When people vote for candidates, they are not just voting for an individual, they are voting for a party. I don't just mean in terms of control of the White House or Congress, but in a philosophical sense. The two parties have very different philosophies on various issues, and when one votes for a candidate of a particular party, one essentially is voting for that philosophy, regardless of the views of the individual candidate. No matter what that candidate may say or believe personally, over time they eventually are forced to conform to their party's philosophy if elected.
On tax policy, it is pretty clear what the two major parties think. Democrats believe that the tax system should be used aggressively and systematically to equalize incomes. Those at the top must be brought down by high tax rates, and those at the bottom should be lifted up by tax subsidies, such as the Earned Income Tax Credit.
Republicans, on the other hand, generally believe that the tax system exists mainly to raise the revenue needed to fund necessary government services and should not be used to implement social policy. In principle, Republicans believe that we should have a tax system that interferes as little as possible with economic and social decision-making.
Obviously, both parties fall far short of their own ideals. Nevertheless, one can assume that tax policy will tend toward each party's philosophy if they are given the power to make policy. Therefore, it is worth looking at specific tax policies to see how the two parties differ, as an indication of how they might act on a broad range of issues. A good example is the Alternative Minimum Tax.
The AMT grew out of testimony by Treasury Secretary Joseph W. Barr, who was secretary for about two months at the very end of Lyndon Johnson's administration. Just days before Richard Nixon took office in January 1969, Barr used to his position to publicize the fact that 155 wealthy taxpayers had avoided paying any federal income taxes in 1967 because of legal tax avoidance techniques. This was considered a scandal that demanded legislative action.
In the Tax Reform Act of 1969, which Nixon stupidly signed into law, the AMT was first imposed. The idea was that if people were too aggressive in using tax deductions, credits and exclusions, they should be punished, even if everything they did was perfectly within the law. For example, if someone put all their money into tax-exempt municipal bonds, the AMT forced them to pay federal income taxes, even though the tax-exempt status of municipal bonds was created intentionally to subsidize local governments.
Bruce Bartlett is a former senior fellow with the National Center for Policy Analysis of Dallas, Texas. Bartlett is a prolific author, having published over 900 articles in national publications, and prominent magazines and published four books, including Reaganomics: Supply-Side Economics in Action.
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