Saturday, January 16, 2016

Reflections on the Republican Debate: Tax Reform

Yesterday I was so focused on typing up what the candidates were saying that I didn't actually give much commentary. Plus, sometimes I was actually trying to pay attention to what they were saying, which gave me even less time for typing and thoughts of my own. That's part of the problem with live commentary, I guess: balancing your attention between your comments and what you're commenting on means you get to give your full attention to neither. So, I probably won't do that again.

Anyway, today I want reflect a bit on what the Republicans talked about. I disagree with a lot of what they said, but so did many people, so I wouldn't be adding anything to the conversation by ripping apart their views.

Instead, I'm going to explore the things I thought were interesting; ideas that stood out to me as well-thought-out or, at the very least, worth a second thought. I've settled on three things:
  1. Tax reform
  2. Foreign diplomatic relations
  3. Congressional authority
Today, I'm going to talk about tax reform. Let's see where their ideas and mine on these subjects align and diverge:

I think both parties are interested in some sort of tax reform. I mean, what we've got is keeping the country running so far, but at it stands taxes are disproportionately effecting the middle class and doing little to reduce poverty. The poor avoid most income tax thanks to tax brackets, but that makes sense since they don't have much to give. The rich, on the other hand, can afford to find loopholes to avoid paying the taxes they're supposed to pay according to their tax bracket, resulting in many of them paying no more, and often less, than the middle class. So, the middle class is basically funding the country.

Several of the Republican candidates had ideas about this problem, but the gist is basically that if you lower taxes then the rich will be less likely to search out loopholes to avoid paying them, resulting in greater tax revenue overall.

This concept is actually sound. The Romans dealt with a similar problem a few thousand years ago: the rich land-owners, to avoid paying their share of taxes, would simply bribe the tax collectors to look the other way, leaving most of the tax burden to the poor who couldn't really afford it. The Romans, eternally strapped for cash, tried several methods to fix the problem, but most were ineffective at best or met with violence at worst. Eventually, one of the emperors (I forget who) decided to solve the problem by lowering taxes to the point where it was no longer worthwhile to bribe people; the rich, seeing a price that wasn't much more than they were paying in bribes, felt they might as well just pay their share. So they did, and tax revenues improved overall, with less of the burden placed upon the poor.

So, the idea is sound, but it leaves us with a question: what is the equivalent to those bribes today? Obviously there must be some cost to maintaining overseas bank accounts or whatever rich people and companies are doing to avoid the bulk of their taxes. Logically, if there wasn't a significant cost or hassle to it, then everyone would be doing it and our country would be operating on a shoestring budget.

If we can figure out that figure, we can set the tax rate to be just a little beyond that; not so far above their "bribes" that they still don't pay their taxes properly, but low enough that the expense, hassle, and investigations are just no longer worth what they'll be saving.

I'm not saying that lowering taxes is necessarily the magic solution to balancing the budget or anything, but it may be worth an experiment.

Taxes are a complicated issue, though, and I honestly don't expect significant tax reform to happen any time soon. And I should note that I disagree about many of the other benefits Republicans think lower corporate taxes bring, like creating more jobs and improving wages overall. I just think it's worth pointing out that there is some logic to it, and tax cuts could be beneficial if handled well.

Tomorrow I'll reflect on the Republican candidates' ideas on foreign relations, especially in regards to diplomacy, the military, and the Middle East.

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