by William Teach | August 2, 2011 9:05 am
…..sorry, no, it could bring on an even bigger fight, per Reuters Kevin Drawbaugh: Analysis: Storms ahead as debt deal sets up tax fight
If Congress passes the debt ceiling deal by Tuesday, as expected, it could trigger a battle over tax reform within weeks and turn Washington once again into a dateline for deadlock.
It would probably be better if we had this debate closer to the November, 2012, just ahead of the elections. Then Republicans could highlight that all Democrats want to do is raise taxes in order to increase spending.
The deal calls for a 12-member special congressional panel to locate $1.5 trillion in budget savings by late November. Some panel members will push for the first major tax code overhaul in 25 years.
I assume Drawbaugh is referring to The Showdown at Gucci Gulf (a book on tax reform during the Reagan period, which is, surprising interesting. Yes, tax reform. Interesting. Good reading), when the Reagan admin. attempted to remove every single tax break, loophole, and subsidy out of the code, which would leave the actual tax rates for all very low (they would still be progressive), and would mean that “the Rich” would have an actual paid rate somewhere around 15%-20% or so, when often, with the deductions and loopholes, they often pay way less. And everyone would pay. Then someone said “hey, what about the interest deduction on a person’s first home mortgage?” and we ended up with the current code. At the beginning of the hearings, people stacked federal tax code books on a table till it collapsed under the weight.
At stake in any such effort would be tax breaks dear to big corporations and ordinary Americans alike, with the outcome uncertain in a politically super-charged climate.
Obviously, this is what Democrats will push for: raising taxes, and going after any tax breaks for companies and industries they like to demonize.They will not want to cut a dollar from the federal budget. Well, except for the constitutionally required Defense.
Democrats will look for the committee to raise more government revenue by closing tax loopholes for corporations and the wealthy, something that is distinctly missing from the debt deal, much to the consternation of progressives.
So, let’s raise taxes on the job creators. Good idea on the Worst Recession Evah!:©
“Everything is on the table, as it should be,” White House economic adviser Gene Sperling said. “First, the Committee can consider getting rid of tax expenditures like subsidies for oil and gas companies or corporate jet owners.”
Well, Gene has his Obama Talking Points down. Personally, I have no problem with getting rid of the “tax expenditures” for corporate jet owners. We can call it the “Obama rescinds the tax breaks for corporate jet owners that were in his own Stimulus bill Act of 2011.” Doesn’t exactly roll of the lips, but, you get the idea.
When push comes to shove, Democrats will not want to reduce spending (except the aforementioned Defense): they’ll want to make it mostly about raising taxes to ramp up their spending, excuse me, injecting revenue enhancements to increase investments. Republicans will have to hold strong, including in the face of the GOP squishes who will want to capitulate.
Crossed at Pirate’s Cove. Follow me on Twitter @WilliamTeach.
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