Monday, August 20, 2012

What Oil Filters Can Teach Us About Taxes And Charity

What Oil Filters Can Teach Us About Taxes And Charity

There is a wonderful old series of commercials extolling Fram Oil Filters.  In one, the opening shot is a garage where the hood is up on some ailing automobile.  A man in coveralls looks down and shakes his head.  The owner of the car was obviously both penurious and misguided: looking to save money in the short term, he failed to regularly change his oil filter.  An economic abyss now looms.

Speaking of the abyss, last week’s round of toxic chatter from the campaigns and their surrogates had more than the usual quota of gaffes and hyperbole.  There was the Joe Biden “chains” comment (and the delicious irony of Rudy Giuliani calling Biden a clown) and GOP Senatorial hopeful Todd Akin’s bizarre riff on “legitimate rape”, and Paul Ryan slamming Mr. Obama’s plan to cut Medicare Advantage by $716 Million dollars, even though his own plan does exactly the same thing. 

There was also a little bit of fun when a report came out that roughly 30 GOP House members of and their staffers were reprimanded for drinking and, in one case, skinny-dipping (Freshman Congressman Kevin Yoder of Kansas) while on a trip to Israel last August.  The GOP defends the junket as underscoring “the strategic importance of the relationship with one of our greatest allies,” which, I suppose, is an interesting way of getting Rep. Yoder to wrap himself in the flag.

But, amidst all the noise and faux outrage, there remains one particularly persistent little itch that won’t go away no matter how much we scratch:  Mitt’s tax returns.  He has released 2010, and promised 2011, and that’s all we are getting. Of course, this leads to all kinds of (unflattering) speculation.

So, what is in Mitt’s treasure trove of IRS data?  Probably what you think-rich man has all sorts of ways to avoid paying taxes.  Could there be more embarrassing disclosures, such as a tax amnesty?  Perhaps, although I doubt there’s anything racier than an actuarial “Lifestyles of The Rich And Famous.” 

The White House, not to play a political card (not them!) offered Mitt a way out, or, as my children would say, “trap!”  Release five years of returns and all is forgiven. Nope.  Mitt doesn’t have to, and he isn’t going to, and there is nothing further to discuss.

Except, there still is, and even the GOP pros know it.  So Mitt causally let it drop that he paid about 13.6% in taxes-less than most of us who are reliant on the less favored earned income, but something.  He should have let it go at that, because he then noted that his tax and charitable contributions, he “gives” closer to 20%.  

An interesting perspective.  Taxes are charity.  The Washington Post interviewed Michael Tanner of the Koch-affiliated Cato Institute, who confirmed that, indeed, the conservative position on taxes is that they are a form of charity, in that both are intended for the public good.

Being the moderate statist that I am, I had a hard time wrapping my head around that.  In my mind, taxes go for things like fire departments, roads, schools, cops, and national defense. 

Charity, on the other hand, might also “go for the public good” but is by no means the same.  I pick my charities based on my personal priorities: my place of worship, my alma mater, a library, a park.  Yesterday, my wife and I sent a check to honor our late parents.   I could have approached the IRS with a request that they consider a direct payment, but something tells me that wouldn’t have worked.

Mitt, too, has his priorities: his church, The US Equestrian Team Foundation, the Heritage Foundation, the Friends of the George W. Bush Library.  Those are choices that reflect his personal interests and political ambitions, as is perfectly appropriate.

But, if conservatives continue to equate charity to taxes, aren’t they really asking for what amounts to a personal line-item veto on expenditures?  The lower they can drive taxes and public spending, the more “charity” has to fill the gap.  That is, of course, exactly what the Ryan Plan is all about.  It doesn't balance the budget, but it does eliminate virtually all discretionary domestic spending along with entitlement “reform”, and upstreams the cash to the affluent.  Presumably, those folk could take the money they got from Granny and then engage in “charity”-they would give (or not) to the causes they support.  So, Mitt could pay less for things like schools and cops, and give more to various conservative causes and show horses. 

That shows you just how much the modern conservative movement has gone away from long-held concepts of public virtue.  Government should provide nothing beyond national defense--and even a war can be put on a credit card. Roads, sanitation, public safety, schools are all optional.

They have pushed this idea brilliantly, with a series of anti-tax measures that disconnect the individual from the public services he takes advantage of.  There is a fascinating article by Floyd Norris in the New York Times “Schools Pass Debt To The Next Generation” which covers a recent bond issue by the Poway (California) school district.  Poway needs to do renovations, but the taxpayers, aided by various Propositions, don’t want to pay for them, they just want to use them.  So Poway is borrowing $105 Million at 6.8%, and deferring payment until 2033, when, with accrued interest, it will pay more than eight times what it borrowed.  My friend Cynical Cynic says that the difference between Democrats and Republicans is that the Democrats want to tax and spend, and the Republicans borrow and spend.  We end up in the same place.  He seems to have it just right.

Brings me back to the Fram commercial.  The owner of the shop looks at the damage that could have been avoided if only the owner had changed his filter, and delivers the punch line, “you can pay me now, or, pay me later.” Then he slams down the hood.

I do change my oil and filter regularly, but the car is getting old.  I’m thinking of setting up a charitable foundation.  I wonder if the IRS would go for it?