Senate Republicans, who have turned obstructionism via filibustering into an art form, are allowing S. 2204, a bill to repeal the subsidies granted to major oil companies to come to the Senate Floor, not that they will follow Senator Harry Reid’s (D-NV) lead and enact the measure. [LVSun] However, debate on the bill does provide another opportunity to contemplate the almost total disconnect between the Senate Republicans and the reality of the global oil market.
Appointed Senator Dean Heller explains:
“Once again, Washington is doing its old familiar dance — pushing another measure that’s big on talking points but light on solutions,” Heller said in a statement shortly after supporting the procedural motion to take up the bill he doesn’t sound keen on voting for. “The truth is this measure will not help anyone struggling with rising gas prices.” [LVSun]
No, the bill has precious little to do with gas prices yesterday, today, or tomorrow. Not that Senator Heller wouldn’t like to attack a bill “to reduce American dependency on global oil markets which doesn’t do that,” BUT the junior Senator is crafting a straw man at which to aim his lance. The bill is about repealing generous tax subsidies to highly profitable energy corporations who have benefited from American protection without paying their share of the tab. And, taxes are what Senator Heller wants to discuss:
“Heller argues his position is not about protecting oil and gas companies; it’s about taxes. He’s open to talking about closing loopholes in the context of a larger tax discussion but not to raising taxes on anyone — including oil and gas companies — before then.” [LVSun]
For the want of a better term, let’s call this the Trap Door Argument. The political expediency of the contention shows when it’s inferred that unless Senator Heller gets to close “loopholes in the context of a larger tax discussion” he’s not amenable to closing any loopholes. The little devils are, of course, in the details. What is that “larger context?”
One of the most notable features of Heller’s overall vision for taxation and federal spending is prominently displayed on his campaign website, a call for the adoption of a Balanced Budget Amendment. For reasons already explained in more detail here, here, and more specifically here, Senator Heller’s allegiance to Senator Jim DeMint’s (R-SC) Balanced Budget Amendment proposal from the Tea Party adherents in Congress isn’t so much a “larger context,” but an exuberant flight from fiscal reality.
What other proposals shape Senator Heller’s “larger context?” Grover Norquist’s Americans for Tax Reform has proudly announced that Senator Heller was the first Nevada candidate to sign the No Tax Pledge. [Aft] What did Mr. Heller sign?
“By signing the Pledge, Heller commits to the taxpayers of Nevada that he will “oppose any and all efforts to increase the marginal income tax rates for individuals and/or businesses … and oppose any net reduction or elimination of deductions and credits, unless matched dollar for dollar by further reducing tax rates.” [Aft]
And by aligning himself with Norquist’s organization, he’s signed into the Flat Tax Society:
“ATR believes that all consumed income should be taxed one time, at one low and flat rate. ATR is neutral as to where this taxation should occur. A flat tax is a consumption tax imposed when money is earned. Various sales taxes like the FAIR Tax are imposed when money is actually consumed. Each has the same consumption tax base. ATR maintains that tax reform should not be an excuse for a net tax increase. Rather, all deductions and credits repealed should be replaced by lower tax rates, new deductions and credits, and/or making existing deductions and credits bigger.” [AFT]
Therefore, the “larger context of tax reform” gives every appearance of being framed by (1) a balanced budget amendment, (2) no reduction in corporate tax loopholes unless matched by spending cuts, and (3) the enactment of a flat tax. If Class Warfare is the desired outcome, the Flat Tax is the weapon of choice.
An economist from the Strom Thurmond Institute at Clemson University provides this explanation as to why this would be the case:
“…there’s no concealing that the flat tax would radically redistribute the tax burden. Adam Smith, to whom economists always turn to for economic wisdom, observed, “It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.” The current U.S. tax system consists mainly of taxes on income (personal and corporate), payroll (Social Security), sales, and property. In 2007, these taxes provided 92 percent of federal income and 51 percent of state and local government income. Sales taxes are regressive—they take a higher share of low incomes than higher incomes.” [USNWR] (emphasis added)
There’s another little wrinkle in the so-called Fair Tax (Flat) Proposition which may rankle many who still cringe at the income derived from playing the market — as it was played during the Housing Bubble, under the Flat Tax Plan there would be NO tax on interest earnings:
“Not taxing investment income would eliminate the current “double taxation” faced by investors who pay taxes on their income, and then again when that income generates profits. That, too, would benefit the rich more than the poor. (A retired billionaire living solely off interest income, for instance, would pay no taxes at all.) [TP,WP] (emphasis added)
Thus far, Senator Heller’s “larger context” is a Financialist’s recipe for fiscal irresponsibility as prescribed in the Balanced Budget Amendment, for more (not less) deductions and credits, and for financing the operations of the federal government under a radical redistribution of the tax burden.
The Flat Tax hasn’t gotten much play in recent Republican debates since Governor Rick Perry and Herman Cain left the presidential candidate’s field, but the propositions most often offered for a Flat Tax range from 17% to 20%, with no taxation on income earned from investing (or speculating.) The question at this juncture becomes: Does Senator Heller continue his advocacy of the Tea Party’s Balanced Budget Amendment, and does his adherence to the Americans For Tax Reform’s pledge indicate his adoption of Flat Tax proposals?