Tax Breaks

Now here is a story guaranteed to conflict someone with my set of beliefs and opinions about the way the economy should be ordered. The US House of Representatives yesterday passed a measure that shuffles $155 billion of corporate taxes, reducing the overall payment by corporations by $34 billion. The US Senate has already passed a similar measure.

The net reduction is made up of a $10 billion payment to tobacco farmers, the ability of certain taxpayers to recoup about $4 billion of local and state taxes from federal taxes, a special "one time only" concession allowing multinational corporations to repatriate foreign profits while paying only 5% tax, and a host of smaller reductions.

"Most Democrats and a handful of Republicans opposed the bill, saying it went far beyond its intended goal of offsetting [internationally-declared illegal subsidies] to provide tax breaks and other largesse to a wide range of special interests while driving up the deficit. "The Republican leaders sent the word out that every lobbyist in Washington has one day to get his favorite thing in this bill. It is just unfortunate that the American people didn't get their one day to get jobs in the bill," said Rep. Charles Rangel of New York, the senior Democrat on the tax-writing Ways and Means panel."

The denouncing of an outrageous giveaway by Bush to his corporate backers is an obvious and not unreasonable reaction.

But hang on. Don't I want a smaller government which, by definition involves the reduction of taxes? Yes, I do. I have written before about how I would eliminate all personal and corporate income taxes. So I should be pleased with a $34 billion dollar reduction in the size of government, right? I would be if that were an accurate depiction of what's going on. But, as Rangel said, this measure will have the effect of "driving up the deficit" and thus leading to bigger and longer-lasting taxes in the long run. This is because the US government (all parties) is incapable (or, rather, unwilling) of figuring out how to reduce the size of government without reducing their own power. Therefore, this $34 billion giveaway will simply be replaced with further borrowing.

Moreover, I object strongly to the further enhancement of the corporation over the individual. If the US government has $34 billion to give away, give it to the people! Let us get to the point where perosnal income taxes have been reduced to zero before the corporations get another break.