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Frank Bernheisel: The View From Here
Frank Bernheisel
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Frank Bernheisel
Posted 11.23.13
Just Outside Washington

FRANK BERNHEISEL

US TAX GIVE-AWAYS

In 2011, according to the U.S. Census Bureau, families in the upper 10 percent were making more than $140,000 per year. That includes all the members of both the Senate and the House of Representatives.

The conservative Republican members of the Congress claim to be speaking for the American people but they seem to be speaking mostly for those that fall into the Tea Party category. So who are they speaking for?

According to Gallup Poll conducted in 2010, the individuals in the Tea Party represent 28 percent of the population and are:

49 percent Republican, 55 percent men, 55 percent have incomes above $50,000 (which is the U.S. median family income), 50 percent over 50 years old, 31 percent college graduates, 49 percent employed full-time and 79 percent white.

We hear a lot from Ted Cruz and a couple of others, but who are the conservative Republicans?

Well, in the Senate, according to the National Review (see their website), there were 16 conservative Senators with a National Review conservative ranking of 83 percent or higher, and all Republicans. Of the 100 Senators, these certified conservatives constitute 16 percent.

In the House, there were 36 conservative Representatives with a National Review ranking of 89.7 percent or higher, all Republicans. Of the 435 Representatives, these certified conservatives constitute 8 percent.

They claim that they want to reduce the size and expenditures of the federal government and balance the budget. To accomplish this goal they have focused their efforts on a number of programs:

  • The Affordable Care Act, which is designed to provide health insurance and hence health care for 30 million or more people who are currently not covered, mostly lower income. (Yeh, the website is a problem and it took my niece four hours to sign up in Virginia.)
  • Food Stamps or the Supplemental Nutrition Assistance Program (SNAP), which provides food for low-income persons and families.
  • Medicare beneficiaries, caps on medical malpractice verdicts and reduced payments to hospitals that treat more poor people than average.
  • Eliminating the Social Services Block Grant, a flexible funding stream for states to help with day care, Meals on Wheels, and drug treatment facilities. Social Security
What these programs all have in common is that they are designed to and do help low income people.

Programs that help the higher income people, let's say the top 10 percent, are not being considered for cuts. These programs are mostly built into the income tax structure and are more properly called Tax Expenditures. Some of these are:

  • Interest that is paid to buyers of Municipal Bonds is tax free
  • Lowering taxable income by the interest paid on primary home loan, up to $1 million loans.
  • Lowering taxable income by the interest paid on second or vacation home loans.
  • Special low tax rate on capital gains averages 15 percent, the range is 0 to 20 percent.
  • Deductions for money given to charity.
  • Deduction of interest costs for investment loans.
  • Estate exemption from taxes up to $5.25 million per person
These are the straightforward tax expenditures. Then we have the special treatments, accounting dodges, and loopholes that reduce the taxes of the wealthy. Some examples: taxing the income of hedge fund managers at the capital gains level, tricks that allowed Mitt Romney to stash $100 million tax free in his IRA and then there is always the overseas account trick.

So, We The People give money -- tax breaks, tax deductions, entitlements -- it does not matter what one calls it, it is giving money to high-income people, people who do not need it. According to the Economist, this money amounted to over $600 billion last year -- Almost enough to eliminate the budget deficit.

Do you want to balance the budget? Stop giving money to people who do not need it.

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