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No representation without taxation
Amity Shlaes
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TEXT OF COMMENTARY
Kai Ryssdal: Those famed secret Swiss bank accounts are going to be getting a little less secret. The Swiss finance minister said today he's going to loosen up secrecy laws to keep Switzerland off a European black list of tax havens.
Back here at home it's not tax havens so much that politicians are worried about, it's tax increases. President Obama's going to have to deal with criticism from both sides of the aisle in Congress as he works out his budget plan for next year. Commentator Amity Shlaes says the discussion can't forget the lower ends of the tax charts.
Amity Shlaes: Taxation without representation. That's what our nation's founders rebelled against. Subjects in the colonies were sending money home to the crown without getting say in their own government. The course of U.S. history can be seen as progress by those who are taxed to get representation. Think of women with the 19th Amendment.
Along the way we began to pay out money to groups that paid no income tax at all. There's Medicare, of course, for senior citizens, even if they never worked; welfare for the poor and struggling, at least through the 90s. And, more recently, there's the earned income tax credit, a break for low income workers. The credit was designed to make people want to work and to offset their heavy pension payments for Social Security. The result of expanding it, however, is that many people who work don't pay income tax. Instead, they get money back.
Do we want to help weaker citizens, especially in downturns? Totally. In fact, both parties have plans that relieve yet more taxpayers of their burden. Republicans like payroll tax holidays. And the Obama administration is zeroing out the income tax obligations of yet more citizens.
But a tipping point does come when too many are paying out and too few are paying in. Maybe that tipping point is now. Today, households in the bottom half of earners pay only 4 percent of the income taxes. One tiny group, the top 1 percent, pays close to 40 percent.
This can slow the economic recovery we're waiting for. Top earners won't want to keep producing if their burden gets much heavier. But the more important problem is a problem of civics. All presidents talk about the need for community. We strengthen that sense of community when everyone has to pay some taxes. Like jury duty, paying taxes reminds you that you are part of something; it reminds you of what you owe, not just what's owed to you.
The mood of the skeptics today is just the reverse of the mood at the Boston Tea Party. Then, we said no taxation without representation. Today, try flipping that line: No representation without taxation.
Kai Ryssdal: Amity Shlaes is a senior fellow at the Council on Foreign Relations.
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First of all, the colonists rebelled against both taxation without representation and the monopoly of the crow: colonists had to buy from the crown and sell to the crown. So, it is more complex than that? Also, ignoring every other tax except the income tax is bigoted to say the least. The poor pay property, sales and the gas tax. It also ignores the fact that many multi-billion dollar companies and their CEO's such as Google's don't pay any income tax either. Poll taxes were used in the Jim Crow south to disenfrachise African Americans. Enfrachisement based on taxes is arbitrary and has no place in America. Very disappointing Marketplace.
As a tax preparer in California I notice that about 9% of the head-of-household families are really married and not filing joint returns (like they should). The spouses deceive the federal government in order to exclude the other spouses income. In that manner the IRS considers the spouse claiming the children as living in poverty and gives her (him) the Earned Income Tax Credit. This year with 3 kids under age 17 the two credits could exceed $9000. Instead of paying a small amount of tax, the fraudulent couple "milks" about $6000-$9000 from the Treasury.
People who pay no net tax on their income should not be allowed to vote in federal elections.
I used to work as a general service tech at Goodyear. A guy I worked with used to "quit" every year around the first of November because - get this - "If I continue working, I will make too much to be eligible for the earned income tax credit, and I will make about the same amount at the end of the year either way."
I joined the military for four years, got my education payed for and now make a good salary with a stable job. Donnie still has the same job and is still on welfare - and probably still quits every year.
Why should he have the ability to vote himself part of my earnings?
A Robin Hood economic model of take from the rich and give to the poor is very seductive if you are on the receiving end of that equation. Real life is more complex than that.
I've never been employed by a poor person. And I don't have enough money to employ a poor person. What's hard to understand if you are always faced with too much month left at the end of the money (like me) is that rich people have to decide what to do with their "extra" money. The unintended consequense of 1% paying 40% is not that the rich will take their money to a beach somewhere, sit on their asses and watch the world go by. What happens is that instead of taking that pile of cash and creating a business that employs poor people and get rewarded for their effort with higher taxes, they'll do something less risky and less beneficial to society. What we need to encourage in our tax system is investments that employ people.
My ideal personal tax system is a flat rate above a threshold = a year at minimum wage. NO DEDUCTIONS. My ideal business tax system is a flat rate above a threshold computed from all employees salaries. Again NO DEDUCTIONS.
Deductions are just a way for Congress to hide the fact that they are coercing us to do something we wouldn't otherwise do. If Congress wants to encourage certain investments and activities, matching funds would be a better and more transparent way of doing it.
How 20th century: "Top earners won't want to keep producing if their burden gets much heavier. But the more important problem is a problem of civics.". In the 21st century we wonder why AIG employees should keep producing, and we wonder about the civics of those in AIG who are offered and accept bonuses in the millions of dollars.
What is the percentage of greencard holders - permanent residents- in the U.S. who pay taxes and have no representation? Such people have to be residents for 5 years before having the choice to become citizens, but in those 5 years they pay all the taxes without representation. Is it possible that these taxes offset the amounts paid to those who never contribute?
As far as the "top 1%" go, here are the facts:
"The top 1% of taxpayers (AGI over $364,657) earned approximately 21.2% of the nation's income (as defined by AGI), yet paid 39.4% of all federal income taxes. That means the top 1% of tax returns paid about the same amount of federal individual income taxes as the bottom 95% of tax returns." So much for the left's 'fair share' argument.
As for "What is the percentage of wealth that top 1% have?" We have an *income* tax, not a wealth tax. Oh, wait, yes we do: the death tax!
As far as the "top 1%" go, here are the facts:
"The top 1% of taxpayers (AGI over $364,657) earned approximately 21.2% of the nation's income (as defined by AGI), yet paid 39.4% of all federal income taxes. That means the top 1% of tax returns paid about the same amount of federal individual income taxes as the bottom 95% of tax returns." So much for the left's 'fair share' argument.
As for "What is the percentage of wealth that top 1% have?" We have an *income* tax, not a wealth tax. Oh, wait, yes we do: the death tax!
Several commenters blast Shlaes for neglecting to include "taxes on food, gasoline, telephone, etc. etc." But that argument is disingenuous. Those taxes are regressive, not progressive. The tax *rate* on food doesn't increase when you buy more, whereas the income tax *rate* punishes you more progressively for being more productive.
There's a difference!
Several commenters blast Shlaes for neglecting to include "taxes on food, gasoline, telephone, etc. etc." But that argument is disingenuous. Those taxes are regressive, not progressive. The tax *rate* on food doesn't increase when you buy more, whereas the income tax *rate* punishes you more progressively for being more productive.
There's a difference!
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