Friday, September 21, 2012

Taxes

Republican leaders like John Boehner keep saying that our government doesn't have a revenue problem; it has a spending problem. Really? What if we found out that one of our most prominent citizens, who happens to be running for president, is so embarrassed by the low rate of taxes he is paying that he deliberately understated the amount of his charitable contributions last year, just so that he could try to show that he is paying his fair share of taxes? Wouldn't that suggest that some rich people are pretty sheepish about the tiny contributions they are making to keeping the government current on its obligations?

Today Mitt Romney released his 2011 tax returns showing that he paid 14.1 percent of his income in taxes. Romney was only able to reach that 14% level by claiming only $2.25 million of the approximately $4 million in charitable contributions he and his wife apparently made last year. Nobody should fault the Romneys for their charitable giving. But if Romney himself is not ashamed of his contributions to charity, why wouldn't he take full advantage of them? How remarkable that the Romneys have to cheat themselves in order to get their tax rate up to a paltry 14%. Doesn't that indicate there is something seriously wrong with our tax code? Shouldn't we be connecting the dots between the government's continuing structural deficit problem and a tax code that demands such a small share of the incomes of the wealthiest members of society?

We recently learned that Romney doesn't think too highly of the 47% of Americans who pay no federal income tax. These include students, seniors, members of the military, and millions of the working poor. And they do pay lots of other kinds of taxes, such as sales tax, and payroll tax, and property tax. In Romney's mind, however, they are all lazy freeloaders, itching for more handouts from the government.

I wonder what Romney thinks of the next strata of society, those employed with a decent income who, unlike Romney, rely on their earned income to support their families, rather than on lightly-taxed capital gains as Romney does. Millions of these people, making far less than Romney does, pay tax rates much higher than he does, up to a 35% top marginal tax rate. And they are probably taking advantage of every deduction they can, and still paying a higher rate than Romney does. Romney probably pities, or privately snickers at, the poor suckers.

And what about Romney's fellow members of the top 1%, the hedge fund managers, private equity owners, stock traders, real estate investors, etc.? These people are paying rates of taxation not much distant from the 47% of Americans whom Romney scorns. To be consistent, he should probably be labeling them as dependent on government handouts, since they are taking advantage of a very privileged status under our tax code. (And to those who want to argue that the very rich are paying a larger share of the tax burden than has been true in the past, let's remember that that is mainly because the very rich now take a much, much larger share of the national income than they have in the past.)

Maybe the most important thing about the 2012 election campaign is that it is forcing us to have a long-overdue debate about the rising degree of inequality in our society, to a level unmatched since the 1920's. We should be talking more about the unfairness of a tax system that not only perpetuates that inequality, but actually exacerbates it. Mitt Romney is the perfect symbol of that system. And what is Romney's proposal for dealing with this problem? He turns it on its head. The Romney-Ryan program is premised on the belief that we don't have enough inequality in this country. They argue that poor people are not paying enough in taxes, and rich people are paying too much. They want to reduce spending on programs like food stamps, unemployment insurance, health care, college loans, and other forms of assistance that alleviate some of the inequality in our society. They attack President Obama for being a socialist because he wants to restore the top marginal tax rate to the 39% rate that people were paying in the 1990's. (Imagine if Obama were proposing that we go back to the 90% top income tax rate that was in effect in the 1950's, or even the 70% top marginal rate that was in effect under Nixon, or the 50% top rate in effect during Reagan's presidency!) How is anyone going to buy Romney's argument after they see his tax returns, and the machinations he was forced to go through just to get his income tax rate up to a pitiful 14%?

(complete return here)

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