January Debate - Tax Loopholes

To continue with yesterday’s blog, I first have to say that both Romney and Gingrich mentioned getting away from other countries for our energy needs and yet Gingrich said we need to find modern ways to bring electricity from Quebec to Boston. I believe that Quebec is in Canada and not the US.

Now, in connection with the jobs and infrastructure question Huntsman was asked where the money would come from – he said he would keep out all the loopholes in the tax code which would give us $1 trillion ($1 billion in revenue per the Simpson Bowles Commission appointed by Obama). Santorum said we should only have 5 deductions – health care, housing, pensions, children and charities and cut corporate taxes to 17.5%; 30 years ago business and labor didn’t understand global competiveness and they made a lot of mistakes but that’s not what’s happening now; they’re running into government taxation (35%), he wants zero taxes for manufacturers and processors so we can compete in the global market and reduce the regulations that cost businesses over $100 million; he said with Obama last year there are 150 of these regulations and on average only 60 for each year of the Clinton and Bush administrations; he’d either eliminate these regulations or find ones that wouldn’t cost so much. Romney said we can’t go to zero taxes; during Kennedy’s administration (1961 – 1963) government was 27% of our cost and now it’s 37%; government needs to be scaled back, reduce taxes to 25% and give to the people who need it most – the middle class; no taxes on savings, dividends or capital gains for them; Romney agreed with Huntsman that we need to scale back on taxes but doesn’t agree with increasing capital gain taxes.  

My response to all this is – I don’t believe we should eliminate all tax loopholes (deductions) as Huntsman suggests. I not sure what Santorum meant by pensions being deductable – if he meant the money put into them only, I’m okay with this as the funds are taxed when received. If he meant the income from a pension should be 100% deductable then I wonder if Social Security (SS) would be considered a pension and no longer taxed; this opens up a new can of worms. I believe that providing a zero tax to any industry as Santorum suggests is just as bad as the farming subsidies given to the non farmers and the oil industry (mostly rich people). In September 2011 it was reported that the Census Bureau showed 1 in 6 Americans are living below the poverty level which is $22,314 for a family of 4. So I think that only people or businesses at or below poverty level should go untaxed. By the way, many Republicans are not in favor of this thinking and also have problems with what they call entitlements (food stamps, SS, Medicare, Medicaid, and welfare); I think SS and Medicare are entitlements because I paid into them, the others are government gifts that need to be looked at (not eliminated) for their application of the programs. I also believe that corporations should be taxed in accordance with revenue earned and not have a set corporate tax. On January 11, per Forrester, 4.5 million jobs went to China in the last decade and 3 million of those are to come back in the next 5 years and on this same date it was reported that the President gathered CEOs and is calling for tax breaks for companies bringing jobs back. This leads me to believe that the problem with American business was not government taxation but plain old greed. It irks me that the companies have to be given a tax break (subsidy) in order to support the people and this country. As far as regulations, I’m sick of hearing about how they eat into profits when lives are constantly at risk. I do believe that we have laws and regulations that can change. For example, there are so many laws that cause food to be thrown in garbage cans instead of going to the needy. Perhaps laws can be changed so that restaurants and food outlets must contact non-profit groups, e.g., Senior Gleaners, food banks, shelters, and others to get rid of the food that’s still good that usually ends up in dumpsters (there was an Oprah show that showed people diving and finding good food in dumpsters).

Don’t be fooled with Romney’s comment regarding no taxes on interest on savings, dividends or capital gains. Romney agreed with Huntsman that we need to scale back on taxes but doesn’t agree with increasing capital gain taxes so I believe that he knows that would most likely benefit the well to do and not the middle class as he indicates. I think that savings, money markets and Certificates of Deposit (the average American’s way of putting aside money) should require about $100 earnings before being taxed. (Dividends and capital gains come from ventures with business and/or Wall Street.)

Romney pointed out the growth in government since Kennedy and this needs more time and space to be responded to so I’ll get to this later.