Karen Handel is she really a Conservative? (Part 3)

by Peach Tree

Peach State Voice (Atlanta)

June 30, 2010







This is the third and final part in the series to look at Ms. Karen Handel's position on the issues as it pertains to her race for Governor of Georgia in 2010. Ms. Handel professes on her website; "Karen is a lifelong conservative and Republican." The Peach State Voice will be the judge whether Ms. Handel is a Conservative, as for being a Republican we stipulate.

Part 1 - Abortion - Karen's Handel's vision for Georgia.

Part 2 - States Rights - Will she fight hard for all Georgia's citizens?

Part 3 - Economy - Does Karen Handel know Austrian economics?
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Part 3 - Economy - Does Karen Handel know Austrian economics?

If you read the issues on Ms. Handel's website regarding taxes and the economy it seems Conservative. Ms. Handel does indicate a willingness to lower taxes for families and businesses, which is a good thing. Ms. Handel also favors repeal of bureaucracy that hinders job creation. This is all well and good, but you need to look deeper into the statements and dig deeper into the meaning of what she says.

For example, Ms. Handel supports the Fair Tax, but she does not recommend elimination of the state income and property taxes, replaced with a consumption tax. You can call it a Fair Tax, flat tax, consumption tax, but the crucial test is whether is stops feeding the state Leviathan. The only way to starve the state Leviathan is to replace the state income and property taxes with a state consumption tax. While we applaud Ms. Handel's strategy of lowering tax rates, that will do nothing to starve the state Leviathan and only shuffle money through a bloated state bureaucracy.

Ms. Handel also recognizes the destructive nature of state bureaucracy for job creation. We applaud any and all initiatives to eliminate rules and regulations that hinder job creation. Still the only way to eliminate the destructive bureaucracy is to slay the state Leviathan and you do that by starving it of money. It's a zero sum game if you successfully grow the economy but simultaneously expand the state Leviathan.

All of this is well and good, but I want to address Ms. Handel's concept of Tax Credits; "Karen also calls for tax credits for capital investment in Georgia start-ups." "Establish an "Angel Investment and Venture Capital Tax Credit to encourage investment in Georgia businesses with high growth potential." This sounds fabulous, but we need to look at the details. Some things to note about tax deductions/tax credits.

Look at the front of the 1040 tax form. There are a number of possible deductions that can be made before figuring the amount of tax due. Any deduction allowed is a good thing. Then on the back of the 1040 tax form there are further itemized deductions or exemptions. Again this is good. At this point the amount of tax due can then be lowered by tax credits, of which there are two types; nonrefundable and refundable.

Nonrefundable tax credits lower the amount of taxes that are due. If no taxes are due because of deductions and exemptions that lowered taxable income, then the credits are unnecessary. Refundable tax credits lower the amount of tax due, but it refunds the unused portion of that credit. The taxpayer actually gets money back from the government over and above what they paid in. This money comes from Leviathan's coffers and taxpayer money. That is called "redistribution of wealth" or welfare. In this case, corporate welfare.

An Angel or Venture Investment Tax Credit can't be nonrefundable, because early stage businesses have no income to be taxed, so nonrefundable tax credits are worthless to start up's. There is no incentive to invest. But, the refundable tax credit is attractive to the early stage investor. The Angel or Venture investor is attracted to the guarantee that all or part of the yearly capital investment in a start up will be received back as a tax credit. This lowers the investors risk and offers no incentive to make resource allocation decisions, which means shutter the business or expand capital investment.

Ms. Handel's tax credit idea is simply welfare for business. It will guarantee tax payer dollars are redistributed to investors instead of allowing market forces to determine whether a business idea is good or bad.

Ms. Handel is not Conservative. She is a creation of the Liberal Republican welfare state. She uses feel good soundbites to further her career, but if you dig deeply you'll find she is not a Conservative and will further expand the state Leviathan.

Next week: Mirror, mirror on the wall ... who is the biggest Democrat of all?