So, the latest push is to get get Republicans in the House to agree to "close loopholes" in the tax code that allow certain wealthy individuals to deduct income (and thereby skirt the taxes on said income) for certain expenditures like the newly demonized corporate jet owner. Language that pits the evil rich vs. the poor and unemployed resonates with Obama's base and he gains significant political traction from the latest round of class-warfare rhetoric. And what better target for the poor to target than the poster boys of wealth and privilege, the corporate jet owner. Sounds like a good plan.
First, let's clear up what a loophole is and isn't. Loopholes are mistakes. Unintended gaps in the tax code that well paid lawyers and tax attorneys exploit to allow their clients to legally game the system. Loopholes don't last forever and are usually cleaned up in a future amendment once they are discovered. The corporate jet issue is a modified depreciation schedule that Obama and his administration purposefully included in the Stimulus Package. It was not a mistake. It is not a loophole. It was an Obama-backed piece of legislation.
The obvious reason the jet exemption was included in the stimulus was that the 2008 financial meltdown all but destroyed the private aviation market. Consequently, 20,000 IAW union workers were laid off. In an effort to save the industry, get union members back to work, and assuage the fears of hesitant jet buyers, this exemption was included in the bill.
Now, the IAW and the aviation manufacturers are understandably pissed at Obama's newest talking point. In one of the only instances in recent memory of union workers and management colluding for their common good, the General Aviation Manufacturers Association(GAMA) and the The International Association of Machinists and Aerospace Workers(IAM), both sent a letter to President Obama after his latest round of press conferences.
“Words have consequences and, in this industry, a few misguided words can put at risk even the ever-so-modest recovery we have experienced,” said IAM International President Tom Buffenbarger. “What this industry and its workforce requires is more time to recover, a chance to book more orders and the opportunity to recall more workers.”Here we have a Union President, saying what Republicans have been saying for months. You can't tax the problem away and not hurt the recovery. Obama loves to say that the economy is slooooowly recovering. And in such a fragile recovery period, cause and effect are easy to predict. We are not enjoying a boom that can absorb unfortunate decisions in a whirlwind of growth and profits. It stands to reason that potential jet buyers are waiting to see what is going to come out of these debt talks. No one in their right mind is not going to wait this thing out. Even simply talking about the issue has put the brakes on production orders and will likely cause fallout.
The jet issue is only a microcosm of the fallacy of Obama's tax-the-rich plan. It makes zero economic sense if the goal is to boost the economy and help create jobs. However, it makes perfect sense if the goal is to whip up the base who want to see the have-nots stick it to the haves. The appearance of Obama fighting for the little guy is more important than the fact that his proposed policies end up sticking it to the little guy. Taxing the few remaining business that are surviving, and who might still be able to hire people, is intuitively counterproductive. But, the downtrodden want their "pound of flesh" and taking some rich peoples' money seems to be what will satisfy them. Misery loves company. Recent polls say they that over 70% of voters would favor a tax on the rich. Of course they do. Those 70% are likely not directly effected, unless they are out of work and actually want to be hired by someone.
The Dems love to draw incorrect correlations on the tax & spend issue. They say things like, "We are not going to cut benefits to seniors and children in order to give tax breaks to the corporate jet owners." This, of course, plants the illusion that it's one or the other. However, it is Dems who are putting entitlements into the discussion. They haven't identified any other areas of wasteful spending that can be cut to solve the spending issue. It's always "rich people vs. poor people." Class warfare wins elections when the majority are suffering. The Dems are not talking about cutting foreign aid, cutting funding to wasteful pet projects, simplifying the tax code, cleaning up the entitlement programs to stop abuse (the real loopholes), or anything of the sort. Ironically it is Rebublicans that are suggesting all of the alternatives and distancing themselves from cutting benefits.
The problem is that Republicans lack good talking points. They don't have catchy phrases that resonate with people. They make informed, factual arguments that bore the average American to sleep. But, "Tax the rich!" when so many are out of work, sounds awesome. If republicans could explain, in language that the masses could understand, that both parties want to get people back to work, but that they just differ on the methods to be employed, they may get traction. They are correct in their arguments, but they are not being heard. Slogans like "paychecks, not unemployment checks!," or "we don't want to cut your benefits, we want to make you independent of government handouts." "Restoring pride to the American worker by getting them to work." Hell, anything is better than just saying that it is "unwise to raise taxes in this economy." Again, factually correct but, that and, "no new taxes" is lost on the people who hear the Robin Hood mentality of the leftists on every radio and TV show all day, every day. To them, job creators are stuffing their mattresses with cash that really belongs to the great unwashed masses. Republicans need a better spokesperson.
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