So says The Wall Street Journal, here, which approves as a way of helping pay for Romney's proposed across the board 20 percent tax cuts.
Without saying, of course, that this will shift costs from the rich who buy most of these bonds onto the broad base of taxpayers, in the form of higher taxes raised through property taxation. Property taxes will necessarily have to be increased because municipalities will have to pay more to borrow for spending on infrastructure, schools and the like without a ready pool of incentivized investors, i.e. the wealthy.
Municipal bonds are tax exempt for a reason: it makes borrowing cheaper and therefore taxes lower on the people who directly benefit from the spending. So what if the wealthy also benefit thereby? They should, and they do. For every bit of tax-free income the wealthy enjoy, someone somewhere has decent roads, schools and fire protection. It's not like the voters don't get to say No to such local spending. Property tax referenda are the meat and potatoes of local politics.
This kind of cost-shifting was pretty much Romney's m/o in Massachusetts, where he made it almost an art form, increasing fees on businesses under the rubric of equalization, and on property tax payers of all kinds. Americans can probably expect the same from a President Romney, except on a much larger scale. It won't be spreading the wealth around to make people equal, it'll be spreading the taxation around, eliminating "loopholes".
Taxing interest gains from life insurance plans is a case in point. It will hurt any beneficiary of such plans, not just the rich. Think of a wife left with young children to raise, who will have just a little less left from her dead husband because she had to pay her fair share. And imagine having to pay tax on that life insurance when the buyer was counting on it to pay the taxes due on his estate so that his heirs wouldn't have to sell assets to do so. Talk about throwing a monkey wrench into the estate plans of countless millions.
Push here, and it comes out there.
Are Americans really going to vote for someone who is already getting bogged down in the weeds of tax loss expenditures? All Obama has to do in response to this is say Republicans are going to take away your tax deductions. This is not the way to sell the Republican brand.
As tax loss expenditures go, the two together add up to $90 billion annually in lost government revenue and benefit mostly the wealthy, according to an AEI source quoted in the editorial. Nevermind the $3.8 trillion we're already spending in this fiscal year is itself "lost government revenue".
Republicans ought to be saying every dollar spent by government is lost.
Don't hold your breath.
