The Maverick Conservative

I happened to see a Larry Kudlow interview with Democrat Charles Rangel (chairman of the House committee dealing with taxes and such).  HOW do I see these things, when I don't even generally watch CNBC?   Well, I just happened to click on CNBC for amoment to check on how the market was likely to open, and up popped Charles Rangel.

Kudlow came across as a sycohphantic idiot (or unbelievable naive).  Rangel came across as what he is:  a DECEPTIVE Democrat.

Rangel has proposed a one trillion dollar tax increase.  Kudlow let him get away with posing as a "reformer" wanting tax CUTS (I guarantee you:  Charles Rangel never saw a tax INCREAASE he did not like, and any flirtation with tax CUTS is a tactical DECEPTION).

WHY is Kudlow willing to be deceived?  I think it is because Kudlow is primarily a WALL STREET guy, more than a real conservative.  In this case, Kudlow is fixated on Rangle's "carrot" of a cut in the corporate tax RATE (not a big cut, but from 35% to maybe 31%). Kudlow thinks that a corporate rate cut will be well received on Wall Street (causing stocks to rise), and that such a cut will help corporate profits (and, to be fair to Kudlow, help stimulate the economy through corporate spending).

Problem:  Kudlow is HOPELESSLY naive here.  Democrats refuse to make the Bush INDIVIDUAL tax cuts permanent.   That is a HIGHER priority (except to Wall Streeet people like Kudlow) than a corporate rate cut.  In fact, it is BAD for the corporate rate to get TOO much lower than the individual rate:  that encourages TAX GAMES with the corporate form.

That is not even the most important reason that Kudlow came across as a sycophantic idiot.  Does Rangel really intend to have a corporate RATE "cut"?  Yes, I know that the idea is that Rangel's "plan" includes corporate tax INCREASES by elminatiing "prefernetial tax treatments" (i.e. supposedly merely closing loopholes).  Using that money Kudlow believes Rangel to be saying that we can cut the corporate RATE. 

Hogwash.  Oh, maybe theoretically it could be done.  But Rangel is not interested in CUTTING TAXES, especially for corporations.  The far left now controls the Democratic Party.  Even if Rangel were serious (I don't think he is), the Democratic Party would NEVER cut rates at this time on corporations.  They could jest never sell it to the far left.  Thus, this is merely BAIT for people like Kudlow.  If the White House can be brought on board for some TAX INCREASES, the supposed rate cuts will melt like the wings of Icarus getting too close to the sun.  They will not happen (as the "spending cuts" in the Bush 41 tax "deal" never happended).

Nope.  Rangel's entire idea here is to DECEIVE in such a way that tax INCREASES gfain momentum such that they cannot be stopped (or appear to be sabotaged by Republicans, after being endorsed by some Republicans, to political advantage of teh Democrats).  I guarantee you that any tax bill out of the Democratic House is going to be a TAX INCREASE bill.  Kudlow should look to his wallet.  His pockets have been picked.

You want a further example.  Look at the AMT (alternative minimum tax).  That 1969 law, because it was flawed to being with in FAILING to take inflation into account,  is now set to begin impacting some 23 MILLLION Americans who regard themaselves as "middle class", and who were not MEANT to be affected by a law designed to prevent the RICH (highest income earners) from avoiding paying significant tax because of certain deductions the tax code allows.  Note that Congress was never supposed to get that money, because the TAX was NEVER supposed to reach down this "low".  Inflation is bringing more and more people into the realm of the AMT, when they were never supposed to be taxed under that law.

So what did Charles Rangel's Democratic House do?  They DECEIVED.  They did NOT pass a law to just "fix" the AMT.  Charles Rangel even has the collossal GALL to tell Kudlow that the AMT was a mistake, and should never have been in the law in the first place (as if Democrats did not put it there to try to make sure the "rich" paid their fair share of the taxes).

Then Rangel turns around and tells Kudlow, WITHOUT CHALLENGE, that he just did not want us to BORROW to make up the lost revenue.  Rangel had just SAID (shades of Hillary Clinton) that there was no "lost revenue", because the government was not supposed to have this money in the first place.  DECEPTION.  It is all deception.

But what about corporate tax "loopholes", or "preferential tax treatment."   I am in favor of closing many.  The farm subsidies are ridiculous, in large part (the Congressional "farm" bills are always filled with pork).  There are manybenefits in the tax and spending bills (what do you think "earmarks" are, and Deocrats have shown they use them MORE than Republicans) that could be modified or eliminated.  However, bills "closing loopholes" should STAND ON THEIR OWN (unless part of a related tax cut, such as Rangel's "stalking horse" corporate rate cut discussed above).  There is NO EXCUSE for putting a TAX INCREASE (whether called "closing loopholes" or not) in the AMT bill which EVERYONE wants (which is why the tax increases are there).  The government is NOT "losing money" because of the AMT fix.  It never was supposed to have the money in the frist place.

Say we did have bills  ending "preferential tax treatment" (don't hold your breath on suome of these ridiculous farm subsidies).  They should be separate bills argued on their MERITS (and not put in as a deceptive part of the AMT fix). 

I agree with Charles Rangel on one thing.  If there are "corporate" (or other) tax "benefits" that should not be in the law, we should eliminate them.  That is NOT a "tax increase" (unless it is being snuck through as a revenue raising measure rather than as a simple removal of an UNJUSITIFIED tax break). 

Say we do that--eliminate unjustified, preferential "tax breaks".   Well, the first prioirty is NOT a reduction in the corporate tax rate (except to Larry Kudlow).  The FIRST priority is to make the Bush tax CUTS  (such as on individual rates, the death tax, etc.) PERMANENT.  Get the top INDIVIDUAL RATE permanently to 35% or below before we worry about corporate tax rates.  Again, if there are "loopholes" that should be closed, that tells you NOTHING about where the money should be used.  Just because corporations pay more taxes THEY SHOULD BE PAYING ANYWAY (the overse of the AMT coin), does not mean that corporatiions should get the "benefit" of closing loopholes. 

If Republicans want to couple "loophole closing" (which many regard as a tax increase--as, of course, n a way it is, but only if you fail to appreciate that the tax deduction involved should not exist) with tax CUTS (I certainly have no objection to Republicans doing this), then they should start with making the Bush tax cuts permanent.  They might then go on to a corporate tax rate cut (perhaps in conjunction with a further cut in individual rates).  Is this going to happen?  Of course not.  Thatis why Kudlow was operating in an idiotic fantasy land in his love fest with Charles Rangel.   What Republicans CANNOT do is let Democrats get away with DECEPTION, such as ty;ing together the AMT (which BOTH parties want fixed) with a Democratic attempt to raise revenue.

Then there is the "Fair Tax".  That is the REAL "tax reform" that would do away with the IRS entirely, in favor of a (modified)  national sales tax.  That is another tax proposal that may be a good idea.  It is also another that is NOT going to happen with Democrats in control (it got nowhere, even with Republicans in control).

Bottom line:  Despite Kudlow, Democrats are NOT interested in anything presently but "raising taxes on the rich".  Any statements other wise are DECEPTION, and that includes what Charles Rangel told Larry Kudlow.   Now the AMT fix is not deception, because the new Democratic mantra is to appeal to the "middle class".  Fixing the AMT is NOT a "tax cut".  But Democrats might label it so, except that Democrats have no intention of facing the screams of the middle class when they feel the pain.  Therefore, Democrats in the House passed the bill to fix the AMT, but could not restrain themselves from political DECEPTION at the same time--including revenue raisers in a bill which should have been a simple fix of the AMT. 

I have said before that Democrats are willing to SACRIFICE CHILDREN on the alter of politics (the S-CHIP refusal to compromise--see earier blog entry).  Democrats are also willing to SACRIFICE the middle class by playing political games with a simple fix of the AMT tax.  Kudlow helped them in that deception, and for that he deserves condemnation.

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