Facing the self-described fiscal cliff, the amount of rhetoric pouring out of Washington unfiltered by the media conducting their own war of thoughts and ideas has completely obscured two disturbing concepts that sadly say a lot about the state of America. Whichever plan is adopted, we are likely looking at the end of tax deductions for home ownership and for charitable giving. Milton Friedman famously said that you should tax behavior that you want to discourage and these latest steps are a sad commentary on the state of American values.
For many U.S. taxpayers the inability to take these deductions has been in place for some time as this nasty little device called the “alternative minimum tax” has been decreasing or eliminating mortgage and charitable deductions for many since the adoption of the Clinton tax plan revisions. The current propose changes would just extend those limitations to a much broader audience.
Everyone agrees that something needs to be done to reform the United States tax code. The real problem with a truly simplified tax code is that it would severely limit the patronage system keeping most if not all legislators returning to office in out nation’s capital. A simplified tax code would eliminate special deductions, eliminate corporate welfare, limit congressional “flexibility” in creating tax loopholes and exemptions and eliminate a myriad of similar favors to be doled out by elected representatives. Everyone from both parties should want this kind of tax reform, but anyone daring to espouse a simple system is immediately branded reactionary, crazy or simply “a wacko.” There are several trillion reasons why this kind of reform is highly unlikely.
Democrats have created an entire voting based on those who pay no taxes at all. Promising more for nothing, an entire generation now sadly thinks that they are owed regardless of what they have done with their life. Social programs were largely started to create a very temporary safety net for those who had fallen on hard times. That has morphed into “rights” to indefinite entitlements for folks defined as in poverty that have on average one or two cars, two or three televisions, an xbox game system, heating and air conditioning, washer and dryer and the list goes on. I don’t begrudge anyone having any of those things, I just find it hypocritical that we call those people living in poverty and provide no incentive for them to find work or be otherwise productive.
In the meantime, both parties will find imaginary ghosts to attack to deflect from the kind of reform that our country really needs – a fair and evenly applied tax code where Warren Buffet finally pays his fair share. By the way, my secretary pays more taxes than Warren Buffet and that has nothing to do with income taxes on those making more that $250,000 or more – it is because Buffet benefits directly from the tax deductions and loopholes afforded to those with influence in Washington D.C. Hey, It’s “just our system,” what are you going to do?