Tag Archives: tax credit

Today I Praise Republicans. Well, Three Republicans.

A couple of Republican Senators caught me by surprise on Sunday. Both Sen. Tom Coburn, and Sen. Saxby Chambliss said that raising government revenue should be considered in the attempt to balance the budget. This goes against not only the Republican budget proposal in the House, but also the Republican talking point that the governments problem is spending not revenue.

Coburn and Chambliss are both part of the “Gang of Six” who are Senators looking for a budget compromise in the Senate. Coburn has come under fire from conservative activist Grover Norquist who says he is going back on his word. Specifically, Sen. Coburn signed an oath with Americans for Tax Reform that said he would not vote to raise taxes. Coburn’s repsonse was very direct. He said:

“Well, I think which pledge is most important, David , is the pledge to, to uphold your oath to the Constitution of the United States or a pledge from a special interest group who, who claims to speak for all of American conservatives when, when in fact they really don’t.”

For a Republican to fire back at a conservative special interest group like that caught me way off guard. Sen. Chambliss was far less fiery when talking about revenue. On CNN, he said:

” Now, if we don’t want to pay the debt back, then we could just not worry about the revenues. But the fact is we’ve got a $14 trillion debt staring us in the face, and revenues has to be on the table if we’re serious about attacking that debt.”

Both quotes come from this NPR story.  It’s important that two Republican senators have put raising revenue on the table. Democrats have already acknowledged that spending needs to be cut. Now, we at least have a group working at both sides of the problem, revenue and spending.

Coburn’s idea for raising revenue is certainly going to be a hard sell to Republicans. He wants to eliminate tax deductions, and credits in the tax code. This will cause businesses and individuals to pay more in taxes. Republicans have often called this a “tax increase.”  As the Boston Globe reported  last July, House Republicans opposed the act to give healthcare to 9\11 first responders because it included a “corporate tax increase.” The bill would have prevented foreign corporations from not paying taxes on profit earned in the US.

I don’t see that as a tax increase. Our tax code says you should pay this much. It then says if you do certain things the government will give some of that money back (a tax credit) or not tax you on that income (a tax deduction.) This is the government’s way of influencing our behavior. It is a version of positive reinforcment. For those of you not schooled in psychology, positive reinforcement is when you provide a reward for a certain behavior with the intention of increasing the probability that the same behavior will reoccur. So, when the government offers a tax credit to first time homebuyers they are trying to increase home ownership by giving a financial incentive. Taking away that tax credit is not really raising taxes it’s just not providing that incentive.

I like to use the metaphor of a retail business, perhaps a grocery store. When you walk into a grocery store everything has a price. It’s usually listed right on the shelf below the item. From time to time the store wants to encourage you to buy particular items. Maybe they have a large supply of something and they want to move some product. For a time that item costs less. As people buy enough of a particular item, the store will end the sale. Did the store raise prices? Not really. The price of that item did technically go up, but it just went to the normal rate. In the same way, when the government says a particular tax credit or deduction is expiring, they aren’t raising taxes. They are really just saying we need to start paying full price again.

Perhaps thats not important right now, but I wanted to make a point. In the end I applaud Sen. Coburn, Sen. Chambliss as well as Sens. Conrad, Durbin, Warner, and Crapo for trying to do real work for the people of this country. I hope they are successful in finding a good compromise.

Arizona Doesn’t Support Religious Education. They Just Pay For It.

The Supreme Court ruled on an important case today. In a 5-4 decision they upheld an Arizona law that provides a tax credit to citizens if they donate to a “school tuition organization.” This tax credit, called the “Private School Tax Credit Law” gives citizens somewhere between $500-$1000 dollars in a tax refund if they donate to one of these “STOs.” The real question is whether this is government support of religion. There are a few very important questions that need to be answered about this law.

First of all, how is it not government support of religion when government is providing money that supports religion. The Arizona state government is saying if you promote private education they will give you the money to do it. A tax credit means that they reduce the amount of taxes you pay. This is different from a tax deduction that only reduces your taxable income. How is that not government support of private education? It is true that not all private education is religious, but most of it is. When it gets down to the facts of the case, government should only be funding private education because it is the only way government can control the agenda. Religious schools teach only their view of the world. That’s why children brought up in religious schools may not be taught evolution for example. Government should provide education for its children without religious influence.

It would be very interesting to find out if those people who support the Arizona tax credit would support it if they heard that the money was going to Muslim schools. It shouldn’t. It also shouldn’t support Christian, Jewish, or any other religious schools. It is important that education explores world religions. It is also important that they do not show a bias. Education is something that should provide a broad worldview. It should never narrow that view to support any one viewpoint.