We have huge federal budget deficits in this country. They have to be addressed. The natural, the sensible, the obvious way to do this is with a combination of spending cuts and increased tax revenues. The national debate should revolve around where and how much to cut, and where and how much to tax.
Except that’s not how the national debate over deficits is being carried out. Instead, the revenue end of the equation, the tax end, has somehow disappeared from discussions, leaving the debaters to fight only over where and how much to cut.
How did this come about? How did Republicans, who don’t like taxes of any kind, especially on the wealthy and well-connected, manage to take them off the table? The answer is simple and in a way brilliant: They simply turned the word “taxes” into a generic.
No one likes to pay taxes. In our present recession-ridden economy a great many Americans, perhaps most Americans, would not find federal tax hikes to be merely irritating, but something that could jeopardize already stressed standards of living.
So when Republicans say something like “Read my lips, no new taxes,” and the “taxes” part of this statement is not modified, not challenged, left to stand as a generic for ALL taxes, it becomes natural for large segments of the public to support Republican budget-cutting initiatives.
But of course “taxes” are no more a generic than “medicines.” Not everyone should take a particular medicine. Not everyone should be hit with higher taxes
When Republicans/conservatives say: “Read my lips, no new taxes.” the appropriate Democratic/liberal response is: “Read my lips, no new taxes for the great majority of Americans, only those who can easily afford to pay more at a time when more government revenues are needed, and only those who deserve to pay more because they have been paying too little by virtue of gaming the tax code.”
What taxes might then become part of the deficit cutting debate? The most obvious involves taking back lower Bush-era income tax rates for the country’s highest earners. Perhaps not those making $250,000 a year, which in some large cities is still upper middle class, but earners making $500,000 a year or more. This step, it might be noted, is NOT a new tax, but simply an adjustment of a past adjustment made in light of new revenue imperatives.
Next there’s the estate tax, which was a huge giveaway made last year to a few thousand ultra-rich Americans. Republicans in years past cunningly labeled this a “death tax.” It is more accurately labeled a “trustafarian tax,” a tax on very rich heirs, people who didn’t even earn the huge amounts of money they inherit when the real earners die.
Given the way Wall Street’s misbehavior has done so much to harm all of us, failure to tax its institutions and biggest individual gamers strikes many as a disgrace, and given today’s need of government for revenue, plain crazy. We might first institute a Tobin tax, a transaction tax on volume trades that don’t benefit the economy but only big bankers and hedge fund managers, We might also change the tax status of hedge fund managers who pay income taxes at LLC rates instead of corporate rates, a standard that only a K Street lobbyist might even try to justify.
And then there’s the option of doing away with the business tax breaks that companies like GE have opened for themselves through lobbying, breaks that let some very big companies pay little or no corporate taxes while shipping jobs overseas. And we need NOT balance this off with lower overall corporate tax rates which conservatives are fond of saying are among the world highest, which is only true in looking glass conservative land where companies pay their taxes on gross rather than net incomes.
Once we get “taxes” out of the realm of the generic and into the realm of the specific, we can have a real debate on how to reduce federal deficits. A debate that runs like this:
Shall we cut Medicare and Medicaid or raise the tax on the wealthiest Americans, and on those who have cunningly diddled the tax code to their own benefit?
Should we cut spending on alternative energy, on other infrastructure investments, on countless other programs that help the rural poor and the urban sick, or raise taxes on the wealthiest Americans, and on those who have cunningly diddled the tax code to their own benefit?
That’s the great deficit debate we should be having in this country. If we don’t have it, if we don’t talk about some tax increases for the few and while everyone else gets stiffed, it’s not a debate. It a coup.
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