- Nov 26, 2011
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As I have explained many times, every time you give a special interest a tax break, someone else has to make up the difference. This is achieved by raising tax rates on everyone. So even the lobby that got the tax break now has a higher tax rate, along with everyone else.
However, if we raised tax rates high enough to pay for the $1.4 trillion of them that are given out each year, the American people would revolt. So tax rates are raised to a barely tolerable level, and then the rest is borrowed.
And that is how we got to $19 trillion in debt and a 39.1% corporate tax rate.
As I have explained many times, if you get rid of all these government gifts to all these special interests, you could substantially lower tax rates. And you get the extra bonus of everyone being on a level playing field. Entities which earn identical incomes would pay identical taxes.
Instead, we have an insane system where entities which earn identical incomes pay radically different taxes.
Enter the House Ways and Means Committee, chaired by Kevin Brady. This committee came up with a plan to do just what I have been saying for years. They came up with a plan to lower the corporate tax rate substantially by getting rid of all those government giveaways.
Their original plan was simple. Get rid of all the special interest deductions, credits, and exemptions.
Guess what? Those special interests are so powerful that this turned out to be impossible. Our Congress is now completely owned, boys and girls, and it is long past time to wake the fuck up to this fact.
You simply must wake up. Anyone who defends $1.4 trillion of thievery is on the wrong side, and yet we are burdened with pseudocons who do just that. They defend deductions, credits, and exemptions which add up to $1.4 trillion like they are welfare queens.
They have been fed a lie that these tax expenditures mean they get to keep more of their own money. This is a giant lie. A YUGE lie.
As it happened, every time the House Ways and Means committee tried to take away all those special interest tax breaks, the special interests forced them back in. Which then forced the House Ways and Means to raise tax rates back to 39.1%.
Impasse.
So House Ways and Means came up with Plan B: The border adjustment tax. It’s real name is a “destination-based cash flow tax”, but the colloquial term is border adjustment tax.
The border adjustment tax is, very basically, an import tax. Even better, it’s a consumption tax. The corporate tax is a tax on production.
All of our allies have a border adjustment tax. We don’t. We’ve been living on that unlevel playing field forever. Now that House Ways and Means introduced the idea of the US moving to one, our allies are screaming at how unfair it would be for us to have the same kind of import tax they do!
Go figure.
We can get into the pluses and minuses of a border adjustment tax a little later. But for now, here’s how the GOP plan was going to work.
Since the special interests refused to give up their special tax breaks, the GOP decided to leave them in.
Since the special interests want their cake and to eat it, too, they also got the corporate tax rate lowered. To somewhere around 15%.
Because of this, all the lost revenue due to the tax breaks was no longer made up for by the 39.1% tax rate. So House Ways and Means intended to make up the lost revenues with the Border Adjustment Tax.
Enter Trump.
Donald Trump was “ambivalent”, at best, about the Border Adjustment Tax. And now he has decided he is against it.
So bye-bye Border Adjustment Tax.
But…he is keeping the lower corporate tax rate AND all those special interest tax breaks. And that means, boys and girls, a gigantic spurt in national debt if the Trump way comes to pass.
This is a total cop-out. It is the coward’s way out, and every fiscal conservative should be vehemently opposed to this.
However, if we raised tax rates high enough to pay for the $1.4 trillion of them that are given out each year, the American people would revolt. So tax rates are raised to a barely tolerable level, and then the rest is borrowed.
And that is how we got to $19 trillion in debt and a 39.1% corporate tax rate.
As I have explained many times, if you get rid of all these government gifts to all these special interests, you could substantially lower tax rates. And you get the extra bonus of everyone being on a level playing field. Entities which earn identical incomes would pay identical taxes.
Instead, we have an insane system where entities which earn identical incomes pay radically different taxes.
Enter the House Ways and Means Committee, chaired by Kevin Brady. This committee came up with a plan to do just what I have been saying for years. They came up with a plan to lower the corporate tax rate substantially by getting rid of all those government giveaways.
Their original plan was simple. Get rid of all the special interest deductions, credits, and exemptions.
Guess what? Those special interests are so powerful that this turned out to be impossible. Our Congress is now completely owned, boys and girls, and it is long past time to wake the fuck up to this fact.
You simply must wake up. Anyone who defends $1.4 trillion of thievery is on the wrong side, and yet we are burdened with pseudocons who do just that. They defend deductions, credits, and exemptions which add up to $1.4 trillion like they are welfare queens.
They have been fed a lie that these tax expenditures mean they get to keep more of their own money. This is a giant lie. A YUGE lie.
As it happened, every time the House Ways and Means committee tried to take away all those special interest tax breaks, the special interests forced them back in. Which then forced the House Ways and Means to raise tax rates back to 39.1%.
Impasse.
So House Ways and Means came up with Plan B: The border adjustment tax. It’s real name is a “destination-based cash flow tax”, but the colloquial term is border adjustment tax.
The border adjustment tax is, very basically, an import tax. Even better, it’s a consumption tax. The corporate tax is a tax on production.
All of our allies have a border adjustment tax. We don’t. We’ve been living on that unlevel playing field forever. Now that House Ways and Means introduced the idea of the US moving to one, our allies are screaming at how unfair it would be for us to have the same kind of import tax they do!
Go figure.
We can get into the pluses and minuses of a border adjustment tax a little later. But for now, here’s how the GOP plan was going to work.
Since the special interests refused to give up their special tax breaks, the GOP decided to leave them in.
Since the special interests want their cake and to eat it, too, they also got the corporate tax rate lowered. To somewhere around 15%.
Because of this, all the lost revenue due to the tax breaks was no longer made up for by the 39.1% tax rate. So House Ways and Means intended to make up the lost revenues with the Border Adjustment Tax.
Enter Trump.
Donald Trump was “ambivalent”, at best, about the Border Adjustment Tax. And now he has decided he is against it.
So bye-bye Border Adjustment Tax.
But…he is keeping the lower corporate tax rate AND all those special interest tax breaks. And that means, boys and girls, a gigantic spurt in national debt if the Trump way comes to pass.
This is a total cop-out. It is the coward’s way out, and every fiscal conservative should be vehemently opposed to this.
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