To the People

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Wednesday, March 14, 2007

Pay Tax-as-You-Go

If there were any doubts that the promise by Democratic leadership to restore pay-as-you-go budget rules was really code for raising taxes, Congressman Charles "Slavery is Good" Rangel (D-NY) has confirmed their lust for taking away other people's money.

Rangel suggested that scrubbing the tax code of its many tax breaks and incentives would be the best way to pay for the costly fix under the Democrats’ pay-as-you-go budget rules, which require that every tax cut or spending increase be deficit-neutral.

“You’ve got a lot of fat in there — scratch that — incentives in there. You have to look at the incentives,” he told an audience at a seminar on tax and budget issues sponsored by Baker Hostetler, Clark Consulting and the Yale Club of Washington.

Rangel did not call for the elimination of any particular tax break. But he singled out the popular mortgage interest deduction for homeowners and the special tax status conferred on non-profits as items that ought to be on the table.
I'm of mixed opinion here. On the one hand, I loathe tax increases of any kind. So I generally oppose attempts to eliminate so-called "loopholes" that let people keep the money they earn. On the other hand, both the mortgage interest deduction and the tax-free status of non-profits have caused irreparable harm to this nation. The mortgage interest deduction single handily destroyed American cities (by making it easier for people to buy homes outside the city) and spurred the suburbanization of America with all it's environmental and economic side-effects.

Tax exempt status for so-called "non-profits"* have created a cottage industry of tax-free groups with a lot of money to spend on lobbying Congress to increase taxes on those that do pay taxes. If left-wing advocacy groups had to give 25% of all the money they raised to the IRS they would instantly understand how taxes destroy jobs and (hopefully) would not be so quick to call for corporate taxes increases (advocacy groups are corporations - in fact, groups like People for the American Way, United Way, and the ACLU are bigger than most businesses). Unfortunately, I suspect that what Rangel really means is eliminating the provision in law that allows people to deduct certain contributions to non-profit groups from their taxes. This would hurt advocacy groups without teaching them the valuable lesson that taxes destroy jobs.

*I put "non-profit" in quotes because there's no such thing as a non-profit organization. People who work for so-called "non-profits" get paid and their goal is to raise as much money as they spend, if not more. This isn't any different than corporations, which by law either have to give their income away or spend it on expanding their organization. Just like "non-profits".

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