We all pay for those cuts down the
road.
Tax
cuts may bring some temporary relief for the yachting set, but we’ll all pay
for them down the road. Like when your tire blows out hitting a pot hole that
there was no money to patch.
Or a bridge collapses as your car crosses it. Or the local library scales back its hours to a handful a week.
Or a bridge collapses as your car crosses it. Or the local library scales back its hours to a handful a week.
At the local, state, or federal level, the lower taxes go, the poorer the arts become, the less reliable our transportation grows, the less protected our food and health turns out to be, and the more abused our environment gets.
Why
isn’t that basic equation self-evident to everyone, especially the people who
have the most money to invest in taxes?
One
of the worst things the government can waste its money on is servicing the
debt, which results from a mismatch between tax dollars and federal spending.
Supposedly
Congress and the White House settled on a deal on New Year’s Day that would
help fix the imbalance between tax revenue and government spending. Payroll
taxes returned to where they’d been before Obama’s stimulus measures took
effect, and the very richest 1 percent of Americans got their income tax rates
restored to levels last seen in the early years of the George W. Bush administration. Capital gains taxes on Americans earning nearly a
half-million bucks a year edged up, but they’re still lower than taxes on money
earned the old-fashioned way: by working.
Republicans
now want to get rid of debt by relying on spending cuts alone in the aftermath
of the “Fiscal Cliff” pact. But our tax system needs more fine-tuning.
Otherwise, thegrowing gap between the rich and poor will continue to balloon. As Mother
Jones Magazine has deftly illustrated with striking graphics, the top 0.01 percent of American families
average nearly $24 million per year in income. The bottom 90 percent of
households, meanwhile, are averaging less than $30,000.
Warren
Buffett famously complains about paying a lower tax rate than his secretary.
But most very rich people don’t share his indignation about this injustice or
join his call for it to be remedied with higher rates on people of means.
Instead, they invest in lobbyists and politicians happy to do their bidding in
exchange for campaign contributions. In return, they get loopholes, exemptions,
deductions, and convenient definitions of what is and what isn’t taxable
income.
Accountants,
tax lawyers, and scallywags of every stripe have built a labyrinthine system
riddled with secret passages to let the wealthy bypass gatekeepers and toll
collectors. Many loopholes are big enough to fly a corporate jet through, both literally
and figuratively.
While
the wealthy may indeed cough up a goodly chunk of all the revenue that does get
collected, that total is still peanuts compared to the percentage of the
national income they take home or the giant share of all the national wealth
that they have amassed.
The
richest 1 percent of Americans owns three
times as much of the nation’s wealth as everyone belonging to the bottom 80 percent. But their
tax burden isn’t equally out of proportion, as financial consultant John
Talbott demonstrated. By crunching the numbers, he determined that the rich spend a smaller share of their disposable income
on taxes than the middle
class.
Under-taxing
the very rich is one key reason why the United States government has a
burgeoning budget deficit. A civilized society would change course.
Emily Schwartz Greco is the managing editor
of OtherWords,
a non-profit national editorial service run by the Institute for Policy
Studies. OtherWords columnist
William A. Collins is a former state representative and a former mayor of
Norwalk, Connecticut. OtherWords.org