[Vision2020] Why tax reform talk a dead end

Art Deco art.deco.studios at gmail.com
Tue Apr 17 11:32:39 PDT 2012


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    *Why tax reform talk a dead end - CNN.com*
By John Avlon, CNN Contributor
2012-04-16T22:53:33Z
 CNN.com

 Editor's note: John Avlon is a CNN contributor and senior political
columnist for Newsweek and The Daily Beast. He is co-editor of the book
"Deadline Artists: America's Greatest Newspaper Columns.

(CNN) -- *It turns out that Richard Nixon was a hippie.*

Here's Tricky Dick's wisdom on taxation, always worth dusting off this time
of year:

"We shall never make taxation popular, but we can make taxation fair."

See -- he's talking about "fairness" -- and we all now know that's code for
social justice straight out of Saul Alinsky. And it was especially
socialistic for him to invoke the concept back in a time when the top tax
rate was 70%.

Meanwhile, back in reality circa 2012, we are having a typically overheated
election-year debate about taxes -- and both teams in Washington have a
point.

Republicans this side of Ronald Reagan finally found a way to out-promise
Democrats. After decades spent griping that the New Deal's electoral power
came from liberal's limitless ability to promise public goodies,
conservatives have realized that they can tap into American's anti-tax
impulse by promising to lower taxes all the time, regardless of whether our
nation is at war or running a long-term deficit. Liberals have always had a
hard time appreciating that the American Revolution was founded in part on
a tax revolt.

But historic perspective is the enemy of partisan ideologues, and on the
flip-side, conservatives who idealize the past conveniently ignore that tax
rates at the heart of the American Century were almost double what they are
today. That was an outrage; by comparison, today's debates are about
rounding errors.

Essentially, we are debating whether the top tax rate should go back to
where it was during the Bill Clinton presidency -- 39.6%, up from the Bush
tax cut level of 35%. And this would apply only to households making more
than $250,000 a year.

I happen to think using that threshold is a mistake. A family making 250k
with two earners doesn't deserve to be lumped in with the super-rich at the
top tax rate. At the same time, someone such as Mitt Romney, who makes
$56,000 a day off passive income from investments, shouldn't be taxed at
just 14%.

Obama has a real weakness in this year's debate, however. Read through his
play-to-the-base budget, and you'll see the term "fairness" advanced over
and over again. Fairness is a noble goal and contributes to societal
stability in the long-run. But the real argument for raising taxes is
directly related to balancing budgets and reducing long-term deficits and
debt. And that argument is rooted in rhetoric about the "shared sacrifice"
needed to restore national greatness. After all, the world's largest debtor
nation cannot remain the world's sole superpower for long.

Obama's fairness rhetoric bypasses that rational argument in favor of
something fluffier -- namely, closing the growing gap between rich and poor
via the tax code. This might excite the liberal Democratic base, but it
also serves to confirm negative stereotypes about wealth redistribution and
the left that alienates independents and swing voters.

On balance, I think policy arguments about moving the top rate to people
making more than a million dollars a year makes good sense.

Republicans will balk out of deference to philosophy and big campaign
contributors, but even 52% of self-identified tea partiers support that
benchmark. It is an additional irony that many conservatives are fine with
raising taxes on those 47% of Americans who don't make enough money to pay
federal income taxes, as long as top rates are lowered enough to make the
overall shift revenue neutral. This isn't tax policy as much as it has
become a shell-game masquerading as ideology.

Tax day is unpleasant, and it has become a colossal waste of time and
money. The current tax code is roughly 10 times longer than the Bible, and
Forbes estimates that 6.1 billion hours are wasted in trying to comply with
its byzantine structures.

Both Obama and congressional Republicans have campaigned on tax reform and
tax simplification in the past. The Bowles-Simpson Plan and the sadly
abandoned Obama-Boehner Grand Bargain imagined lowering rates and raising
revenue by closing loopholes. The real tragedy is that such an agreement
should be within reach -- but the 80% agreement keeps getting eclipsed by
the 20% disagreement, that signature, stubborn hyperpartisan insistence on
all or nothing. So we get nothing.

That brings us back to Nixon's aphorism: "We shall never make taxation
popular but we can make taxation fair." It's about the last piece of useful
wisdom on the subject that we've heard out of Washington.

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The opinions expressed in this commentary are solely those of John Avlon.
 © 2012 Cable News Network. Turner Broadcasting System, Inc. All Rights
Reserved.
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Art Deco (Wayne A. Fox)
art.deco.studios at gmail.com
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