This morning Ezra Klein wrote, The Reality of Tax Reform: Less Charity, Smaller Homes, Higher State Taxes. It gets to the heart of politics, but most especially Republican politics. It’s all about vagueness of proposals.
The reason I associate it with Republicans is that their policy prescriptions are generally unpopular. So rather than say “cut popular deductions” they say, “Let’s broaden the tax base.” That sounds great, right? Broaden the tax base! It sounds like getting other people involved in paying taxes. What it means is making you pay more in taxes.
Klein quote Peter Orszag, who notes that 90% of all deductions (or “base broadening,” if you prefer) is in the form of three deductions: home interest, charitable giving, and state and local taxes. The home interest deduction was put in place to encourage home ownership. In general, I’m not in favor of it. Home ownership tends to tie workers down and make them more compliant. In fact, I think this was the main purpose of it; the government doesn’t really give a rat’s ass about who owns property; someone will own it who will pay taxes.
I also don’t think much about the charitable giving tax deduction. I tend to think that people give to charities because they want to. The fact that they get a deduction is just icing on the cake. The state and local taxes deduction, on the other hand, is very important. These taxes tend to be regressive or at least not progressive. Providing a federal tax deduction limits some of the harm that these taxes cause.
The main thing to notice about these tax deductions is how much they would affect the middle class. This gets back to the Tax Policy Center’s analysis of Mitt Romney’s budget proposal. The problem was that there just weren’t enough upper class deductions to pay for the upper class tax cuts. Of course, Romney knew that. He just didn’t think that anyone else would notice.
And so the Republican Party continues on with their vague plans to “broaden the tax base.” This is because they know that “screw the middle class” would not be very easy to sell. But that’s what it is. If someone will not give you details, it is because it is a bad deal. In this case, it is a bad deal.
Update (30 November 2012 10:23 pm)
I just saw Ezra Klein hosting The Last Word. He noted that people making over $200,000 per year give 20% of the nation’s total charitable giving. This represents about the top 2.5% of income earners. But let’s look at the top 1%, because I have data on them. They earn 24% of the total yearly earnings. They own 40% of all the wealth in the country. My point here is that the rich apparently don’t give to charities at as high a level as their income and wealth would indicate. As usual: fuck the rich. They are a bunch of selfish assholes. Ezra Klein needs to stop pointing out the large absolute value of their giving and put it into perspective.