--lby instinct, and especailly if it is explained to them--than politicans are willing to accept this (Republican and Democrat). Politicans want CONTROL.

Butawe are talking about tax rates of 40^ at the top, are we not? Too high. Especially when you consider all of the other taxes, and the monster the tax code has become. We--even most Republican politicians--are approaching taxes from the wrong direction. As I began this article, I told you that income tax reductions are NOT "spending", and do not need to be "apid for". That is partly because income tax reductions--and refusal to raise tax rates--often RAISE revenue. Further, income tax increases REDUCE revenue. However, the main reason tax rates are NOT "spending" is that it is absurdly wrong to talk about tax rates that way. The FIRST thing we need to decide is the appropriate tax rate (and structure). If you don't understand that from the thought expermient above, then yuou have missed the point. What is the maximum the Federal Government should take out of an individual's income (and estate), both to maximize revenue and limit the government to an appropriate amount of intrusion inoto a person's personal life? I put that at no more than approximately 25%--slightly lower than where Ronald Reagan put it. But that is the decision that has to be made FIRST--or the decision to change the tax structure entirely, which I don't see as necessary if we limit the top rate and go back tto the Reagan idea of a SIMPLE tax system. Once we determine what the appropriate tax rates/system shoud be, THEN we must limit our spending to the revenue produced by that system and rates.

You see--or should--where this is going. The tax rates, and system, SHOULD NOT CHANGE (once it is appropriately set). A goood part of our problems come from the fact that we have continued to tinker with the Reagan revolutioin--NOT to simplify the system while keeping the tax rates constant, but by RAISING tax rates and COMPLICATING the tax system to let the politicians determine winners and losers (economic fascism). CERTAINTY in the tax system is almost as important as the appropriate rates and system.

That is where Stanley Johanson comes in. He was one of the nation's leading authorities on estate planning when I was a student at the University of Texas Schoool of Law (although I had him as a teacher of a class called Low Income Housing--believe it or not). Over the years, Stanley Johanson (I have not checked his current life status) remained one of the top estate planning experts. In that capacity, he used to give a yearly seminar in El Paso on estate planning--a one day seminar that was better than most week long deminars on the subject I attended. For a number of years--until I quit doing estate planning and headed toward retirement--I attended Johanson's seminar every year. What was one of Johanson's main messages, year after year? It was about the STUIDSITY of Congress tinkering with the estate tax system year after year. I can't even imaine what Johanson would say about the STUPIDITY of reducing the estate tax over an entire decade to ZERO (what it is now), and then proposing to put back the entire complicated law at a tax rate of 55% (or 35% under the "compromise", or whatever_/ Kpjamspms [pomt was tjat cpmstamt cjamges om tje tax ;aws==eer ,pre cp,[;ocated==,ade [;ammomg O<{PSSOB:E/ What he said about estate planning applied to the entire tax system. Tinkering constantly with the tax system is merely a way for politicians to assert CONTROL for their own political benefit.

Yes, if you understtod the above, you realize that we need to arrive at a SIMPLE system with taxes low enough to avoid government domination and low enough to avoid excessive interference in the lives of people--and excessive government interference in the economy. We need to have a system that AVOIDS encouraging people from making decisions for tax reasons--either economic decisioins because of government subsidies or to avoid taxes. Then we need to STOP. Simple and PERMANENT, that is what we really need. That is the opposite of what we are getting, and the opposite of what Stanley Johanson correctly preached all of those years.

What if we have a deficit? What if we have a recession? What if...... Forget it. We need to let the tax system alone (once a simple system is in place). No gimmicks. No "temporary" increases. No "temporary reductions. No tax credits. No "temporary" tax holidays. This idea that government can CONTROL the economy is theoretically impossible, and historically absurd. If you think lyou have to spend in a recession to help people, as FDR did in the Great Depression, do it. History says it will not work, and that correct long-term olicies are better. But, whateverf you do, LEAVE THE TAX CODE ALONE. Yes, the problem is that ALL politicians thknk exactly the opposite. The tax code is the FIRST place they look to TINKER and CONTROL. That may yet destroy us.

Ywes, the new, proposed 2% "tax holiday" on the payroll tax IS the equivalent of spending-nothing more than welfare payments trgeted at taxpayers where politicans think the votes are. Tax credits are SPENDING (as the Debt Commission correctly said). This is not true of general tax rates. But it is true of these TAX GIMMICKS. Part 2 of this article will explain why . For now, you can surely see that Republicans--who keep proposing complex gimick aftrer complex tax gimmick themselve, falsely in the name of tax reduction--have totally BETRAYED the idea of a SIMPLE tax system they have often purported to support. You can see why so many Republicans have jumped at this compromise with Obama. Far from giving up anything, they are gloating that Obama has embtaced their traitorous (to conservatives) idea that the TAX CODE is the way to "solve" all of our problems--with politicians coming to the rescue with tax incentives targeted at specific groups and specific problems. This is a BETRAYAL by Republicans of the basic principle of a simple tax system wehere the government does not assert the power to determine winners and losers in the economy.

Part 2 of this article will expand on the reasons "targeted" tax relief is spending--no different than welfare spending--including an analysis of this payroll tax holiday. Remember that a variation of that "tax holiday" was proposed by Republicans as a STIMULS in place of Obama's failed "stimulus". It is, in fact, a better simulus idea than the Obama stimulus, because it merely gives people money to spend the way they want, but it is merely a variation of the Bush/Democrtat $600 "stimuls" that FAILED in the summer of 2008. These games--as represented by this new Bush tax cut compromise--may cause ou to despair. That is often my reaction. All we can do is refuse to accept them--the purpose of these articles condemning politicians of both parties and explaining why they are all so bad. The only "sollution" is to KEEP voting these people out until they get the message, and to keep telling them why we are not voting for them.

Note: Part 2 will appear sometime this week. In the meantime, please note that the above is not proofread in any way, due to my eyesight, and that the only articles you can assume are proofread will not contain this note. I am trying to retroactively get articles proofread, but who knows how well it will work.