Finding a Space to be Bipartisan

If we are looking for areas where bipartisan agreement might
be possible I believe that downsizing the Federal Government might be one such
area. We accept that our budget gets bloated and that once something is added
to the budget it almost never comes out. While I don’t know if we can ever
agree about how small the Federal Government should be, we could make a start
with just moderate adjustments.
I believe that the middle class cannot afford to pay higher
taxes right now. I can also see that wealthy folks don’t want to pay higher
taxes and that they object to the way their taxes are spent. I have never been
wealthy, but I suspect that they just don’t want to give up their money because
it’s theirs and not because it would make them alter their lifestyle if they
had to pay more. I also believe that the money they believe is theirs is not
really all theirs. Incomes of the wealthy were increased through clever
regulations and tax structures which allowed the wealthy to stockpile money
that should have been circulating throughout the economy. However, if we agreed
to work with just the tax structure we have and the budget we have now we might
be able to adjust our priorities so that they would line up with our current
national interests and needs and that this would help us make decisions about
our budget.
Any changes to the federal budget should not be made in an
across-the-board fashion (as in the Sequester). Each sector of the budget
should be assigned to experts and minutely analyzed. Cuts and consolidations
and savings should be based on careful study and then acted on only when there
is true bipartisan agreement. I accept that this could never happen in the
toxic political culture of today’s Washington, D. C., but I’m pretty sure that
we should not keep putting off this task.
Clearly we will have to muddle along through animosity, and
protectionism, and vested interests, and we will have to strain against that
ironclad insistence by some  that any tax
reforms that could lead to increased revenues are off the table. We will have
to lurch along from sequester to fiscal cliff, from attack to counterattack
until, somehow, the current dynamic resolves into more reasonable congress
amongst us (pun intended). However we do this in the knowledge that waiting is
not in the best interests of the American people, the health of our nation, or
the health of our economy. 
By Nancy Brisson

A Bipartisan Concern – The Tax Code

It sounds like there is one area that both Democrats and Republicans talk about as important and that area is revising the tax code. Everyone seems to agree that the tax code is too complex. What is not clear is if revising the tax code in the ways it really needs to be revised constitutes an increase in taxes. Since Republicans are in thrall to Grover Norquist, they are not allowed to change taxes in any way that Mr Norquist defines as a tax increase. They signed a pledge, which should be unconstitutional, but which apparently is not.
I know very little about the tax code; it is not my area of expertise. But I do know how to read so I asked the internet to tell me what parts of the tax code should be changed. Hardly anyone is very specific in their recommendations. But the internet did lead me to Robert Pozen, a senior lecturer at Harvard Business School and a senior fellow at the Brookings Institution. He wrote an op-ed in The Washington Post on the subject last year on July 19, 2011 entitled A debt plan Republicans can support.
He says, “On the corporate side, Congress could raise $150 billion over 10 years by adopting four measures:
First, Congress should eliminate the $60 billion tax subsidy for producing ethanol.
Second, changing corporate accounting standards from LIFO (last in, first out) to FIFO (first in, first out) would raise $70 billion over 10 years.
Third, Congress could raise $17 billion by taxing ‘carried interest’ earned by investment professionals at ordinary income rates (35%) rather than capital gains rates (15%).
Fourth, Congress should eliminate the allowance for accelerated depreciation of certain capital expenses such as corporate jets. Although this is a rhetorical favorite of Democrats, it would raise only $3 billion over 10 years.
On the individual side, Congress could raise substantial revenue by imposing several limits on the mortgage interest deduction (2nd and additional houses, vacation property, home equity loans, restricting such deductions to mortgages of as much as $500,000 per couple instead of $1million). This could raise $150 billion in revenue over the next decade.
To raise the final $100 billion of revenue, Congress could modify the approach to insurance premiums in the recently passed health care legislation. That legislation imposed a ‘Cadillac’ tax effective 2018 on any insurance company offering health care plans with premiums of more than $27,000 per year. Instead of the ‘Cadillac’ tax Congress could cap the currently unlimited exclusion for employer based health care premiums at $23,000 for families (and $8,500 for singles), effective 2013. For example, a family with health care premiums of $24,000 per year would pay income tax only on the last $1,000.
This cap would have a narrow impact; approximately 80 percent of workers would not be affected. Yet the cap would help constrain health care expenditures by limiting the tax subsidies for the most expensive plans.
I will continue to explore the internet for other suggestion re tax code reforms, but in my preliminary search I didn’t see too many people offering specifics.
Of course when you have one party (the GOP) whose stated goal is to stop the other party (Democrats) from accomplishing anything for as long as our current President is in the White House, then there is no longer any room to discuss tax code revisions or any other economic strategies for that matter. This stance alone should convince every voter that it would not be wise to elect any Republicans in the 2012 election. The reforms to the tax code are something that could be tackled right now to help us avoid that “fiscal cliff” we will hear about almost daily at least until the election and maybe beyond. Will it happen? I doubt it.

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Here is what the Republican in my backyard had to say:

“Ok. I read this and it isn’t horrible but you are missing the point. The point isn’t a lack of funding, a need for increased taxes. The problem is the out of control, and increasing spending. Obama’s spending nearly as much as spent for WWII. Further, recent legislation is going to increase the deficit. If all the tax increases proposed here passed, it still won’t touch the deficit. What is coming, is a huge increase in middle class taxes. There is no free ride and the majority of the wealth regardless of what Democrats think, is in the hands of the middle class.”
(He knows I don’t agree with the way Republicans do the math relative to Obama’s spending, but he insists the Republicans did the math correctly.)