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Tax deal a flawed opportunity

December 12, 2010 - Mike Maneval
Purists from several ideologies are roasting the tax compromise negotiated by President Barack Obama and Republican leadership in Congress. While some flaws with the deal are evident, the positive aspects shouldn't be neglected either.

The compromise would add $700 billion to the deficit in the next two years alone, according to the Los Angeles Times. And while the extension of unemployment benefits is preferable to allowing the benefits to lapse, what both parties are dodging is the need to reform the system overall, which totters closer and closer to unfeasibility and is hurried along that dangerous path by short-term band-aids like this extension.

But on a positive note, the decision to renew the Bush administration's tax rates for earned income for both wealthy and working-class, joined with the return of the inheritance tax and a cut to payroll taxes, positions the Democrats well - if they choose to take advantage of the potential shift. Granted, at 35 percent the inheritance tax would remain 20 percent lower than the rate it was at during the economic boom of the 1990s. But if the Democrats take advantage of this opportunity to which I've alluded, this tax rate on familial handouts and free rides could rise to a more reasonable level.

That opportunity is a chance for the Democrats to divorce themselves of what is often labelled "class-warfare" rhetoric and embrace instead a tax code and other economic policies that recognize the importance and neglected value of work, and recognize the exaggerated "value" of usury, often, in a cynical ploy to disguise its true nature as usury, mislabelled as "investment" or "entrepreneurship."

Some may scoff that such a shift from progressive taxation on earned incomes toward flatter earned income tax rates is impossible - though I would remind such readers that Jerry Brown, past and future Democratic governor of California, has endorsed flat rates on earned income in the past. But the real key to this shift may be replacing high tax rates on engineers and airline pilots with a heavily progressive tax system on unearned income - money diverted from payroll and compensation for work toward rewarding usurers and money-lenders in practices and methods that have for decades undermined the value of work.


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