Maybe Republicans Should Heed Harry Reid
Harry Reid said we all want to pay more taxes, so the GOP should help make it happen, beginning with Reid's own "rich people."
In a recent interview with Nevada Public Radio, Reid said, "The only people who feel there shouldn't be more coming in to the federal government from the rich people are the Republicans in the Congress. Everybody else, including the rich people, are willing to pay more. They want to pay more."
This is, by the way, the same Harry Reid who once claimed that paying income taxes in America is "voluntary." In any regard, because he's one of the "rich people," and he receives contributions from many "rich people," Reid should know what they want. Why not give it to them?
A recent article at the American Thinker proposed that "Republicans should forget the tax policies of Grover Norquist and embrace Bill Maher's California model for fiscal success." Three revenue enhancement suggestions were offered.
1. Remove state income taxes as a deductable item from the federal tax code for those making over $500,000.
2. Remove city income taxes as a deductable expense from the federal tax code for those making over $200,000.
3. Remove real estate taxes as a deductible item for all those paying over $15,000 in property taxes.
Reid has challenged Republicans to stop opposing "more coming in to" the federal coffers. It's time the GOP accept his challenge. To that end, here are seven more federal revenue enhancement suggestions -- making the total 10 -- that, if proposed by Republicans, would show they're serious about enabling "rich people" pay a fairer share into the U.S. Treasury.
4. Impose new limits on charitable tax deductions for wealthy people making more than $500,000. President Obama first proposed this -- at an income level of $250,000 -- back in 2009. His intent was to "rebalance the tax code so that the wealthiest pay more." This aligns with Reid's notion that everyone, including the wealthy, want to pay more taxes.
Obama proposed that it not take effect until 2011 when the economy would be well on the way to recovery. It's now 2013, and the regime is heralding an economy on the uptick. So, it's time to enact the President's 2009 proposal, but at a higher income level -- to start with, anyway.
5. Remove the municipal bond tax-exemption provision. Munies compete with an advantage against treasury bonds. Recent 10-year AAA munies yielded 2.70% (AA - 3.30; A - 3.80). Meanwhile, US treasuries were at 2.50%.
Also, their sale of tax-exempt muni bonds encourages cities to undertake more debt. Many don't need more debt, given their unfunded pension liabilities.
6. Eliminate the tax deduction for interest paid on home equity loans. It encourages homeowners to undertake more debt. And, according to the Washington Post, "A majority of Americans with 401(k)-type savings accounts are accumulating debt faster than they are setting aside money for retirement." So the WaPo should seemingly endorse any suggestion for federal revenue enhancement that discourages additional personal debt.
7. Tax private universities on interest earned from their endowments. The top five university endowments held by private institutions total about $72,000,000,000. Their tuitions are high; their professors and executives are well paid. Tax their endowments. That's fair. After all, they are by-and-large institutions of, by and for "rich people," with a relatively few noteworthy exceptions, of course.
The 2012-2013 annual average salary for full professors at the universities of Columbia, Stanford, Chicago, Harvard and Princeton ranged from $212,000 to $200,000.
Columbia University's President was paid nearly $2 million in 2012. And, Yale's and the University of Chicago's Presidents each received $1.6 million. Why should the profits on university endowments escape taxation?
Plus, why should private university land endowments escape paying property taxes?
For example, Stanford University sits on 8,180 acres "of foothills and plains...in the center of the San Francisco Peninsula." That's prime real estate. Subject it to property taxes.
Stanford's 700 buildings are linked by "46 miles of roads, a 49-megawatt power plant, two separate water systems, three dams, three open water reservoirs, 88 miles of water mains, a central heating and cooling plant, a high-voltage distribution system and a post office. Stanford provides or contracts for its own fire, police and other services."
Rich universities are big businesses. They receive big government welfare checks in the form of federal grants. For example, Johns Hopkins University received $1,900,000,000 in federal grants in 2011. In total, the federal government gave almost $40,000,000,000 in R&D grants to colleges and universities in 2011.
The pedagogical staffs of most universities generally promote big government. So, tax them appropriately to help pay for the big government they advocate. That's only fair.
8. Reduce the level of tax-exemption on contributions made to foundations with assets over $100 million, and...
9. ...tax the interest gained by those foundations from their assets.
Here's a list of foundations with assets well over $100 million.
- Rockefeller Foundation (Standard Oil)
- Ford Foundation (Ford Motor Co.)
- Duke Endowment (Duke family fortune)
- John A. Hartford Foundation (Great Atlantic and Pacific Tea)
- W.K. Kellog Foundation (Kellogg Cereals)
- Carnegie Corporation (Carnegie Steel)
- Alfred P. Sloan Foundation (General Motors)
- Moody Foundation (W. L. Moody's oil, realty, newspapers, and bank holdings)
- Lilly Endowment (Eli Lilly Pharmaceuticals)
- Pew Memorial Trust (Sun Oil Co. or Sunoco)
- Danforth Foundation (Purina Cereals)
It's time rich foundations pay a fairer share of the tax burden. After all, as Senator Elizabeth Warren might argue, they didn't build their foundations -- tax-exempt donations did.
The total endowment fund of just the top 25 U.S. foundations is approximately $150,000,000,000. That represents a substantial taxable opportunity for the federal government.
10. Cease crony-political tax breaks and industry welfare payments. It's a bipartisan disease that infects the federal budget. For example:
(R) The American Taxpayer Relief Act, signed by President Obama on January 2, 2013, delighted the National Thoroughbred Racing Association. It allowed a "bonus depreciation" on the purchase of race horses. According to Forbes, "Estimating the value of all aspects of the Thoroughbred racing industry to be worth about $4 billion dollars to his home state of Kentucky, [Joel] Turner [a Louisville attorney specializing in equine legal services] approved of the renewal of the provisions. 'Buying horses and writing them off was included in the law because of the ripple effect to the economy,' he said. 'This encourages investment in assets.'"
This tax break for thoroughbred constituents must have pleased Senator Mitch McConnell.
On the flip side of the bipartisan coin there's this:
(D) The Travel Promotion Act, signed by President Obama on March 4, 2010, was heralded by Senator Harry Reid as a great boon to the travel business in Nevada (AKA: "the gaming industry"). Reid's website reads: "Senator Reid fought so hard to pass this bull because he knew it would mean thousands of jobs for Nevada as foreign tourists flood to Las Vegas and Lake Tahoe."
Several hotels on the Las Vegas Strip displayed their appreciation for Reid's effort by posting accolades to the Senator on their arcades.
No tax money is used in this scheme, but fees collected by government aid the tourism industry. So, money is extracted from the U.S. Treasury to support, in part, the Vegas Strip. That income has to be made up from somewhere.
Horse racing and gambling - are they the backbone of America's economic prowess?
The Heritage Foundation opposes this scheme as representing "waste and abuse": "Rather than continue government-led travel promotion measures, Congress should leave the promotion of tourism to the private sector. Instead, Congress and the Administration should focus on making it easier, safer, and more efficient for travelers to come to the U.S by improving U.S. visa services and expanding the Visa Waiver Program, the very program that is helping to fund Brand USA's misguided efforts."
In a bipartisan spirit of modeling behavior for their colleagues, and to alleviate crony arrangements in federal taxing and spending policies, the two Senate leaders - Reid and McConnell - should delete favored treatment to the horse racing and tourism industries. Take some of the tax burden off the middle class, guys. Come on, that's only fair.
Meanwhile, we wonder: How long are the boys and girls in D.C. going to make us watch repeat replays of the debt ceiling puppet show where the only thing that changes, invariably upward, is the debt level?
Enough already. It's time the GOP change tactics. What it's doing isn't working, and We the People can see that it's not.