One of the biggest problems with our impoverished media sector is the fact that nobody covers anything that matters anymore. We’ve got a lot of outrage, and a lot of time and effort spent on simple compelling stories. But if you’re truly interested in what’s going on in the world, or the direction that our government is going in, these stories are largely useless. What matters is almost always a lot more complex.
This channel’s first big hit dealt with one of those issues. We were the only folks looking at the Foreign Account Tax Compliance Act (FATCA) who didn’t expect to make millions off of it. So we were able to show what the ramifications of the legislation were to a wide audience. I’m beginning to think that the elimination of the State and Local Tax Deduction (SALT) is a similarly important issue. Sounds boring, but the implications are immense. This video attempts to lay out that story.
Video Transcript after the jump…
Hey there. We in the United States are obsessed with the death of our Republic. Many of us think that the government wants to take all our guns and set up a dictatorship. Many of us also think that the clueless populism of Donald Trump is destroying the civility and basic competence our government needs to be viable. I’m sympathetic to both of these ideas actually, though to differing degrees. But neither side is paying much attention to the biggest step towards the death of the Republic that has been proposed this decade. It’s a quick ticket to Tyranny, and nobody is talking about it.
I’m talking, of course, about the elimination of the State and Local Tax Deduction. This could be passed with the Republicans tax reform before the end of the year. The US system was designed to have multiple centers of power. Independent power for the states is probably the most important part of the system of checks and balances that was set up by the folks who wrote our constitution. This means that each state and locality has its own taxing authority. Different states are free to do things differently. It’s the state and local tax deduction that preserves this independent power.
Most Americans have to pay an income tax to the central government in Washington, DC. But they have always been able to deduct the State and local taxes that they pay from the money they send to the national government. This deduction actually pre-dates the modern income tax system by over 50 years. Earlier generations of legislators knew that if they didn’t have the deduction, states would be forced into a race to the bottom in tax terms, and individual state power would have been destroyed. Everybody would move to weak states with no taxes, and all power in the country would flow to Washington, DC.We can argue over whether money is speech, but we can all agree that money is power. Today’s Republicans have forgotten that basic truth. In this generation, states run by the Democratic party tend to have higher state and local taxes, so the Republicans see a short term win. Congress gets more money to use for tax cuts elsewhere, and they get to stick it to the dems.
This short-sightedness reveals a fundamental misunderstanding of how freedoms are lost. It’s not quick or dramatic or exciting, it’s a slow process. Our freedoms are chipped away bit by bit. The first Roman emperor had to pretend that the senate was important, and tried hard to pitch himself as the just the first among equals. Three hundred years later it was considered a privilege to crawl at the emperor’s feet. It’s the gradual centralization of powers we have to look out for, especially when it looks like the regular give and take of politics. More power centralized in Washington, DC should be a lot scarier than a school board in Kansas that bans books on evolution, or a city government in Chicago that wants background checks for guns. But Mickey Mouse bullshit like this draws a lot more attention than the drastic power grab congress might enact as early as this week.
State’s rights has a bad reputation nowadays for some very good reasons. But we have to acknowledge how important a part of our system that concept is. Our independent state and local governments are our most valuable tool against the centralizing power of Washington, DC. The US Constitution doesn’t really work without them. Once eliminated the State and Local Tax deduction will never come back. It won’t be obvious immediately, but this move by Congressional Republicans will kill those laboratories of Democracy we used to hear about.
My favorite Benjamin Franklin story goes like this. In Philadelphia in 1787 he’s walking out of the Constitutional Convention. Somebody asks him what kind of government has been created for these brand new United States. His supposed response: “A Republic if you can keep it.” We always need to be on the lookout for threats to our system. The elimination of the SALT tax deduction is easily the biggest step towards the death of the Republic I have seen this decade. And nobody is talking about it.
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