High rates make it easier to sell favors.

Robert Samuelson has an opinion piece at the WaPo dealing with death tax reform. This is one of the main taxes that the rich tax hike proponents like Buffet wants to go up. In Buffet’s case the reason is blatant: that’s so his insurance company can make a killing selling policies to fat cats that need protection from the confiscatory fleecing government will impose on their property before the body is even cold.

There were a couple of important and critical revelations that I got from this piece. The first discusses why the left wants the hike:

For Obama, the obsession with raising top rates (from today’s 33 percent and 35 percent to 36 percent and 39.6 percent) seems an exercise in political symbolism. He wants to be seen as vanquishing the rich — and Republicans. Otherwise, why not accept Boehner’s means (loophole closing) to achieve his policy ends (higher taxes on the rich)?

No, it doesn’t “seem” like political symbolism: it is political symbolism. This is about image. Obama wants to tell the people that love and believe in that class warrior nonsense that he won one for them. Even if the hike is all but symbolic, the purpose is to allow the left to open the door to raising taxes on everyone. “We stuck it to the rich, but it is not enough, so you are next, sorry.”

The second point, and this one is the one that I find critical, is the argument about closing the loopholes. From the piece:

The White House claims that loophole closing can’t raise enough revenues. This is bogus. The nonpartisan Tax Policy Center has estimated that capping all itemized deductions at $17,000 for couples and $8,500 for singles would produce $1.7 trillion in added taxes over a decade. To be sure, there would be practical problems; some tax increases would fall on households under Obama’s income thresholds of $250,000 for couples and $200,000 for singles. But these could be managed with adequate political will.

Of course the WH’s claims that closing loop holes is not going to produce enough revenue is bullshit! I am certain that the WH’s own accountants came to the same conclusion about revenue. Their resistance to loophole closure is because of another reason. The pertinent point is well made in the article:

As important, many politicians support tax breaks for favored groups (the elderly, the poor, small business) and causes (homeownership, attending college, “green” industries). This enhances their power. The man who really pronounced the death sentence for the Tax Reform Act of 1986 was Bill Clinton, who increased the top rate to 39.6 percent rather than broadening the base. As the top rate rose, so did the value of generating new tax breaks. Ironically, many of the people who complain the loudest about Washington influence-peddling and lobbying are the same people who support higher tax rates, which stimulate more influence-peddling and lobbying.

Who is really surprised that the class warriors, those that want jacked rates, are also the ones that stand to gain the most from selling favors, huh? This stuff is not rocket science: the higher the tax rate, the more people that want special favors – those loopholes the WH says won’t make a difference in revenue – will have to pay politicians to get it. Jack up the rates, and sell the favors. Remember Nancy Pelosi’s Obamacare exemption list? This logic applies to all forms of taxation, BTW.

It is not a mistake that the left loves higher rates. It allows them to make a killing selling loopholes. They get to grand stand and pretend that they “HAVE” to do it to help the little guy, engage in social engineering – the practice of picking the winners and losers – and do it all while they make a personal fiscal windfall as well as drastically increase their clout & power. Low rates don’t force all but a few to look for ways out of paying. High rates however, will make most want a break of some kind. And the politicians know this. Especially the class warrior pols which are doing whatever they are doing for their own benefit, first and foremost.

As usual, the people losing out on this stuff will be the American tax payer and the American economy.

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