ARCHIVE - APRIL 2015
Issues, News & Views
Who will be the
DOWNTON ABBEY IS A TV SHOW. THIS IS AMERICA
2015/04/24 - Recently there have been rumblings from The Right about eliminating the federal estate tax, a tax they like to disparage as "The Death Tax". This week the House passed H. R. 1105 to repeal that tax, by a score of 240-179, mostly along party lines. But is repealing the "Death Tax" really such a great idea?
Chalprem supports smaller government and lower taxes, and so, on a superficial level, we would support the elimination, or at least reduction, of any tax you might care to mention. But, of course we do need some measure of government, and unless we are willing to take on debt (NO!), then taxes we must have.
So the real question is how to best structure the government's revenue needs. It is foolish to look at a single tax in isolation and ask if we would like to get rid of it: of course we would! But it is necessary to look at the big picture, and make reasoned determinations about what will be cost of the government that we will most likely have - as opposed to the government that we would like to have - and not make impulsive decisions about what's the worst way to not fund it.
If Boehner & Co. are going to dangle a shiny object like a tax elimination in front of us, then the House leadership also needs to explain how they will match that with proportional spending cuts, or counter it with other revenue increases. Otherwise we just add to the national debt.
America is what we at Chalprem like to call "The Earnership Society". We get what we earn. We keep what we earn. Want something? Earn it. Such an ethos builds character in the individual, and builds character in the nation.
Unfortunately too many people on both The Right and The Left seem to think individuals should get a free ride on the hard work of others. For The Left, the freebies come on the hard work of strangers in a different place, and for The Right, the freebies come on the hard work of relatives in a different time. But it's all the same, folks are getting free stuff that they themselves did not earn.
America is not an aristocracy, we are not Downton Abbey. We don't live off of what others have earned. We support economic mobility, but mobility is a two-way street. Every person, from all walks of life, should have the freedom to find their own way, to both prosper and to fail. They should have the freedom to move up, and with it, the freedom to move down. You get what you earn. It is the only public policy position that can endure.
Of course the estate tax should not be confiscatory. The idea is most certainly not to make anyone poor, that does no good to the individual, and is counterproductive to society. There should be generous exemptions at lower levels to ensure people can continue to grow small businesses and enjoy existing lifestyles. But it's annoying to hear the "middle class" card played when businesses grow to 8-digit and 9-digit valuations - shouldn't those businesses have invested in the creation of a succession plan? And why is it the problem of other taxpayers if they chose not to?
Further, the tax code could delay collection of the taxes, eliminate penalties, and charge only interest on the tax at a slow but accelerating rate, to give the heirs time to fund the tax payment in an optimal fashion. For example, unpaid estate taxes could be charged 2% interest the year after death, 4% for the second year, and growing by 2% per year indefinitely. But that's generous, after all, why should other taxpayers bear the cost of the failure of the family to prepare, to plan, and to buy insurance? Why did they not stand up and take responsibility?
And there should be accommodations for real, genuine, revenue-generating, food-producing family farms engaged in legitimate agriculture. But not for fake phony fraud farms like the tax-shelter horse hotels created by scheming malevolent tax lawyers.
Chalprem believes in eliminating corporate income taxes, and lower, flatter individual income taxes. Letting people who earn the money, keep the money. But after they die the bill comes due. We feel no guilt about We The People claiming our share from the aristocracy once every generation. And we preserve freedom for the heirs, the next generation, to begin the cycle anew.
Government needs to get its revenue from somewhere. No tax is of itself desirable, but the Estate Tax is less worse than most others. It could use a few fixes, but is conceptually sound. Sorry, we are with the Democrats on this one. John Boehner gets a thumbs-down. Again.
PUBLIC POLICY PRIORITY: EMPOWER PARENTS
2015/04/10 - Americans are inundated with statistics every day. Some are amusing, others are at least a bit disconcerting. But among the statistics that are the most troublesome, one stands out among the most disturbing of all: illegitimacy, the out-of-wedlock, or extra-marital, child birth (XMCB) rate.
We are not judging, we are not casting stones; rather, we are trying to raise awareness of a serious societal issue, and the public policy implications. The fact is that there is a distinct causal relationship between illegitimacy and poverty, and this has negative implications beginning with the individuals but reverberating throughout society. Single-parent households trend toward raising children who fail to meet educational testing standards, and this leads to non-employability, despair, violence, crime, and ultimately incarceration.
Worse, extra-marital child birth instigates a downward spiral that feeds upon itself and perpetuates from generation to generation. Children from single-parent households themselves tend to have children out-of-wedlock, children who are born into the same circumstances that their parents came from - a culture of poverty and reliance, rather than efficacy and self-sufficiency.
The implications for society are immense. When people are furnished with the ability to work their way out of poverty, they become contributors to their community - we gain a person paying taxes, plus, it's one less person requiring assistance, so it is a double win. Employed people trend away from violence thus reducing our costs of police, courts and prisons. Crimes that are not committed, do not have victims, and our communities become safer.
It would seem axiomatic that public policy should be aimed at strengthening the traditional family structure, and more fundamentally, at strengthening the parental bond to ensure children are raised in stable, dual-parent households.
Unfortunately public policy has not had the objective of reinforcing the dual-parent family structure, with the result that we have achieved retrograde outcomes. Since President Johnson launched the War on Poverty in 1965 - yes, this is the 50th anniversary - the illegitimacy rate in African American households has tripled! from 24% to 72%.
You might think that the 1965 African-American illegitimacy rate of 24% might be higher than desirable, but even among whites today the corresponding figure is 29%, and among Asians it is 17%. If we had implemented better policies 50 years ago that bolstered the African-American family, blacks might have employment, income and education outcomes today that match whites and Asians; instead, Johnson's policies have decimated the very communities he intended to help.
We have little but damage - real human hurt - to show for the trillions of dollars wasted on Johnson's well-intended but ill-conceived ideas. Is it time for something new, or are we stuck on stupid? Is fifty years of waste and failure enough, or do we desire to waste and fail even more?
A year or so ago Senators Mike Lee and Marco Rubio released a tax reform proposal that we generally approved of, but we also had a some reservations. One of those reservations requires additional consideration in a context broader than just tax reform.
The Lee-Rubio proposal includes proposals with the laudable goal of strengthening America's families. In some ways the plan goes too far, and in other ways not far enough. It is true that strong families are the foundation of a strong America, but at the core of a strong family is a married cohabitating couple. We believe that the focus should be on the couple, not the children.
The tax code contains a "marriage penalty" which Lee-Rubio eliminates, but we believe their plan does not go far enough. It should go further, to not merely eliminate the marriage penalty, but to reverse it and create a "marriage premium", one that helps most those who need it most, the poor. Instead of the material inducement that presently exists to keep parents apart, we must institute a material inducement for parents to unite both legally and practically. That inducement would be in the form of a substantial refundable tax credit available to those who married or remained married in a year but not if they separated or divorced.
Where we believe Lee-Rubio goes too far is with respect to the various child tax credits. The current system has several schemes already, and Lee-Rubio runs against the spirit of tax reform - smaller and simpler - by adding yet another. We generally believe that family assistance should be directed at the parents rather than at the children. The tax code should put the parents in the best position possible, and then should stand back and stay out of such family-planning decisions. Simplifying, reducing and consolidating the child tax credits would help.
Financial problems are at the root of many marriage failures, and a marriage premium could alleviate some of those problems. Better yet a marriage premium attacks the vicious cycle of poverty at multiple pressure points. If single-parenting leads to poverty and further breakdowns, then the Marriage Premium that we propose does the opposite: it would address both the illegitimacy and the poverty nodes of societal breakdown simultaneously.
Unfortunately the rate of children being born out of wedlock continues to rise, with negative consequences for individuals, families, communities and America. We don't pretend that the Marriage Premium is a panacea for all societal ills, but it is a step in the right direction. Let's start with the Lee-Rubio tax reform plan to get rid of the Marriage Penalty, modify Lee-Rubio to add a Marriage Premium, and continue to focus public policy priorities on parental power. Strong parents yield strong families that build personal self-sufficiency and reduce government-dependency. That is what we want, right?
|© Copyright 2015 Challenge The Premise. All rights reserved.|