Thursday, January 3, 2013

Fiscal cliff innards

Most reporting on the fiscal cliff deal--the American Taxpayer Relief Act of 2012--sticks to the basics: tax rates were increased for high-income earners, the Bush tax cuts for all other levels were made permanent, unemployment insurance benefits were extended, and the payroll tax holiday was allowed to end. And sure, those are the major points.

But is anything else in this legislation, beyond the above? Well, the bill comes in at over 150 pages. For comparison, the monstrous Stimulus Bill of 2009 was a little over 400 pages. So what else is in it? US News and World and World Report notes a few of them here. There are kickback extensions for rum producers, tax credits for scooter-riders, tax deductions for motorsport track  owners, and--my personal favorite--continued tax breaks for Hollywood:
Making movies in America is big money, and Congress is doing its best to ensure the movie industry doesn't pack up and leave. Television and movie makers can continue to gross $15 million in breaks for filming in the U.S., $20 million for filming in low-income areas, an incentive for Hollywood that costs the country about $430 billion to maintain.
An incentive for Hollywood that amounts to over $400 billion in lost revenues for the nation. Isn't that special. And here I thought Big Oil got all the breaks.

But this is just the tip of the proverbial iceberg. Here's the full text of the bill. Read it at your leisure. All kinds of tax credits were extended, from ones for bio-diesel fuels to ones for teacher-purchased classroom supplies. And maybe some of them are fair, are even just, given the way our tax code is currently structured. Yet, all of these tax breaks and tax credits are part of the reason why we're running huge deficits, year in and year out. They weren't extended, en total, because it was the right thing to do, they were extended because it was the politically expedient thing to do.

The concept of "fairness" is not all that complicated. The President has invoked it himself time and again with reference to increasing taxes on the wealthy. But what exactly is fair about the great majority of these breaks and credits? Nothing. They're giveaways to appease voters and campaign contributors. And their accumulation, year after year, goes largely unchecked and even ignored by most: most citizens and most politicians.

How many Senators and Representatives actually read all 150+ pages of this bill before they voted to pass it? Almost none, I'll wager (which is also a violation of their implied fiduciary obligations to their constituents). They were briefed on the main points, then went ahead with the vote. But even if they had read it all, how many--who voted for the bill--would have been willing to stand on principle and object to one or more of these many extension? Again, most likely none.

And that's because to do so--to actually hold fast to principles--results in excoriation by the mainstream (clueless) media, the other Party, and possible even one's own Party. Why? Because bills like this one--and the Stimulus Bill--are characterized as being vital, or as absolutely necessary, or as"can't wait legislation."

But are they ever, when the actual contents of the legislation is not actually known or understood by those passing it? The Stimulus Bill--and Obamacare--were both wake-up calls to this kind of nonsense. But it would seem most people are still asleep. How much longer?

Cheers, all.

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