Never let it be said I back down from a fight, even when it’s the other team’s game, played by the other team’s rules, and for the benefit of the wrong person.
And that definitely went through my mind when U.S. News & World Report asked me to contribute to their “Debate Club” on the topic of “Should Mitt Romney pay higher taxes?”
I’m not a Romney fan, and it irks me to defend good tax policy on behalf of someone who is incapable and/or unwilling to make the same principled arguments.
But my job is to do the right thing and bring truth to the economic heathens, so I agreed to participate. And I’m glad I did, because it gave me a chance to try out a new argument that I hope will educate more people about the perverse impact of double taxation.
Let me know what you think of this approach, which asks people whether they would think it would be fair if they couldn’t take credit for withheld taxes when filling out their 1040 tax return.
Capital gains taxes and dividend taxes are both forms of double taxation. That income already is hit by the 35 percent corporate income tax. So the real tax rate for people like Mitt Romney is closer to 45 percent. And if you add the death tax to the equation, the effective tax rate begins to approach 60 percent. Here’s a simply analogy. Imagine you make $50,000 per year and your employer withholds $5,000 for personal income tax. How would you feel if the IRS then told you that your income was $45,000 and you had to pay full tax on that amount, and that you weren’t allowed to count the $5,000 withholding when you filled out your 1040 form? You would be outraged, correctly yelling and screaming that you should be allowed to count those withheld tax payments. Welcome to the world of double taxation.
By the way, if you like my argument, feel free to vote for my entry, which you can do on this page.
I won my previous debate for U.S. News, so I’m hoping the keep a good thing going. As they say in Chicago, vote early and vote often.
Those interactions apparently aren’t enough, though, since several people have asked me to debunk this Reich video.
But I had no desire to address Reich’s demagoguery, in part because I’ve already put together videos that deal with most of his basic points.
He wants higher taxes on investors, entrepreneurs, small business owners, and other “rich” taxpayers, but I’ve explained why he’s wrong on that issue in this video.
He claims to want a stronger middle class, but I’ve explained the keys to economic growth and Reich is on the wrong side of almost all of them.
He argues that spending has been cut back, but that’s factually wrong – and a strange argument since Reich was in the cabinet of the last President who actually did reduce the burden of federal spending.
So I hope you can understand why I didn’t want to spend time countering Reich’s video. But he has attracted more than 1 million views, which means it would be a good idea for someone to specifically debunk what he said.
Fortunately, Don Boudreaux of George Mason University has stepped up to the plate with this excellent video.