- - Monday, August 21, 2017

ANALYSIS/OPINION:

It is the spending, stupid.

The Republicans just don’t get it.

There were several reasons why the voters gave Republicans control of the government but one of the big reasons was fiscal responsibility.  Most Americans get one very simple concept.  The nation is spending itself into bankruptcy.

The Republicans could cut spending.  They could keep their promises to the American people, but they won’t.  Because they will not cut spending, and because they fear making the deficit and the debt much worse, the Republican majority is now coming out with some really horrible ideas.

The Republicans have accepted the idea that for tax reform to happen, it must be revenue neutral.  In other words, if there is a tax cut in one area, it must be offset in another by a “revenue enhancement.”  In plain, non-politician English, the Republicans have no desire to cut the size of government. They want to feed the beast and therefore they are pushing stupid ideas to continue to feed the beast that is big government.

In their desire to send even more tax dollars to Washington, the Republicans are now kicking around a really bad idea.  In 2014, then House Ways and Means Committee Chairman Dave Camp came up with an advertising tax. 

Anyone who has ever run a business knows how expensive and important advertising is.  Without advertising, no one comes around to by a business’ goods or services.  Currently, under the tax code, advertising expenses are a normal business expense. That means they are deducted from a business’ income the year the expenses are incurred.  Under Camp’s original proposal, instead of being able to deduct all of an advertising expense immediately, a company would only be allowed to take 50% of the expense the year it is incurred and the remainder would be spread out over ten years.

In other words, the Republicans wanted to raise taxes on small business again. 

Fortunately, Mr. Camp’s 2014 proposal was never acted on.

But the Republicans, ever diligent to try and keep a steady flow of tax dollars coming to Washington to feed big government are now considering this bad idea again.  Business in general, and small business in particular, lives because of advertising.  Anyone who has studied economics knows a basic fundamental principle of economics. If you tax something or otherwise increase the cost of something, you will have less of it.

Less advertising will certainly hurt media companies, but more importantly, it will hurt small businesses.  If small businesses cannot deduct the costs of their advertising, they will do less of it. If there is less advertising, there will be fewer sales.  This is a concept so simple that even Democrats get it. Even Senate Minority Leader Chuck Schumer thinks this is a bad idea. 

Much of the emphasis on tax reform, which President Trump desperately wants to see passed, focuses on the immediate expensing of more items. That is a good thing.  Why would any sane Republican support an increase of any kind of tax?

The advertising tax is another sign that the Republican Party does not get it. They still think they can go home, talk about how conservative they are, then go back to Washington and spend money like drunken Democrats.

Republicans need to buy a clue. The Republican government needs to start cutting spending and cutting taxes.  The GOP does not need to try and balance out tax cuts in one area with tax increases in other areas. That is not why Americans put them in charge of the government.

When Republicans forget this important concept, they fall victim to stupid ideas like the now rejected Border Adjustment Tax and this advertising tax.

They would do well to remember and update Bill Clinton’s 1992 slogan.

“It’s the spending, stupid.”

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