Sunday, January 6, 2013

Hopelessly Hamstrung...

"A central promise of my campaign for President was to change a tax code that was too skewed toward the wealthy at the expense of middle class Americans" --Barak Obama

If the Bush-era tax cuts, as popular opinion has it, were all for the rich, how is it that both sides were desperate to preserve the Bush-era tax cuts for the middle class?

And I'm trying to get my head around this notion that tax breaks for the wealthy come "at the expense of middle class Americans." Or, now that we've raised tax rates on the wealthy, how exactly are we helping out the middle? I mean we didn't cut middle class tax rates. And since wealthy people tend to sell stuff for a living, surely raising their taxes won't reduce the prices of goods and services for the middle class. And since wealthy people tend to employ folks, there's no way that raising their taxes will create jobs, or generate pay raises, for the middle class. And raising the tax rates on capital gains and dividends certainly won't make the stocks that occupy the middle classes 401(k) accounts more valuable. And I don't see how the feeling of fairness engendered by raising taxes on the wealthy will enhance anyone's lifestyle.

Is it that the additional tax hit to the wealthy (assuming they don't entirely loophole their way around it) will somehow make it through the government filter and into the hands of the middle class, in ways not yet apparent? Perhaps.

Now while this opacity exists with regard to the middle class, a number of not-middle-class victors indeed emerged, crystal clearly (to the tune of billions in subsidies), from last week's "fiscal cliff" deal. Here's the shortlist:

Goldman Sachs
JP Morgan
Virgin Island and Puerto Rican rum producers (lobbying courtesy of former senators Trent Lott and John Breaux)
Wind farms
Ethanol producers
Asparagus growers

So was the fiscal cliff fiasco merely staged to give us the impression that Washington is serious about cutting the deficit? Was it truly all about Democrats fulfilling their promise to raise tax rates on the rich, and Republicans and Democrats taking care of their cronies? Honestly, I don't believe it was an act. I believe both sides get how serious the problem is. It's just that, when push comes to shove, their allegiances lie with their respective special interests---leaving them hopelessly hamstrung...

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