Token Dissonance

Black & gay, young & conservative. A Southern gentleman writes about life and politics after Yale


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The Golden Taxes

“Why would anybody in their right mind leave Dallas for Southern California? We’ve got the same weather without the liberals.” –Gigi Stopper, GCB

It’s hard out there for a baller.

As you may recall, California voters in the last election enacted a plan to raise taxes on their most successful neighbors. Top earners in the Golden State now owe more than half of their income to the government, effective retroactively, and more than half of all revenue in Sacramento will be supplied by less than 1% of residents who make 20% of income. Unsurprisingly, many of the wealthy are fleeing as swiftly and shamelessly as Nicholas Sarkozy from Socialist France.

Many in the “fair share” crowd who espouse Ted Strickland’s “economic patriotism” are predictably, scathingly maudlin over the fact that people have the temerity to pursue more economical happiness. Liberals even got a cautious quasi-apology from their latest high-profile tax-flight target, Phil Mickelson, for stating the obvious—people want to keep their money. But as many are noting, Mickelson has not recanted his intention to consider leaving California. He merely expressed regret for trying to encourage “change”. Funny, that.

As Ed Morrissey noted over at Hot Air:

“Well, I don’t think Mickelson was looking for sympathy. I think he was explaining that he doesn’t have to put up with Jerry Brown’s tax hikes to fund a massively dysfunctional state government, and that he’s not likely to do so.”

Meanwhile in my native Florida, California-expatriate Tiger Woods enjoys tax-free income. Elsewhere, in predictable blue-red splits, several states have considered “millionaire taxes”, while lawmakers elsewhere have announced plans to abolish income and corporate taxes. There are certainly many problems with our convoluted tax codes in America. But whatever your thoughts on the matter, one thing remains clear: the problem remains spending. Just as California has done little to prevent future budget woes, the federal chasm between revenue and spending endures primarily because of entitlements.

In wake of all this, President Obama’s inaugural address barely mentioned the top issues concerning most Americans: jobs (fewer of those than at Obama’s first inaugural), debt (a lot more of that), and economy. Instead, he triumphantly heralded a resurgent era of the welfare state in which none of the debt-driving programs—entitlements—would face any serious reforms to keep them solvent. Thus, the administration is doubling down on what Walter Russel Mead dubs the blue social model, which Presidents Reagan and Bill “Era of Big Government is Over” Clinton had previously rebuked en route to tax reform and balanced budgets. This comes even as well-to-do citizens get far more from entitlement programs than they paid in the first place.

So this is the bed we lie in, America. Until we’re willing to make tough decisions to rein in entitlement spending, our expenditures will rise and our revenue will stagnate. In response, liberal administrations will push tax hikes, as they have from California to Maryland to 1600 Pennsylvania Avenue, and ever growing government will depend on an ever shrinking group of earners. Contrary to what many on the Left like to believe, those earners can always leave. Many already have. Other successful American job-creators, like Mark Zuckerberg and Whole Foods CEO John Mackey, are voting Republican with their wallets, despite the chagrin of Democrats.

You can berate them for greed, callousness, and lack of “patriotism” all you want, but at the end of the day, they’ll still be taking their wealth and jobs to friendlier climes.

And we’ll still have our debts to fix.

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The War on Revenue

Update: An earlier draft of this post was adapted by The Daily Caller. You can find that article here.

“Lower rates of taxation will stimulateeconomic activity and so raise the levels of personal and corporate income as to yield within a few years an increased – not a reduced – flow of revenues to the federal government.” –John F. Kennedy

“We believe small businesses are the engine of economic growth in this country.” –Barack Obama

What do you mean taxes have consequences?

The U.S. Treasury Department announced yesterday that the federal budget deficit for the month of October 2012 was $120 billion.

For some fun perspective, Greece, Spain, and Italy produced deficits of about $9 billion, $29 billion, and $87 billion, respectively, in 2011. Read that again. In a single month, the U.S. government accumulated debt nigh tantamount to the entire annual deficits of three precariously recessive Eurozone countries. Of all the countries on Earth, only four—Japan, Britain, France, and Mexico—ran deficits in all of 2011 that exceeded Washington’s shortfall last month alone. Of all the annual surpluses of 2011—from Brazil to Sweden to Saudi Arabia—not one reaches $82 billion, let alone the $120 billion the U.S. spent by Halloween. Of course, these countries all have much smaller GDP, but it still makes for amusing comparison.

By now, you have already heard ad nauseam that Barack Obama has added more than half as much debt as he inherited. You also know that spending is at the highest levels since the Second World War, and yet Millennials are still, in a word, screwed. With the election behind us and the status quo ante more or less entrenched, we should expect the president will finally offer a real, centrist proposal to subdue the debt and unburden a drowning economy in way both sides can agree.

A week past the election, however, President Obama remains obsessed with effecting higher tax rates, which his allies are insisting do not matter. Before the election, the president campaigned on the need to lower corporate taxes in order to spur growth and create jobs. Now freed from the oversight of the electorate, Obama has reneged on this oftrepeated promise and literally doubled down on plans to sap resources from what he has agreed are the engines of our economy. Either the president has “evolved” on the question of private enterprise or he places a minimal premium on political and economic integrity.

Just as edible chemicals are not interchangeable for bodily health, not all forms of revenue have equivalent effect on the economy. Put simply, taxes retard growth, but certain types do so more than others—hence the once bipartisan agreement that corporate taxes should be cut and the fact of different rates for different kinds of income. (By the way, Great State of Illinois, sin taxes are terribly regressive.) As it happens—income taxes, which have already risen at the state level—are particularly associated with lower economic growth than other kinds of revenue, and the U.S. already has an unusually progressive tax system relative to the rest of the developed world. Hence, Republicans have long admitted and embraced the need for more revenue while insisting only that tax rates not be increased. From an economic standpoint, and contrary to the administration’s demagoguery, this makes sense.

We all know that President Obama won the election, and the Democrats gained seats in Congress. The Party of gracious victors was magnanimous enough to remind everyone of this fact, ad infinitum, in case we forgot. It was really very thoughtful of them. But now that the campaign is over, we need our elected officials to get serious about fixing this economy.

Equating Bill Kristol’s musing that the country would survive a tax hike with an endorsement of the idea is not serious. You could survive an amputation, if the party in power insists on it, and we may have to negotiate an arm down to a finger because they have won the upper hand (ahem). But that doesn’t change the fact that the powers that be are obdurately committed to hurting you, and we need to discuss ways that will actually solve problems.

At the end of the day, America still has a spending problem that can never be matched by revenue, and entitlements will start to go insolvent in the next decade. I would love to see the President of the United States reckon with the reality of the mess, and I expect the Republicans in Congress, however weakened, will continue to insist that he do so.