Taxes – a dirty word?
Taxes is not a four-letter word, but we treat it as though it were. The dictionary gives two definitions of taxes: 1. a sum of money demanded by a government agency for its support, or for specific facilities or services; 2. a burdensome charge, obligation, duty, or demand. We like to adopt the second definition, but let’s be realistic. We all want quality schools, libraries and parks, well-maintained streets, bridges and highways, police and fire protection, national security, and retirement and health care benefits.
We just don’t want to pay the taxes needed to provide them.
The inevitable question is who should pay the taxes? An argument has been made that because the wealthiest one percent (making over $300,000/year) is paying one-third of the income taxes, while the bottom half is paying less than four percent, the wealthy are being overtaxed while those in the bottom half are not paying their fair share. Again, let’s be realistic ” you can’t get blood out of a turnip. How can those who are earning barely enough to cover their living expenses, can’t afford health insurance (which isn’t being provided by their employers), and have nothing left over for savings, pay more taxes? And why can’t anyone making more than $200,000/year afford to pay more taxes?
A fallacious claim is often made that higher tax rates on the wealthy stifle the economy. For years, the economy survived just fine with a top tax rate of 70 percent or higher. The late 1980s and the 1990s were boom years, in spite of top tax rates of 50 and 39.6 percent respectively. We are now in economic doldrums with a top tax rate of only 35 percent.
If we want those with lower incomes to shoulder a higher share of the tax burden, we could start out by reducing the disparity in incomes. The average per capita income of the top one percent is more than 80 times that of the bottom half. In just one year, the average after-tax income of the top one percent went up $180,000, while the bottom half barely kept up with inflation. Even more revealing is that the personal wealth of those in just the top 0.1 percent is equal to that of the entire bottom 50 percent.
It is a niggardly wage structure (in part due to outsourcing) which makes the creation of multi-million dollar incomes possible. If the wealthy were willing to pay their employees a living wage, the employees would end up paying a larger percentage of the taxes, and there would be less money flowing into the pockets of the wealthy, which would reduce the amount of taxes they would be called upon to pay. We should also eliminate the foreign tax shelters which allow many with high incomes to avoid paying income taxes altogether.
When we advocate lower taxes, we need to recognize the effect on the national debt. In World War II, President Roosevelt added a “war tax” to offset a large portion of the cost of the war.
Neither President Johnson nor President George W. Bush were willing to do the same for their wars in Vietnam and Iraq. Even more ridiculous is to cut taxes during a war, as Bush has done, and as President Reagan did while greatly escalating military spending during the Cold War with Russia, which fortunately bankrupted Russia before it did us. This fiscal irresponsibility accounts for two-thirds of the deficit spending that has exploded our national debt from a “mere” three hundred billion dollars in 1965 to more than nine trillion dollars today ” a thirty-two fold increase.
This credit-card addiction (or “voodoo economics” as the first President Bush called it) is a treadmill to oblivion. Collectively or individually, we can purchase a temporary sense of prosperity by borrowing from the future, but sooner or later, the price has to be paid. Unfortunately, there are only two ways to pay off our huge debt; raise taxes, or cut spending. The wealthy are all for cutting spending, but only on programs that benefit those without wealth. That way, the wealthy avoid having to pay more taxes.
If we want the benefits of a functioning government, we have to be willing to pay for them, and the only ones who can do that are those who are fortunate enough to have incomes that make it possible.
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