Your taxes at work

This is the week that our income taxes were due and it was a week when we got a vivid example of our taxes at work. 

As a society, we like to complain about our taxes, but the truth is that the U.S. has some of the lowest taxes in the industrialized world.

Personally, I've never begrudged paying taxes. I see them as a part of the social contract that binds us together, as the price of all the goods and services I receive from the government, and paying them is part of my patriotic duty as a citizen.

If you feel disposed to grouse about your taxes, just keep this image in mind. Perhaps it may make you think twice.

The patriotic eight

So Salon.com did a survey of the Forbes 400, the richest people in the country, billionaires all.  They asked them if they would willingly pay more taxes to help the country get out of its economic slump and on the way to prosperity.  Most of the 400 declined to respond to the survey.  Three unhesitatingly said no, they would not pay more taxes. Among these three was Charles Koch of the infamous Koch Brothers - no surprise there. One respondent gave an ambivalent "maybe" reply. And eight of the 400 stated that they would be willing to pay more taxes to help the country.  These eight were Todd Wagner, Leon Cooperman, Mark Cuban, James Simons, George Soros, Herbert Simon, John Arnold, and, of course, Warren Buffett.  We'll call them the "Patriotic Eight" for paying taxes is, in fact, a patriotic duty, no less than picking up a weapon and going to war when your country needs defending.

As that champion of the middle class, Elizabeth Warren, has pointed out, no one gets rich by himself.  Certainly, no one becomes a billionaire by himself.  Each of the Forbes 400 has taken advantage of the infrastructure paid for by the taxes of their fellow Americans - the roads, railroads, airport systems, not to mention the military defending their interests around the world and the civilian police force maintaining order so that they can do business, and, of course, an educational system that trains people to be productive employees, and on and on.  All parties fulfilling their obligations under the social contract that keeps our society running contribute to Charles Koch and George Soros being able to make wagon loads of money every day that they breathe.  Does it not seem fair that such people should themselves fulfill their obligations under the social contract to keep our society solvent and able to provide the services that we expect of government?  Should such people not pay a comparable share of their income in taxes as a laborer, a store clerk, a teacher, or a policeman pays?  Charles Koch says "no."  George Soros and seven of his peers say "yes."

Fair taxation is one of the underpinnings of a civil, equitable society.  It is at least encouraging that a few billionaires believe that and love their country enough to be willing to act on it.  

Time for the super-rich to do their part

Sunday, in The New York Times, the super-rich chairman and chief executive of Berkshire Hathaway, Warren Buffet, had an op-ed piece entitled "Stop Coddling the Super-Rich."  The point of his piece was that the super-rich in this country have gotten that way because of coddling by the government and favorable tax policies that have allowed them to keep more of their income than the ordinary people who work for a living. He believes this is unfair and that the super-rich should contribute to the country's coffers in proportion to the advantages they hold because of our government policies.

The op-ed received a lot of notice and comment.  It was reported on in other news outlets around the country including our local Houston Chronicle and the comments there were about what one would expect from the Chronicle's regular commenters.   They were along the lines of, "If he wants to pay more taxes, why doesn't he just write a check? Why does he have to impose his views on other innocent rich people?"

One would think that those who were commenting were among the super-rich, but I seriously doubt that they were.  Instead, I think they are mostly just typical right-wingers who have bought hook, line, and sinker the teahadist philosophy of "All Taxes Bad!"  They are not really thinking through what they are saying and they did not actually read Mr. Buffett's op-ed.

Mr. Buffett believes that we should have shared sacrifice in the country.  As he points out, it is the poor and the middle-class who are fighting and dying in our wars.  There are no children of the super-rich in Afghanistan or Iraq or anywhere else on the front lines representing this country's interests around the world.  No, they, like their parents, represent only their own selfish interest.  NOTHING IS ASKED OF THEM!  NOT EVEN TAXES!

This was not always the case in this country.  I grew up in a country where the rich were taxed relatively heavily and yet they still managed to make out very well.  The rest of us had lower tax rates and the progressive income tax certainly contributed to the expansion and the prospering of the middle-class.  Moreover, at the same time that tax policies benefited the middle-class, the social safety net on which they depended in times of hardship or need was being strengthened.  The '50s, '60s, and even the '70s of the last century were good times to be a member of the middle-class in America.  Then it all started to go wrong.

Since the '80s, with only brief interruptions of sanity, tax policy in this country has been tilted more and more toward the super-rich, who are constantly fawned over by the Republicans and hailed as being the "job-creators."  What a joke!  They have been piling up money hand over fist for the last eleven years with no brakes on their rush to accumulate more and where are the jobs they have created?  Why does the unemployment rate hover around 9% if these rich people are such wonderful "job creators"?

Buffett is right.  The super-rich and everybody else should pay their fair share.  I would even go further and say that the shared sacrifice should be extended to public service. We should have a universal "draft" when children turn 18.  At that point, they should be required to go into service for their country, either military or civilian service (their choice), for two years.  There should be no exemptions except for extreme mental or physical disabilities.  Everyone can do something.  Everybody can contribute.

It's not going to happen, of course.  This one-time democracy, now a plutocracy, will continue its headlong rush into irrelevance and complete inequality.  The super-rich will never again be required to do their part.  And only those with a social conscience, like Warren Buffett, will notice.  

Wanna fix the deficit? Here's how.

Eugene Robinson is an imminently sensible, clear-thinking fellow.  He writes opinion columns for the Washington Post and sometimes appears on MSNBC as a commentator.  Last year he won a Pulitzer for his opinion columns.  Today, in the Post, his column tackles the seemingly intransigent (if you listen to the politicians) national deficit and with a few keystrokes of his word processor, he puts it all to rights.

As Robinson points out, it is evident to anyone who is paying attention that the federal government cannot continue indefinitely spending at a rate of 25 percent of the gross domestic product while taking in revenue that equals less than 15 percent of GDP.   Even a mediocre mathematician can see that this is unsustainable.  It is clear that, with the great needs that exist in our society from failing infrastructure to inadequate health care and education, it is ridiculous for this government to have one of the lowest tax rates among the industrialized countries of the world.  Robinson says, and I would certainly agree, that we must bring our spending and revenue more into balance, but that it would be unconscionable to do this by putting a "disproportionate share of the burden onto the backs of the poor, the elderly and the battered middle class."

The first step in curing the problem is for all parties to recognize and admit that spending is too high and our revenues are too low.  Both should be around 20 percent of GDP.  Here are Robinson's suggestions for bringing the two into line.

1. Allow the Bush tax cuts for households making more than $250,000 a year to expire.  (I would go even further and allow all the Bush tax cuts to expire.)
2. The corporate tax rate is 35 percent but that is a joke because no one pays it.  With all the loopholes available, the richest corporations pay little or no taxes.  CLOSE THOSE LOOPHOLES AND SET A MORE REASONABLE TAX RATE!
3. Why do we have a cap on the income subject to Social Security payroll contributions?  If there is going to be a cap, it should be much higher, but the best idea would be to eliminate the cap altogether.
4. Trimming the Pentagon's budget by just 15 percent would save $1 trillion over 10 years.   
5. When we've done all of that, it is time to tackle another driver of out-of-control federal spending - rising medical costs.  We have some of the highest medical care costs in the world and we have a system that does not produce nearly as good health outcomes as most countries in the industrialized world.  We need to recognize that those countries are doing something right (It's called single-payer.) and try to emulate their success rather than denigrating them and pounding our chests about the wonders of "American exceptionalism."

"There is, indeed, a way to eliminate these strangling deficits with fairness and an eye toward a brighter future," writes Robinson.  "It just happens to be the progressive way." 

And therefore it must never, ever, ever be seriously considered.  The Republican leaders of Congress are determined that any reductions of the deficit shall be made on "the backs of the poor, the elderly and the battered middle class" and the President, who more and more appears to be a closet tea partier, seems to agree with them and to be willing to go along with their Randian schemes. 

There was a time, even within my memory, when politicians of both parties would put the welfare of their country ahead of the opportunity for partisan gain.  No more.  At least not on the Republican side which is now completely ruled by people who couldn't care less if the country prospers as long as their party does.

Meanwhile, grown-up, sane, progressive voices like Robinson's and like Paul Krugman's of The New York Times and Princeton continue to be ignored and our country will continue to suffer for it.

Low taxes = Failing infrastructure

Among the industrialized countries of the world, there are at least twenty-six with higher tax rates than the United States. Most of them also have a more equitable standard of living ranging from their richest to their poorest citizens, as well as a stronger safety net to catch citizens who, for whatever reason, fall upon hard times. And most of them have infrastructures in good repair, some of them absolutely state of the art when it comes to mass transit and moving people safely from one place to another. The state of the infrastructure in this country is an embarrassment and is getting worse day by day, and where is the money to reverse that trend?

Looking at individual tax rates in this country, on this 2011 Tax Day, the effective tax rate for the 400 wealthiest taxpayers is 17%. 17%!!! And there are those who say that they should get further tax cuts.

Meanwhile, the government is drowning in red ink. The situation could be helped immensely with even a slight increase in taxes of the wealthiest and most able to pay, but Republicans refuse to consider any rise in taxes. They profess to believe that we can cure the deficit by cutting, cutting, cutting. Cutting to the bone, if necessary. Who needs infrastructure anyway?

"Raise our taxes, please!"

Happy Tax Day!

Only it actually isn't Tax Day this year. Because of a holiday celebrated in the District of Columbia, all taxpayers get an automatic extension on the due date of their taxes until Monday, April 18. In my household, though, we don't need no stinking extension! We paid our taxes on the traditional Tax Day, today. Didn't even wait until 11:59 P.M. as we have in some years.

I do consider it a patriotic duty to pay the taxes that I owe, which is why I so deeply resent those who use every excuse and every loophole to wriggle out of fulfilling that duty. My observation is that, generally speaking, such people are a lot more wealthy and a lot more able to pay their fair share of taxes than my household, which sharpens my resentment even more.

Because of this, I was very happy and a little surprised this week to read about the Patriotic Millionaires for Fiscal Strength. This is a group of some of the wealthiest Americans who came together last year during the fight over the Bush tax cuts for the wealthy. They jumped into the fray on the side of those who said the tax cuts should be allowed to expire. As the budget battles continue, they are redoubling their efforts, with letters to President Obama, Sen. Harry Reid, and Rep. John Boehner which read, in part:

"For the fiscal health of our nation and the well-being of our fellow citizens, we ask that you increase taxes on incomes over $1,000,000. We make this request as loyal citizens who now or in the past earned incomes of $1,000,000 per year or more."

These people have what used to be admired as a social conscience. They see our failing infrastructure, the inadequate educational system, the poorly funded social services and they know that this is not the kind of society that they want for their children and grandchildren. Further, they know that the only way to fix these problems is with money and that the way that the government gets the money to deal with such issues is through taxes. And so they say, "Raise our taxes, please!"

There are plenty of selfish people in our society and they are well-represented in Congress. They want all the money they can get, even if it means "drowning government in a bathtub" and the rest of the population be damned. It is especially refreshing, then, to find that they do not speak for all millionaires. Even a millionaire can have an altruistic love for his/her country and a willingness to sacrifice for it. That is the essence of true patriotism.

This taxes my patience

A story that received attention from some news organizations in the last few days was all about how General Electric Corporation paid zero income tax in the past year. It would be bad enough if this were an isolated instance and if most multi-billion dollar corporations in America paid their fair share of taxes. It is not an isolated instance.

Corporations such as Bank of America, Boeing, and Citigroup, to name just three, join the rolls of tax laggards. They, too, paid no taxes, in spite of the fact that they had record profits. And there are many, many others who take advantage of tax loopholes to reduce their tax liability to nothing.

That is the real scandal here. It is not that these corporations are necessarily doing anything illegal. I'm sure they have the very best legal and tax advice that money can buy and that those advisers have made sure that they remain within the letter of the law. The scandal is that there are so many loopholes written into the tax laws, often by legislators who are benefiting from campaign contributions from these corporations, that they are able to legally avoid paying taxes. Their actions may not be illegal, but they are most certainly immoral.

Many, in fact most, of these corporations receive subsidies and, in some cases in recent years, taxpayer bailouts to ensure their profitability or to keep them from failing. The average American taxpayer - that would be me - is being asked to support these gigantic corporations with our dollars, while they are doing absolutely nothing to support the infrastructure, social safety net, and defense of this country, all of which are paid for by taxes.

This is a situation that cries out for political courage from our elected representatives. It is the kind of thing that they should be working on instead of trying to repeal health care reform, Wall Street reform, and 30 years of progress in womens' rights. Unfortunately, these same corporations have bought and paid for a sizable number of our elected representatives, perhaps even a majority, and it appears that we, the average taxpayers, can expect no relief from them.

The only thing that these legislators fear more than losing the big bucks from the corporations is losing an election. An aroused and well-informed voting public could make that happen. There will be elections again in one year. Let us do what we can to be sure that the voting public is aroused and informed on this issue. It would be so exilarating to see average voters finally come together and vote in their own economic interests rather than simply succumbing to the scare tactics of slimy politicians. We might finally see true reform happen in our country - our country which needs that reform so badly.

The big tax kerfuffle

Congress comes back into session next week and among the first things to be considered will be whether to extend the so-called Bush tax cuts. The question before the House - and the Senate - will be whether to extend all the tax cuts past December 31, 2010, including the extra added reductions for the very rich who have taxable income of $250,000 or above, or whether to eliminate those extra reductions in taxes for the rich and just keep the middle-class tax cuts. As usual, the Republicans have drawn their line in the sand in defense of the very rich and are insisting that they will refuse to compromise on the issue. The Democrats want to continue the middle-class tax cuts and let those for the very rich expire, but the White House has been distressingly wishy-washy on the issue.

I fail to see what is so difficult about this for the president and his staff. Mr. Obama has said that he wants to keep the middle-class cuts and that the additional cuts for the rich are just too expensive, and he is absolutely right. Furthermore, a significant majority of Americans agree with him on this. And, very importantly, probably 95% of Democrats agree. Most importantly of all, 100% of liberals agree! These are the liberals who did not turn out in swarms to vote in this year's election. They were demoralized and discouraged by President Obama's constant calls for bipartisanship, by which he seems to mean kowtowing to Republican demands.

We did not elect Barack Obama to be a Republican-lite president. We elected him because we knew the country was headed to hell in a handbasket and we wanted a change in direction. We wanted forceful, effective, and empathetic leadership from a leader who would try to improve the lives of the masses of Americans instead of just the bottom lines of his rich pals. So far what we have gotten from this president is an abdication of leadership.

In all the legislative fights over the last two years, he has left the heavy lifting to Nancy Pelosi and Harry Reid, while he stayed out of the arena, above the fray. Nancy Pelosi has delivered everything that has been asked of her and she has been demonized by the right-wingers for her effectiveness. Harry Reid has had a tougher row to hoe because of the arcane rules of the Senate, but when the chips were down, he, too, has been able to deliver.

But how much more effective both of these legislative leaders might have been had they had the support of a third partner in their slugging matches with the opposition. If Barack Obama had deigned to roll up his sleeves and get down into the trenches with his foot soldiers and if he had perhaps thrown a few punches at the opposition instead of always holding up his hands and offering compromise before the fight began, the legislative record of the past two years could have been even more sterling than it has been.

Now Obama has been given another chance, perhaps a final chance in the eyes of the progressive/liberal base of his party. He can again choose "bipartisanship" and lose his base entirely or he can stand fast and fight for principle, knowing that Pelosi and Reid will be at his side and all that party base, as well as a wide majority of Americans, will be behind him cheering him on, because this is what we want. We do not believe that the rich should be given special breaks. We believe they should pay their fair share just like the rest of us. This is a fight that we cannot and must not lose.

Ending special tax breaks for the rich is not only a political winner, it is a moral winner, as well. If Barack Obama does not see that and finally turn and fight those who seem determined to turn this country into the banana republic that I recently wrote about here, then he probably will be a one-term president, and he probably will deserve to be. And we, for our sins, will be dealing with President Sarah Palin.

The happy taxpayer

I've been away from the news of the world for a couple of days, thinking about other things. It was a nice respite.

But back to the world of politics.

I see that our politicians are still wrangling over taxes, specifically the so-called Bush tax cuts, and that the Republicans' new buzzword is "uncertainty." Every Republican you see on TV or hear on radio uses that word in practically every sentence. Uncertainty bad! Furthermore, uncertainty equals Obama.

They claim that the economy isn't growing and recovering faster (from the ditch they drove it into) because businesses are "uncertain" about their taxes. They don't know whether they will have to pay more taxes because the Bush tax cuts will be allowed to expire as the law presently requires.

President Obama and most Democrats want to extend the tax cuts that apply to the middle class but they want the ones that apply to people and businesses earning more than $250,000 a year in taxable income to expire. Just to restate that, an individual or a business having taken all the exemptions and deductions that the law allows and still having a net income of more than a quarter of a million dollars would not get further tax breaks under the president's plan.

And the Republicans will cry, "But that affects small businesses and they shouldn't have to pay more!" Well, in my world, a business that is so successful that it nets more than a quarter of a million dollars a year is scarcely what I think of as a small business, and, even if it is, it doesn't need any more tax breaks. It is doing quite well, thank you, and needs to pay its fair share.

I make considerably less than $250,000 a year - gross, much less net - but I pay my taxes happily each year. I can't go and protect my country from terrorists who would attack us or stand outside eight hours a day building highways and bridges or protecting my community from fires and natural disasters or from criminals. But I can pay my taxes to help fund all those things and to pay the people who can do them. It's just a part of the social contract and I am happy to honor it. I don't even request a reduction in my taxes. I think what I pay is pretty fair. And I think those people who are earning more than a quarter of a million dollars, net, each year need to pay their share with a smile as well and their Republican friends need to quit trying to lower their taxes to zero.

I'm quite sure though that that isn't going to happen. When it comes to Republicans and taxes, there is no uncertainty at all. They hate them and they don't want to pay them. They also don't believe in social contracts.

Taxing credulity

Do you ever wonder if certain people in government have even a basic understanding of budgeting? That is, the amount of money that comes in minus the amount of money that is paid out equals either surplus or deficit. In the case of government, the money that comes in is otherwise known as taxes so the budgeting formula can be stated very succinctly, thusly:

Taxes - Expenditures = Surplus/(Deficit)

You would think that anyone who has made it to the halls of Congress as an elected representative of the people would at least understand that very basic concept, but apparently, you would be wrong. Exhibit number one of this fallacy is Sen. Jon Kyl of Arizona. This is what he said on Fox News Sunday yesterday:

"You should never raise taxes in order to cut taxes. Surely Congress has the authority, and it would be right to -- if we decide we want to cut taxes to spur the economy, not to have to raise taxes in order to offset those costs. You do need to offset the cost of increased spending, and that's what Republicans object to. But you should never have to offset cost of a deliberate decision to reduce tax rates on Americans."

Yes, that is actually what he said. Verbatim. To which I reply, "Huh?"

What Kyl is apparently saying is that reductions in taxes do not have to be offset by reductions in spending in order to balance the budget, but increases in spending in any area do have to be offset by reductions in spending in another area. However, you must never, never raise taxes for any reason! Kyl was arguing for making the Bush tax cuts for the richest people in the country permanent, while at the same time arguing that unemployment benefits for those disadvantaged by our crippled economy should not be extended because that would contribute to the deficit. In his reasoning, lower taxes can never contribute to a deficit; only spending - especially social safety net spending - can do that.

And that is exactly the way that most people in his political party think about budgeting. They just never internalized that formula:

Taxes - Expenditures = Surplus/(Deficit)

They claim to hate, hate, hate the deficit, but their only solution to curing it is to decrease expenditures, even though most economists urge that in our current situation what is needed is more government spending and the deficit be damned! We'll think about that tomorrow. Never, ever, in their wildest moments would Republicans like Kyl ever consider raising the taxes of the super rich (who can certainly afford it) to help solve the deficit crisis. It seems that when it comes right down to it they don't really hate the deficit that much.

Honestly, it taxes one's credulity.

A taxing canard

There is a meme that is perpetuated by every conservative organization, think tank, pundit, and man in the street in this country. That meme states that we are a heavily and unjustly taxed people. That meme is a total falsehood.

In fact, ours is one of the lower taxed countries among western nations.

Any member of the tea party movement, meanwhile, knows and will be glad to tell you in a very loud voice that taxes have been raised since Barack Obama became president. The fact that this, too, is totally false will never stand in the way of a true teabagger rant.

In fact, taxes for most Americans were lowered in 2009. In actuality a USA Today analysis shows that taxes in 2009 were the lowest they had been since 1950 when Harry S. Truman was president. Yes, he was a Democrat, too.

So much for the Republicans' constant harping about how taxes are always higher under a Democratic president.

The USA Today story stated in part:

Federal, state and local taxes — including income, property, sales and other taxes — consumed 9.2% of all personal income in 2009, the lowest rate since 1950, the Bureau of Economic Analysis reports. That rate is far below the historic average of 12% for the last half-century.

Now that the truth is out, I feel sure that all those tea partiers and Republicans will be retracting their statements about how taxes are higher now than they have ever been and they will be apologizing to President Obama for defaming him and lying about his policies. It is what any honorable person who made such an egregious mistake would do, right?

Oh. Right.