President Obama’s proposed federal budget features a dramatic change in the tax code of this country. In the Bush years the aim was to ease the tax burden of the richest Americans, those making more than $250,000, leaving the rest of us with a greater burden when it comes to keeping the federal government fiscally afloat. Under Obama’s proposals upper income people would be taxed more with higher marginal rates and fewer deductions, meaning they would carry a bigger share of the overall tax burden.
What a charming illusion this is. The illusion that this is actually the way proposed tax law changes would work—even if a Congress that still feeds happily on the mother’s milk of rich folk largess were to pass the proposal as presented.
Here’s the way it would really work. A bevy of beady-eyed accountants would wade through the voluminous tax changes from the new law as written and find innumerable loopholes that could be employed to avoid the new law’s intent. The IRS would then move to close these loopholes, a process that will take years, the number of years lengthened, of course, by even beadier-eyed (but better dressed) attorneys who will use every legal dodge in their legal dodge bag of tricks in order to save their rich clients’ untaxed wealth so as to mightily increase their own. And by the time Mr. Obama’s progressive tax notions finally do transcend the efforts of these accounting and lawyering professionals and begin operating as intended, our present president will likely be replaced by a Republican who truly believes the only real way to generate economic growth is to provide more incentives for the rich to keep more of what they already have.
A more progressive tax code that actually operates in a more progressive manner? Don’t bet your temporary payroll tax reduction this will happen any time soon!