President Obama is intimating that the GOP’s opposition to “increasing revenue” is the sole obstacle to achieving a deficit reduction plan. We should call his bluff and put forth proposals to increase revenue. Then, there will be no excuses for opposing a Balanced Budget Amendment.
Obama has complained that we are overlooking the “spending through the tax code.” He is correct. There are a lot of handouts ensconced in the tax code; it’s just a shame that he is indifferent to them. In fact, he has increased their size and scope by leaps and bounds through his stimulus bill, denying the treasury much-needed revenue.
The Marxists have always had a way with words. In their dyslexic world view, they refer to tax cuts as handouts and handouts as tax cuts. Concurrently, they view tax hikes as spending cuts and spending cuts (real revenue increases) as tax hikes. As such, it is no surprise that Obama seeks to punitively eliminate universal tax deductions that are broadly available for real taxpayers, like the charitable tax deduction and the depreciation tax credit for oil companies, while blithely ignoring the selective handouts to those who don’t pay taxes, such as the (un)earned income credit, ethanol tax credit, and the green industry life support.
Those of us who don’t live on Animal Farm can easily discern ways to grow revenue without raising real taxes. This involves eliminating special interest “tax extenders” for selected individuals, industries, or social engineering endeavors – and those “credits” granted to people who have no tax debit in the first place. We should leave those deductions and credits that are 1) broadly available and 2) do not completely eliminate someone’s tax liability.
- American Opportunity Education Credit, Child Tax Credit, Earned Income Credit– While many conservatives would oppose the complete elimination of these credits until all marginal tax rates are lowered, at the very least, they must be reformed. A tax break can only be considered a credit if there is real taxable income. For example, if a family owes $12,000 in federal income taxes, yet receives $5,000 in credits for children and college tuition, they are still paying $7,000 in taxes. On the other hand, when someone owes little or no federal income taxes, but receives thousands from the aforementioned tax credits, such as the ‘additional child tax credit,’ they are ostensibly receiving handouts. Nobody should make money off the tax code. There are plenty of welfare programs; we don’t need more of them couched in the tax code. Instead of reforming or eliminating them to generate revenue, Obama has drastically expanded them through the Stimulus bill. Now almost half of Americans receive redistributive payments on Tax Day.
- Hybrid Car Tax Credit, Electric Vehicle Credit, Energy Tax Credits– We shouldn’t be social engineering and distorting the market by benefiting pet special interest industries.
- Repeal all Stimulus “tax breaks” that have yet to expire.
- Volumetric Ethanol Excise Tax Credit– a $6 billion annual no-brainer
- 30% Investment Tax Credit to Big Solar and Big Wind-ditto. Also, end all loan guarantees for the defunct green energy business.
- 2% reduction in Payroll Taxes – that Obama ostensibly wants to make permanent. I’m all for keeping more of our money out of the government’s pocket, but unlike most other taxes, Payroll Taxes go to the Social Security Trust Fund. As a conservative, I don’t like involuntary social security, and would love to cut the Payroll Tax to zero for both the employee and employer. However, as long as the program exists in its current form, especially in light of its insolvent future, why are we bankrupting it even further?
Another forgotten aspect of the revenue argument is that there are other ways of raising revenue without proposing new taxes, or even eliminating of tax credits:
- Increasing oil and gas exploration and productivity– Imagine what would happen if Obama would allow all drilling in Alaska, the Outer Continental Shelf, the Gulf of Mexico, and shale fracking in the 50 states. How about finally approving the Keystone Pipeline from Alberta, Canada? All of this would bring in billions to the treasury from royalties, rent, and leases. Additionally, cash-strapped states would receive much-needed revenue from property taxes. Yes, some wells would depreciate and some oil executives would fly on corporate jets to explore the wells. Is that not worth the royalty payments?
- Sell off federal lands– The federal government owns almost one-third of all land and a majority of some states. Instead of grabbing more land for the feds, why not sell all unneeded land and make some money to boot?
- Sell Amtrak– We spend over $1 billion annually subsidizing this languishing company. Why not privatize it?
Here is one more way to grow revenue. Since we all agree that this is a long-term problem, let’s stop focusing on short-term increases in revenue. We all know that the only way to increase revenue in the long-run is to grow the economy. We already tried Obama’s inverse Laffer Curve of spending money to grow the economy, and by extension, the federal treasury. It failed miserably. It’s time to replicate the successful revenue growth of the 80s and early 2000s by cutting all taxes for those who pay them. So let’s eliminate capital gains and dividend taxes, AMT, and the Death Tax. We’ll also cut all personal marginal tax rates and trim the corporate tax back to 18%.
Now that we solved the revenue problem, we can proceed to the real deficit reduction mechanisms; free market entitlement program reforms and a Balanced Budget Amendment. Or, will we opt for accounting gimmicks, such as a few trillion in cuts from the baseline projection of your irrelevant 10-year budget-frame, Mr. President?