Happy Tax Day

First, let me apologize for the unusually long hiatus from the blog. I’m hoping to get back in to the swing of things here, so I’ll start off a little slow with a gentle reminder on the subject of taxes. Namely, people tend to be generally confused — sometimes willfully — by the term “income tax.” Consider this garbage from Scott Hodge, President of the Tax Foundation:

But that is no longer the case for a growing class of Americans for whom the price of civilized society has been reduced to zero because the tax code’s generous credits and deductions completely erase their income tax liability.

And for many of these nonpayers, civilized society actually pays them a hefty refund, which is not much different from a welfare check except that it’s run through the tax code instead of through the Department of Health and Human Services.

It’s true that a segment of the population pays no federal income tax, which is the federal tax applied to working income. Of course, this ignores completely the contributions to civil society made by people in lower income brackets through other payroll taxes like those for Medicare, Social Security, State, City and excise and sales taxes — all of which are broadly regressive since they are applied at a more or less fixed rate. When you look at all the full taxation spectrum, things are hardly so dire for those who pay income taxes.

This myth that a large swathe of Americans pay no taxes is absurd, but is also a byproduct of our needlessly complicated patchwork tax system.

The Heights of Chutzpah

So today the Republicans elucidated a bit more fully their budgetless-budget of last week during which they embarrassingly offered to cut taxes, maintain entitlements, and address the deficit, all without the use of the One Ring, the Force, or any other ethereal or mystical powers. Anyway, if you thought that was ballsy and transparently ludicrous, clearly you hadn’t considered this possibility.

But the real way that Republicans offer the tax cut without factoring it into the budget’s revenue is to suggest that Americans won’t actually take advantage of the lower rates. Instead, the GOP budget permanently extends President Bush’s 2001 and 2003 tax cuts. A Republican budget committee aid said that the revenues assumed in the GOP budget are based on the current tax structure that resulted from those cuts.

In other words, Republicans are assuming that given the choice between a higher rate and a lower rate, Americans will choose the higher rate.

A lot of people have been referring to this as the “April Fool’s Budget” ironically, but I’m not so sure. Seriously, I really can’t believe how a party that carps endlessly about being ignored would offer this sort of gimmick on April 1st and not be joking. I look forward to truth emerging.

Republican Plan For Good Times And Awesomeness

So as some of you might know, the Republicans today announced their alternative “budget.” You may have even read about it in a PR flacks wet dream this risible article by Mike Allen that was such an insult to the term “reporting” that it actually caused me to swear off Politico once and for all.* But in case you didn’t, the “budget” is essentially a recycled form of John McCain’s campaign platform, only with even less detail and more platitudes. For example, behold the Republican energy plan!

energyNice plan, jackasses. Of course, there’s more, like how to the stated goal of reducing the deficit while cutting taxes and leaving entitlements intact. Most reasonable people would observe that this is an actuarial impossibility, and indeed, this might be what’s provoking these sorts of testy exchanges with House Minority Leader John Boehner:

When pressed further by reporters, Boehner promised that Republicans would release their actual budget within the next few days and pointed a finger back at the president.

After Obama delivered a prime-time speech previewing his budget, Boehner said, “he didn’t offer his details until days later.”

A co-worker of mine suggested the Republican plan was a wise political move. Needless to say, I disagree largely for the same reason John Boehner’s point about the delay between Obama’s NSOTU speech and the Presidential budget unveiling is stupid. Unlike President Obama, the House Republicans were under no deadline to either address a joint session of Congress or submit their alternative “budget.” Therefore, the drubbing they are now receiving for the vacuity of their “plan” was completely and entirely avoidable and indeed, should have been avoided. In the meantime, the result has reinforced the notion that the Republicans are not a party to be taken seriously.

*on morning commutes.

Facts Hurt

During the opening of the debate, John McCain spent a great deal of time either pivoting to or expounding upon the great many benefits of crusading against pork-barrel spending as a means to reign in government spending. I’d make a joke, but this chart is only punchline needed.

In this light — and indeed I think McCain did make this argument — combating earmark spending, such as through the ludicrous promise to veto any earmarked bill, would be of largely attitudinal benefit. The virtue of positive thinking notwithstanding, it would be nice to hear how McCain plans on curbing spending while expanding Bush’s tax cuts on the wealthy without cutting Social Security or Medicare. I’d say cutting defense spending is an option too, but if you think McCain’s going to slash defense, I have some Lehman stock I’d like to sell you.

Balancing the Budget

The CBO released their update to budget projections from year 2008 through 2018 today, and the numbers don’t look good. And there’s this, from MarketWatch.

Unlike the February update, which showed the budget roughly in balance through 2018 under favorable assumptions, the September projection now sees deficits totaling $2.3 trillion over the next 10 years. Those projections assume that the 2001 and 2003 tax cuts expire and that the alternative minimum tax is not changed. If the tax cuts are extended as the White House and the McCain-Palin ticket want, the deficits over the next 10 years would be $4.2 trillion higher than now projected, CBO said.

Of course, $4.2 trillion is nothing $18 billion of pork-barrel busting can’t solve.