Bush era tax cuts costing trillions

Wall Street had reason to set off fireworks on Monday, June 6, but didn’t. Celebrations might have called unwanted attention to that day as the 10th anniversary of the massive Bush era tax cuts disproportionately benefiting the wealthy.

To mark the occasion, the Economic Policy Institute issued an anti-celebratory memo on the 10 ways that the Bush tax cuts were – and still are – “expensive, ineffective, and unfair.” Some of the telling points that the memo documents about the Bush tax cuts:

--They were much more expensive than avertised.
--They were so expensive that they added trillions to the national debt.
--They continue to be expensive (financing the national debt will cost nearly $50 billion alone).
--They will be more so unless allowed to expire.

For details see the EPI paper by Andrew Fieldhouse and Ethan Pollack:
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Income Tax Down for Wealthy

Inncome Taxes Down for Wealthy


“The wealhy are enjoying some of the lowest taxes in generations,” according to a report issued April 14 by the Economic Policy Institute (EPI).

Although the nation’s overall tax rate – the share of income paid in taxes – since 1979 has fallen slightly, the share for those at the top income ladder (the top 400 families) has fallen dramatically, says EPI. The report is based on data from the Congressional Office and the Internal Revenue Service.

See previous posting on the “two-level” tax policy which investors also get rewarded with tax breaks.


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Wealth vs work: our tax system

Take two taxpayers with incomes of $400,000 a year:

One is a neurosurgeon who, the first in her family to attend college, broke through the glass ceiling through hard work and now earns $400,000 per year, on which she pays a top marginal income tax rate of 35 percent.

The other is a wealthy heir who, instead of working, jaunts port-to-port on a yacht while collecting $400,000 a year in investment income from his multi-million-dollar inheritance, on which he pays a top marginal tax rate of only 15 percent.

Those two hypothetical cases illustrate one of the gross inequities of America’s “two-tiered” tax system. It rewards income from stocks, dividends, real estate and investment portfolios with a marginal tax rate of only15 percent, while income from work – wages and salaries – pays 35 percent.

A surprising group of wealthy taxpayers have stepped up to the plate to propose an end to this favoritism toward wealth over work. Responsible Wealth and United for a Fair Economy have launched a campaign to “Tax Wealth Like Work.”

Among the points made by the campaign:

-- “Eliminating the special break for capital gains and dividend income would raise enough to completely avoid the massive $61 billion in budget cuts being proposed by Republican members of Congress.”

-- “Alternatively, the revenue could be used as federal aid to states, eliminating a significant portion of the $112 billion in budget deficits faced by 44 states.[

-- “Taxing the earnings of just the top 13 hedge fund managers as ordinary income, instead of the special 15% rate as capital gains, would generate enough revenue to pay for 300,000 teachers.”

For details, see the Website
http://www.faireconomy.org/wealth_vs_work

Although the issue of taxes is not treated in the encyclical by Pope John Paul II titled “On Human Work,” the document gives no support to a two-tier tax system. To the contrary. Certainly not in its chapter, “Priority of Labor.” (http://www.vatican.va/edocs/ENG0217/__PD.HTM)


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Tax evasion by multinationals in developing countries

Poor countries lose more money to tax evasion by multinational corporations than they get from official development aid. The Business & Human Rights Center cited that fact as one reason for launching a special Website section on business and tax avoidance.

In introducing the new section, the London-based center explained:

“NGOs are increasingly reporting on companies that avoid paying a fair share of taxes and royalties to developing countries, thus depriving governments of essential revenues that they need to deliver to their people on development, health, education, housing, access to water, and other human rights.”

Christian Aid, for example, noted that “the lives of 1,000 young children a day are being lost to disease and poverty in poor countries because of illegal trade-related tax evasion.”

Also tracked are positive initiatives taken by companies and company responses and non-responses to negative reports.
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A kind word for taxes

As a reporter on a small town newspaper many years ago, l met a farmer who believed strongly in self-reliance as the way to slash taxes. Each family, he insisted, should drill its own well for water, surface the road in front of its own property, and dispose of sewage in its own outhouse or septic tank instead of depending on government.

He was angry and frustrated because his ideas didn’t become public policy. The 21st century has many people of the same mind and with same emotions. Their cause is anti-tax, and their reaction is anger, because their ideas are not implemented.

At my youngest son’s graduation ceremonies in the vast Coliseum in Richmond, I got a taste of popular feeling against taxes. Each group of black-clad graduates of Virginia Commonwealth University got our warm acclaim even when we could hardly fathom their achievement. Then, amid the successful candidates from the School of Business, a lone male stood up to receive the degree of master of taxation.

Master of taxation! The words triggered a deep and prolonged booooo. Afterward, I recounted the incident in a column that appeared in the U.S. News & World Report under the heading “A Kind Word for Taxes.” I quoted the words of Supreme Court Justice Oliver Wendell Holmes: “Taxes are what we pay for civilized society.”

“A reversal of values is in order,” I added. ‘Those of us – individuals and corporations – who have benefited much from the freedom of our land ought to be proud to pay taxes. To wipe out or huge federal deficit, we need to address a deficit of another sort – one of wisdom, unselfishness, and, yes, sacrifice.”

Nowadays, when so many believe our taxes are much too high, we should at least be open to the facts. Charles R. Philips, in a Commonweal article (October 22 issue), points to one widely unrecognized fact: we’re not as heavily taxed as are citizens of most other industrial nations belonging to the Organization for Economic Cooperation and Development (OECD).

Counting all taxes – sales, income, property, whatever, imposed by all levels of government – as a percentage of GDP, the United States ranks 27th out 30 countries in the total taxes paid by its citizens. Only the people of South Korea, Turkey, and Mexico carried a heavier burden.
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