Why Congressional Republicans Should Go Over Fiscal Cliff

There has been some talk within some talking head shows about the Congressional Republicans and President Obama, and talking about the Fiscal Cliff. Within this talk it has been brought up that President Obama has the upper hand when it comes to talks on the Fiscal Cliff.

The first reason why the Republicans should not be concerned with what President Obama has to say on the Fiscal Cliff is that the President has no authority over fiscal matters. Only Congress has that authority. Thus, Congressional Republicans should just ignore the President on these matters since the President is talking about doing things in which he has no authority to do it. Congress “creates” and passes the laws, and President either signs them into law or veto’s them. President is not involved in creating these laws at all.

The second reason why the Republicans should not be concerned with what President Obama has to say on the Fiscal Cliff is that President Obama talked about going back people being treated equal, having the same laws apply to them, and have the same shoot. The Republicans can point out that in order to be consistent with these things that President Obama ran on is to go over the Fiscal Cliff. Going over the Fiscal Cliff will make it so that all citizens are affected equally instead of only part of citizens being affected and others not being affected. This would prevent people being treated equally and this would limit people having the same shot.

The third reason why the Republicans should not be concerned with what President Obama has to say on the Fiscal Cliff is that President Obama talked about going back to the Clinton economic policies. So the Republicans should point out that the bush Tax cuts were based on lowering the tax rates of all Americans by lowering them from what Clinton had them. So point out that in order for President Obama to say anything about Clinton economic times and policy, it would be necessary to get rid of the Bush Tax Cuts that applied to all Americans. This would mean going over the Fiscal Cliff.

The fourth reason why the Republicans should not be concerned with what President Obama has to say on the Fiscal Cliff is that Congressional Republicans were elected by their constituents, which can either be a district for the House of Representatives or a state for the Senate, and this implies that they support their position on this issue (unless majority of constituents say otherwise). They are elected Representatives, and they do not have to worry about how other people in other states think, or other districts, but only the people they are sent to Washington to represent them before the nation.

The fifth reason why the Republicans should not be concerned with what President Obama has to say on the Fiscal Cliff is a mix of the second reason,  third reason, and fourth reason. This is based on how President Obama supposedly has a “Mandate” from the American people. The Congressional Republicans may point out that they have a “Mandate” from their own constituents like the President does as well. The Congressional Republicans may point out that President Obama’s “Mandate” is about people being treated equally, and people would not be treated equally if one group of Americans have their tax rate raised while another group does not have their tax rate raised as well. The Congressional Republicans may point out that President Obama’s “Mandate” is to go back to the economic policies of Clinton and not George W. Bush, so get rid of the Bush Tax Cuts, which means going back to the tax rate under the Clinton Administration which means going over the Fiscal Cliff.

Romney with Income Tax and Capital Gains Tax

There was a time in which Mitt Romney ran for the Republican party nominee for President of the United States of America. During some of this time during the campaign there was one narrative taken against Mitt Romney about him showing his tax returns. In showing these tax returns they would see where he got his money, since Romney is said to be a wealthy person, and also to see how much of his money was taken by the federal government or state governments and at what rate he was taxed by these agencies.

It was found that Mitt Romney had no income for an income tax to apply to, but he did have a capital gains for a capital gains tax to apply. These are both taxes, but they are not one and the same type of taxes. Like Baltimore and Annapolis are in the state of Maryland & Baltimore and Annapolis are different from one another, so too are Income and Capital Gains both Taxes, Income and Capital Gains are different from one another. Income Taxes and Capital Gains Taxes are categorically different from one another. They specifically apply to things that meet certain criterion, and these criterion differentiate on where they apply and where they do not apply. It would be similar to how you have a fork and a spoon, and they come in a set of silverware. They are both equal in being silverware, but the fork is not the spoon and the spoon is not the fork, but silverware fork and silverware spoon are silverware.

So what is the problem? Here is one article talking about the difference from an economist. Here is a reply, in some sense, to the first article.

The first point, and most important point, which the Supreme Court has said itself, which is that the power to tax is the power to destroy. The first article points out the difference between an income tax and a capital gains tax. So these are different powers of destruction being applied to two different sub groups.

“What is a capital gain, and how can we distinguish it from ordinary income? The answer seems simple. If you have a job, the money you are paid for your work is ordinary income. If you buy an asset at one time and sell it later for a higher price, the profit you made from holding it is a capital gain.”

These are two different types of actions that individuals have with one another. One person works for another and gets paid for this work and gets taxed for their work. Another person sells a property for more than it was previously worth and makes a profit that is taxed. So we notice two different types of activity and how the government is taxing these activities. What is noticed is that those people who partake in the activity of capital gains get taxed at a percentage of 15%, and those who partake in the activity of income activity are getting taxed at a percentage of 35%.

Now some of the issues that people had were that Mitt Romney did not pay the income tax rate, but he payed the capital gains tax rate. One of these rates was lower than the other. This does not exactly appear to be what people were upset itself, since it appeared that people were upset about the first but that Mitt Romney is also a wealthy person who is considered to be part of the 1%. It was both of these conditions that made it so that people looked down upon Romney for not being forced to give up 35% of his property by being forced to give up 15% of his property, based on his activities with other people. Mitt Romney followed the law by paying the taxes his taxes based on his activities, which were not in the category of income but in the category of capital gains, even though either which way he would have been taxed. He just didn’t have to be taxed in one way over another, in which one happened to be less than another.

Now let me ask you, does it appear to be wrong that certain activities should be taxed less than other activities? For example, say that we have someone who partakes in activities which harm 49 people out of 50 people, and we have someone who partakes in activities which harm 1 person out of 50 people. Which activity, if both of these activities are legal, would you think one should be taxed more than another? Remember, the ability to tax some activity is the ability to destroy that activity.

The question becomes which activity do we want to be taxed, and how much do we want to tax that activity? Either income has a higher tax rate than capital gains, or income has a lower tax rate than capital gains, or income tax rate is equal to capital gains. If income has higher rate than capital gains, then government is giving less incentive for income activities. If income has a lower tax rate than capital rates, then government is giving more incentive for income activities. If income tax rate is equal to capital gains, then government is giving equal incentive for both activities Thus, either government is giving less incentive for income activities, or government is given more incentive for income activities, or government is giving equal incentive for both activities.

The question becomes, which tax bracket do you want to destroy? Do you want to destroy the activity of capital gains or income? When people ask for a tax increase, they want to destroy people or prevent the activities of people. So those people who are considered to be wealthy are people we want to destroy by making them give up more of their property. But this also holds with those people who are not wealthy.

Now if we want to treat people equally, give them all the same shot, have the same rules apply, then make them equal in their activities. A person gets a shot at either income activity or capital gains activity. Not everyone is built for income activity or capital gains activity. You might not be good at a 9-5 job for 5 days a week in a year. You might not like that job, and not just good at that type of activity. Maybe you are better at having some property and being able to sell it for more than you obtained it for. People have different talents, and so some people are more aligned with either one or the other, and some people are of both sides. We would be telling those who are better at capital gains activity that we don’t like that and we think they should be punished for their ability (if not outright luck). Same would hold with those who do income activities.