October 24, 2005

The Tax Reform Commission is in Good Hands

As long as former Senator Connie Mack is in charge. In yesterday's New York Times magazine, Deborah Solomon interviews him for her weekly "Questions for..." feature-- which is rapidly becoming the first thing I turn to in the Sunday paper each week.
Here's Mack (with an italicized interjection by Solomon) on why the "death tax" should be repealed permanently:

Mack: Well, let's say, if you are in the farming business and you have the desire to pass this farm on to your children. The problem is that when your parents die, you have to come up with cash to pay the estate tax. One thing you don't have is cash. You've got plenty of land. So I just don't believe it's a fair tax.
Solomon: That strikes me as a red herring. The issue is not really small farms, but zillion-dollar estates made up of stocks and bonds.
Mack: I don't know what the percentage breakdown is. I still go back to the same notion that these individuals who have accumulated these resources have paid taxes on them many times in their life, and then to say, when you die, now you pay more taxes on it? There is a limit.

How can anyone sit on a handpicked, highly visible federal tax reform commission and still buy the "family farm" attack on the estate tax-- even as he blandly admits that he doesn't know if farm taxation ever happens? And how disturbing is it that he can retreat (so quickly, too!) to the equally wrong "double taxation" argument?

Here's another exchange, on why mounting federal deficits and debt shouldn't trouble us:
Solomon: Well, the U.S. government has to get money from somewhere. As a two-term former Republican senator from Florida, where do you suggest we get money from?
Mack: What money?
Solomon: The money to run this country.
Mack: We'll borrow it.
Solomon: I never understand where all this money comes from. When the president says we need another $200 billion for Katrina repairs, does he just go and borrow it from the Saudis?
Mack: In a sense, we do. Maybe the Chinese.
Solomon: Is that fair to our children? If we keep borrowing at this level, won't the Arabs or the Chinese eventually own this country?
Mack: I am not worried about that. We are a huge country producing enormous assets day in and day out. We have great strength, and we have always adjusted to difficulties that faced us, and we will continue to do so.

We already knew that Bush's stated goal of a "revenue neutral" tax reform package was a farce, since by "revenue neutral" he actually means "revenue neutral after we enact another bunch of tax cuts." And now we know that the guy in charge of making recommendations that meet Bush's goals doesn't give a rat's ass about revenue neutrality-- however you define it. Maybe Mack was hesitant (or repentant) in the actual interview in a way that doesn't come across in print, but there's something pretty chilling about the ease with which he responds, "we'll borrow it."

Usually Solomon's interview go so well because of the sharp questions she asks. But with this guy, remarkably little prodding is necessary to get behind the mask. Disturbing stuff.


At 5:49 PM, Anonymous squarestater said...

I heard a speech from Rosotti who is also on the commission and he made it sound like the only thing they could really do to "reform" the system is get rid of the AMT. And maybe a deduction as long as it didn't look like a tax hike. So the only reform option is going to further erode the tax collections but it's OK: there's always the Saudis and the Chinese to borrow from.

At 3:36 AM, Blogger Herboturbo said...

Whats wrong with selling bonds to bring in revenue, many businesses do this, yet they are not chastized for ruining thier future. This country is a business, plain and simple. Money is needed to run the business and needs to be borrowed sometimes.

In order for the FED to run properly it needs to have debt run every year. In order to decrease or increase the money supply it has to have the leeway to get things done. And most of the debt that you see out there is to ourselves (meant in the terms of the US govt) and not to other countries, companies, and private individuals.

Also think of it this way, these countries (or whomever holds a bond) don't 'own' a piece of anything in this country. The United States dollar is the supreme money of the world (soon to be challenged by the Euro if those countries get thier act together). They are investing in the safiest product on the planet. The US gov't. has never defaulted. Plus these bonds that they own get called in constantly so they always have to reposition any money they have over here. Bonds aren't stocks where you take ownership in a company if you invest.

Furthermore, going into debt to fund tax cuts helps the economy along as it increases the amount of capital in the country to improve real GDP. If Alan Greenspan wasn't such an idiot the tax cuts of 'o3 would be much more helpful than they presently are. When tax cuts are made and monetary policy remains the same there is an initial period of lower tax revenue, but the increase of economic production makes up for that loss and more after a few years. However monetary policy has gotton worse since the most recent tax cuts thus making them less effectice than they should be.

At 9:35 AM, Blogger Mithrandir said...

The President's Tax Reform Panel seems to be a great big farse. How so you ask. Well for the main thing is they pratcially ignored the goals set forth by the President to reform the Tax code. The tax system needed to be fair, one. Two, it should be revenue neutral. Three, the taxes should be fair for all americans. Lastly number four, the tax system should promote savings.
In the Presidents State of the Union address he used practically all of these phrases. When the Tax Reform Panel met all they had to really look at that would address everything President Bush was asking of them was a current bill in Congress known as The Fair Tax Act.


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