As Nov. 4 approaches, both parties are in a headlong race to run away from taxes. The result will not be good for the country.
Last summer I wrote an op-ed about taxes in Minnesota, and asked those willing to pay more to raise their hands. Guess what? No one raised a hand. Now I make the same challenge as we head into the final days of our national election. Anyone ready to pay more taxes?
Again, I see no hands raised. And all the candidates are making wild, pandering and pathetic appeals to the electorate (many false) about their taxation plans, along with the implied duplicity of their opponent’s plans. It’s a vivid reminder of George H. W. Bush’s “read my lips” promise.
Indeed, except perhaps references to Joe the plumber, and “my friends”… no other word is spoken so much in this campaign as the word “taxes!” But, my friends, beware of what you hear.
McCain would continue Bush’s cuts
Clearly, the worst in the presidential race are Sen. John McCain’s tax plans, which continue the massive inequality of taxation instituted by President Bush when he lowered taxes on top (5 percent) income groups — an unnecessary and damaging effort, which played into our current deficit condition. This income group did not need any tax relief, and the “trickle-down” theory behind it has been continually discredited (as evidenced by our current condition). If you do not accept my evaluation, consider Alan Greenspan’s comments in June of 2005:
“As I’ve often said … this [increasing income inequality] is not the type of thing which a democratic society — a capitalist democratic society — can really accept without addressing.”
The inequality he referred to is the unequal distribution of wealth and income we have experienced in recent years. While there are volumes of details and statistics on this situation, there are some astounding facts from the I.R.S. itself (2004, the latest available data on this subject). Consider these:
• A taxpayer can be a single individual or a married couple. The poorest taxpayers consist of nearly 48 million adults and about 12 million dependent children. This means that the poorest 60 million Americans reported average incomes of less than $7 a day each. Still, the very top households, which include about 300,000 Americans, reported significantly more pretax income combined than the poorest 120 million Americans earned in 2004.
• Only those in the top 5 percent had significant gains (in real terms). The average income of those on the 95th to 99th rungs of the income ladder rose by 53 percent, almost twice the average rate.
• Because of the Bush cuts in the tax rate, the top tenth of 1 percent did even better than their rising incomes alone would suggest. For each inflation-adjusted dollar they had after tax in 1979, they had $3.94 left after taxes in 2004.
• For the bottom 60 percent, their income taxes were so small in 1979 that the cuts did little to change their after-tax incomes. While their pretax average incomes fell by a nickel on the dollar from 1979 to 2004, their after-tax incomes fell by a fraction of a penny less.
Where are McCain and Gov. Sarah Palin on corporate taxes? They complain that high taxation of companies is a job killer. Really? The Government Accountability Office said (as recently as this month) that 72 percent of all foreign corporations and about 57 percent of U.S. companies doing business in the United States paid no federal income taxes for at least one year between 1998 and 2005. The GAO said corporations escaped paying federal income taxes for a variety of reasons including operating losses, tax credits and an ability to use transactions within the company to shift income to low tax countries. To me, the most egregious is Halliburton, which sucked billions from our government in Iraq — then in 2007 moved to its headquarters to Dubai in the U.A.E.
McCain and Palin have tacitly accepted the current Bush tax structure with no apparent changes; they perpetuate the Republican philosophy of “trickle-down” economics as it relates to both taxation of the wealthy and corporate taxes. McCain himself is now touting the fact that Sen. Barack Obama wants to “spread the wealth” — a view he believes is somehow wrong? Money available at the bottom of the economic ladder is the engine that drives capitalism’s growth.
As for Obama, clearly his tax plans would be fairer, and would reverse the Bush tax cuts on those most able to pay. He also wants to close certain corporate loopholes. My complaint with him is that he treads so delicately on the issue of taxes (though I realize it is now the third rail of politics); but when confronting Joe the plumber who said (dishonestly, I might add) that he was buying a business which would earn him $250,000 a year, Obama danced around the issue far too long, when he should have said clearly: “Joe, if you are making $250,000-plus a year in your own business, pay your damn taxes!”
The truth is this: We have $10 trillion in debt. We ran a $450 billion deficit last year, with $750 billion projected this year. All the spurious talk about earmarks and cutting spending will not create a solution (when Arnold Schwarzenegger came into office, he said he found less than 1 percent waste). Many government activities are mandated or needed. The big kahuna on the expense front is the Iraqi war — which McCain wants to continue. This leaves revenue generation as a vital and needed component in any intelligent solution. Let’s get real; let’s get honest.
Now, all those who think we might have to increase taxes, please raise your hands.
Myles Spicer of Minnetonka is a businessman and writer who owned several successful ad agencies over the past 45 years.
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