The Zentrist Guide To Fiscal Conservatism, Part One

[Editor’s Note: People talk about “fiscal conservatism” a lot. What is this mysterious thing that never seems to actually happen when those who preach its importance actually gain control of the levers of power? New contributor Zentrist will clue you in.]

As someone who thinks of himself as a centrist who leans fiscally conservative, I can only shake my head at what seems to pass for conservatism these days. 

When I discovered The American Conservative, I found it to be a breath of fresh air. As an example, consider this piece by Daniel McCarthy, in which he is critical of a recent speech given by W. Mittens Romney, in which Mittens said that Bammers should never have pulled out of Iraq, hinted that he’ll go to war with Iran and gave the rhetoric that says military cuts are BAD – a view that McCarthy describes as “military Kenyesianism.”

While there are some opinions at the site that I didn’t agree with, I thought it was great to find a place that offered some perspective from a conservative standpoint that wasn’t just simply about “fall in line with the GOP” and that you must ALWAYS lower taxes and ALWAYS cut spending and ALWAYS let Wall Street run amok.

So then you might be saying to me: “Isn’t that what fiscal conservatism is all about?”

Well, if you believe what the establishment GOP and its loyal pundits tell you, it may be.

Except those folks are just in engaging in Extremely Stupid Pundit Narratives, or “ESPN”.

If I were to describe “fiscal conservatism,” there is more to than just what you hear from the GOP and its loyal punditry. Allow me to explain how I view fiscal conservatism.

First, it is not simply about lower taxes — a fiscal conservative typically believes that it’s best not to have income tax in the first place, but can accept that it may need to be in place to ensure that the needs of the citizenry can be addressed. But if you do implement income tax, you use the lowest rates possible with the broadest base possible.

It’s the “broad base” that the GOP establishment does not understand. The evidence is in W. Mittens Romney telling everybody he’ll cut the tax rates, but when he gets quizzed about what deductions he’ll remove (read: how he’ll broaden the base), he just says, “I’ll tell you when I’m elected President.”

Or in other words, he has no intention of broadening the base.

And broadening the base isn’t just about addressing that 47 percent that don’t pay income tax — it’s about the fact that people like Mittens are in a 35 percent tax bracket but are paying 13 percent taxes on their total income. When the difference between the rate for your bracket and your effective rate paid is more than 20 percent, THAT is where the problem with a narrow base comes into play.

Now, let’s say you lower the top rate to 28 percent but you modify the tax code overall so that people like Mittens effectively pay 25 percent. NOW you have accomplished what the fiscal conservative wants. So it’s not about making tax code changes “revenue neutral” but about getting the wealthy to put more more money into the coffers than they presently do.

(Side note: What the hell is “revenue neutral” supposed to mean? What, does Grover Norquist believe that if we cut taxes and then revenues go up, that we have to cut taxes some more so that the revenues can go down to whatever level they were previously at?)

As a fiscal conservative, I have no issues with most people who pay no income tax. But I do have a problem with a tax code that only the most skilled accountants can figure out — who, of course, prepare the taxes for the wealthiest people. Really, is it surprising that members of Congress couldn’t figure out their taxes on their own? After all, since most of them are wealthy, they just hire somebody else to do that job!

And when you look at the tax accountant industry, you are looking at an industry that has become less about smart, literate accountants who add something of value, and more about massive firms whose sole purpose is to make money off people who don’t understand how to figure out their taxes.

Take, for example, this study put together The President’s Economic Recovery Advisory Board, a lengthy report about the complexity of the tax code. Among the points it raise is that: taxpayers and businesses spend 7.6 billion hours figuring their taxes, to a cost of at least one percent of GDP annually (the study cites the 2008 figure as $140 billion). Also, given that many provisions that are directed to low-income earners force these people to calculate their taxes multiple times, about 40 percent of low income earners who claimed a child-related credit, and 70 percent of low income earners who claimed the Earned Income Tax Credit, had a tax preparer do their taxes. Now how do you suppose those low-income earners paid those tax preparers?

Hence, what the fiscal conservative would really prefer is a simplified tax code that gets to the point as to what people really owe, at lower rates while maximizing government revenue.

But what about goverment spending, you ask? That I will get to in the next installment.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: