This Is Not The Time For Tax Reform

The politicians in Washington have just finished giving Americans a tax break by continuing the Bush administrations tax cuts.   Of course most Americans got a tiny cut in taxes while the rich got cuts of hundreds of thousands of dollars.   These cuts didn't make any economic sense with a large and growing federal deficit, but they happened anyway.  

Now economists and politicians are talking about reforming the tax code.   Even more worrying, President Obama and Federal Reserve Chairman Ben Bernanke are both voicing their support for an effort to reform taxes -- specifically income taxes.   The White House says they want to simplify the tax system by lowering the tax rate and eliminating most tax deductions.

The Republicans also want to change the tax system, and they've been talking about doing it for several years.   But they want to do it because they hate progressive tax codes -- codes that say the more money you make the higher tax rate you pay.   They like regressive tax systems much better, like sales taxes or value-added taxes which would take a larger percentage of income from the poor and a much smaller percentage from the rich.   Some of them are pushing a flat tax, which would lower tax rates for the rich to those being paid by working class folks.

The Republicans have shown for years that they only care for the rich, and they have drove that point home recently.   They have killed efforts to make it easier for workers to create and join a union, they have killed efforts to stop the outsourcing of American jobs, they opposed raising the minimum wage, they opposed extending health insurance to covers millions more people, they killed efforts to stimulate more job creation, and opposed the extension of unemployment benefits.

The things they did support was shutting down the government to avoid more spending to help ordinary Americans hurting from the recession and stopping the modest tax cuts for 98% of Americans if the rich didn't get massive tax cuts.  

They were able to get those tax cuts for the rich in spite of Democrats controlling both houses of Congress.   In January, the Republicans will have the majority in the House of Representatives and cut the Democratic majority in the Senate.   Considering that, is there any reason at all to believe any tax reform they would pass wouldn't favor the rich while penalizing the middle and working classes?   Of course not, that would be like asking a leopard to change his spots or a zebra his stripes -- it just isn't going to happen.

Some might think the Democratic White House would make sure any new tax reform would be fair to the middle and working classes.   But after seeing his capitulation to the Republicans over tax cuts for the rich (which most Americans opposed), I'm not at all sure President Obama has the political courage to stand up to the Republicans and insure fairness.

I think the best idea is to just put tax reform back on the shelf, at least for the next couple of years.   The Republicans can't be trusted to do it fairly and Obama (and Senate Democrats) can't be trusted to make them be fair.   Any reform in the next two years will just be another giveaway to the very richest Americans (who already control far too much of the nation's wealth and income).

The kind of reform the Republicans would initiate would just turn the current recession into a full-blown depression.