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30 March 2009

Ralph Nader, Paying for the Deficit

Where is the revenue coming from to help reduce the tidal waves of red ink during the massive deficit spending by Washington to bolster Wall Street greed, stimulate the economy and rescue homeowners?

The scale of federal deficit is witnessed by the new frequency with which the dollar word “trillions” is used in the news media. An adjustment of major proportions is needed. It was only ten years ago when economists projected out the Clinton’s budgetary surpluses as “as far as the eye can see.” They were scurrying to figure out how this surprising surplus was going to affect the U.S. Treasury bond market. How quaint!

So, who is going to have to pay more into the Treasury? Not the oil and gas industry whose advertised protests against removing unjustified tax breaks are saturating the radio and television stations. Not the real estate or defense industries. Certainly not the financial industry.

How about the very wealthy? Well Barack Obama is letting George W. “red-ink” Bush’s tax cuts expire. So people earning over $250,000 a year will pay more. Mr. Obama plans to give 95% of the taxpayers some tax relief. Granted the Federal Reserve is printing money big time now, in order to spend it fast.

The right-wing, commercially-funded Think-Tank establishment wants tax cuts across the board. And the Cato Institute’s fellows are also defending foreign tax havens! But most corporatists still want an even bigger military budget which already devours fifty percent of the entire federal government’s discretionary budget. Their faith is that future economic growth will dissipate deficits whose purpose ironically is to promote growth

On Capitol Hill—better described as Withering Heights during the past decade—there is little interest or fortitude to confront the revenue question.
Who or what can you tax more to make a difference on the massive deficits?

For starters, close the “tax gap” which is defined as the difference between taxes owed and taxes actually paid. This amount is estimated to be $290 billion every year by the IRS. Several thousand more IRS tax collectors will pay for themselves many times over and help preserve some public sense of fairness by those Americans who regularly do pay their taxes.

This figure of $290 billion does not include the huge tax shelters and offshore tax havens harboring trillions of dollars from U.S. corporations and very wealthy Americans who do not wish to share onshore tax responsibilities. Some members of Congress, notably Senator Byron Dorgan, want legislation to bring back some revenues from these tax escapees.

Another huge source of revenue, with very little if any fallout on the average taxpayer, would be a Wall Street sales tax on speculative derivatives (not stocks or bonds). With an estimated $500 trillion traded in such bets on bets or bets on debts last year, a 1/10th of 1% sales tax could bring in $500 billion yearly.

Consumers pay sales taxes in most states of 5 to 7 percent on necessities, while Wall Street’s casino gamblers buy trillions of dollars in derivatives and pay no sales tax. Unfair! Also such a transaction tax will help tamp down wild and destabilizing speculation, which has already pushed our economy to its knees.

A carbon tax would be another important source of revenue to keep the deficit lower and provide incentives to shift faster to energy efficiency and renewable energy such as various kinds of solar and geothermal.

There are other activities that our society as a whole would rather see diminished that can be subjected to increasing taxes. These could include the addictive and gambling industries and anti-social behavior such as corporate crime and fraud. Note that companies do not hesitate imposing “penalties” on consumers for far lesser infractions of their private, one-sided, fine print credit card and other form contracts.

Of course another $300 billion could come to the Treasury if Congress just restored the tax rates on corporate profits that were paid in the relatively prosperous nineteen sixties.

Then there is the reasonable argument that if taxes on “unearned income”—that is dividends and capital gains on investments—should never be lower than the tax on “earned income” by human labor. Well, today, taxes on the former—capital gains and dividends—can be half the rate as income taxes on work. Bringing them closer together could raise more revenue or bring down worker taxes in the process.

With huge deficits coming on like fiscal tornados for future repayment, Congress and President Obama have to face the music and stop dodging the question as to when they are going to be paid for and by whom?

Otherwise bankrupt corporate capitalism may be on its way to bankrupting its savior—Washington socialism!

7 comments:

  1. I get a little tired of bloggers who spend all their energy figuring out how to tax more Americans when what they should be doing is castigating the government for spending too damn much money. Examples are all around us.

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  2. So, unless you're a corporation that takes advantage of foreign tax havens, a super-rich person who would like to avoid estate tax, or someone who owns a large financial services firm that would like to avoid a tiny tax on its unearned income, you either didn't read or didn't understand this essay. Furthermore, yes, plenty to be cut from the budget, starting with the insanely bloated military budget. With that, I agree.

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  3. I read it and I understood it. I believe in rolling back taxes, not increasing them. Put your considerable intelligence to work devising ways for the leviathan to spend less money, not more. Giving money to politicians is like giving fast cars and beer to teenage boys.

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  4. Rolling back all taxes, regardless of target, is another one of those fundamentalist dogmas -- like, "we have a free market"; "the free market is always right"; "government of any kind is always bad"; "the Bible is literally true"; "people are basically good"; "people are basically evil"; and so on. In this case, however, decades of corporate-funded propaganda has turned people against the one imperfect institution over which they might have some control. So, whereas cutting bloated defense, intel, and "security" budgets is a good idea, the notion that the government must be starved of funds indiscriminately only strengthens the role of private tyrannies (corporations) in our society. Especially when the offending taxes would be used to relieve the effective tax rates of the other 95% of the population. Check the effective tax rates of most corporations and rich people -- they are quite low relative to those without access to fancy lawyers and accountants. This is what your anti-tax dogma leads to, and that's why your statement of beliefs is perhaps unintentionally accurate: you apparently "believe in" rolling back taxes as a dogma, like believing in Jesus or creationism. So, to folks like you (I assume), a lower out-of-pocket per capita expenditure on national, single-payer healthcare would be "bad" because it would be tax-supported, whereas far greater out-of-pocket per capita expenditures supporting a bloated for-profit healthcare system, with awful outcomes, is "good," even though it's more expensive, because the nature of the payment is not labeled "tax."

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  5. Did you go to Cornell? You remind me of that character in The Office.

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  6. Yes, I went to Cornell, but I've only seen the BBC _Office_ so I can't join in your ad hominem, unfortunately.

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  7. Watch an episode and you'll see what I mean- I think.

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