Thursday, July 19, 2012

Tax Policy

I've been trying to figure out what kinds of tax policy are endorsed, respectively, by Obama and Romney.  It's not easy.  Yes, we know Obama wants the two top income tax brackets and the capital gains tax back where they were under Clinton, but those ideas are not policy — they're talking points.  They have as much chance of making it through Congress as a squirrel fart has of making it through a hurricane.  We also can look back to some Obama proposals when he and Boehner were trying to strike a "grand bargain," but those ideas were contingent on Boehner accepting some elements that he had no way of getting past the House he allegedly leads.

Romney is even harder to nail down.  He maintains he can lower everybody's taxes by plugging "tax loopholes," but he refuses to identify any of those "loopholes"  — better known as subsidies, tax credits, and tax deductions.  Personally, I think we would be better off if all the credits and deductions in our convoluted tax code were eliminated, and subsidies limited to R&D — albeit I think a lot of it has to be done gradually.

The biggest "loophole" of all is the mortgage interest deduction.  At this time, it applies to interest on loans of up to one million dollars, which means it is regressive.  The greatest advantages go to those who finance the most expensive homes — which means that people like you and me, who don't live in $125 million dollar homes, get a lot less out of the deduction than our more affluent non-neighbors do.  Renters get nothing.

Eliminating the mortgage interest deduction would depress property values, because without that deduction, home buyers could not afford the payments on more expensive homes.  Even homes sold out of foreclosure would cost their buyers more.  The solution is to drop the cap on mortgage interest deductions gradually, so that property values could adjust gradually.  Needless to say, this won't happen.

Representative democracy in conjunction with capitalism doesn't work too well.  The people who want to lead us feed us bullshit.  The plutocrats control the flow of money, power, and ideas.  I don't suppose it bothers too many of us with consistent sources of income and decent health insurance all that much, but it bothers me.

The current Republican credo is "leave every child (except mine) behind, so long as I get to hang onto my current comfort level."  It just might work this November, but it still makes me sick.

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