Tuesday, April 14, 2009

No Representation Without Taxation?

What was once merely an outlandish disparity in numbers between those who benefit from U.S. income tax policy and those who actually pay the taxes, is now on its way to its largest and most disturbing level in history. So many voters today pay no income tax that there is little natural incentive within the electorate to keep the cost of government low, to set reasonable spending priorities or to vote for anyone other than a redistributionist Democrat. Rather than trumped-up publicity stunts, I hope that the Tea Party rallies tomorrow will shine a light on this problem above all others. In an article published yesterday in the Wall Street Journal Ari Fleischer, a former Bush press secretary writes:

According to the CBO, those who made less than $44,300 in 2001 — 60% of the country — paid a paltry 3.3% of all income taxes. By 2005, almost all of them were excused from paying any income tax. They paid less than 1% of the income tax burden. Their share shrank even when taking into account the payroll tax. In 2001, the bottom 60% paid 16.3% of all taxes; by 2005 their share was down to 14.3%. All the while, this large group of voters made 25.8% of the nation’s income.

When you make almost 26% of the income and you pay only 0.6% of the income tax, that’s a good deal, courtesy of those who do pay income taxes. For the bottom 40%, the redistribution deal is even better. In 2001, these 43 million Americans, who earn less than $30,500, made 13.5% of the nation’s income but paid no income tax. Instead, they received checks from their taxpaying neighbors worth $16.3 billion. By 2005, those checks totaled $33.3 billion.

Not that this is an entirely new phenomenon; however, the situation in which we find ourselves today, to a far greater extreme devalues work, undermines success, and is at bottom, fundamentally corrupt and debilitating. The pendulum has swung too far in a direction that can only lead to a self-perpetuating and thuggish majority, voting themselves no taxes, but only benefits to be paid for by the minority who are taxpayers.


Anonymous said...

A jingoistic cavalcade of malcontents

So why is it that it is so easy to foment inextricable outrage concerning our national troubles without offering up any discernible solution nor studying the very pervasive troubling specifics? (Ostrich syndrome).
Emerson once again shoots from the hip and either consciously (or unconsciously?) appears to infer that those left behind in the daily grind need to belly up to the bar and pay their fair share so that he might go on worshiping (envy) the wealthy and the almighty American corporation.
Most undoubtedly the root cause for all of our present dilemmas.
He seems to equate taxes paid with the level of representation (or lack there-of). I see when you say” The pendulum has swung too far in a direction that can only lead to a self-perpetuating and thuggish majority, voting themselves no taxes, but only benefits to be paid for by the minority who are taxpayers.” You must be inferring to the hoard of lobbyists that hold sway over the elected officials to continue their unrelenting pursuit of a tax free environment for their corporations. It has been common knowledge for some time that any corp. or wealthy enough individual with the wherewithal and resources can finagle any number of loop holes to escape the tax bite. Yet I see no scorn directed at this very real idiocy. Instead we see paraded out laughable quotes from Bush lackey Ari Fleischer. Press puppet extraordinaire and disgraced Iraq war champion. What about the real facts??
• Income disparities are still widening in the United States. The average inflation adjusted income of the top 1% of households has risen 42% since 2002, while the average inflation-adjusted income of the bottom 90% of households has risen about 4.7%. The average income gain of the top 0.1% of households was 57.6% between 2002 and 2006. Approximately 66% of total income gains since 2002 have accrued to the top 10% of households. (Source: Center on Budget and Policy Priorities).

The ding - dang Tea puppets.

The Astro-turf (phony grass roots plebs) made-for-television demonstrations in cities across the country were generally small, and the only thing they proved conclusively is that -- you might want to sit down -- some Americans don't much enjoy paying taxes.
We’re not going to take anymore!!! Take that you scumbagaro!!
Not going to take what anymore? Well, whatever. The occasion was Tax Day, April 15, and clearly there was a lot of anger about taxes. That can't have been the only source of ire, however, since President Obama's policies mean that the vast majority of Americans will be paying less in income taxes, not more. In terms of logical self-interest, only the wealthy should have come out to dump their tea bags and wave their pitchforks. A growing sense of us vs. them, of the little guy vs. the big guy, is out there waiting to be exploited by anyone clever enough to fashion a sophisticated populist critique of the Obama administration's policies.

There was anger at hemorrhagic government spending, and this plot line in the mad-as-hell narrative at least made sense. A neutral observer might point out that the president who should have to answer for this year's astronomical $1.7 trillion deficit is George W. Bush, since this is his budget -- and since he's the one who hid the costs of our two faraway wars and demanded a king's ransom to bail out the banks.
Editorial: Big business, pay up
by The Grand Rapids Press Editorial Board
Monday August 25, 2008, 12:53 PM
Corporations that make huge profits should not be allowed to dodge paying their fair share of taxes needed to support the country.
For the millions of families struggling to pay for gas, electricity and grocery, it has got to be maddening to learn most corporations in the United States escape paying income taxes.
A federal report released this month raises serious questions about the ability of companies to exploit countless tax loopholes. This system is obviously broken. The government can ill-afford to lose billions of dollars in revenue from corporations. Congress needs to close avenues companies use to avoid paying their fair share of taxes.
Roughly, two-thirds of all American and foreign companies doing business in the U.S. paid no federal income taxes between 1998 and 2005, according to a study by the Government Accountability Office (GAO). In 2005, 25 percent of the largest U.S. corporations -- those raking in at least $250 million in assets or $50 million in receipts -- didn't pay one red cent, but reported $1.1 trillion in gross sales. In comparison, 28 percent of large foreign companies didn't pay up, despite $372 billion in gross receipts that year.
The GAO studied data from the Internal Revenue Service for nearly 2 million companies. No corporations were identified by name because federal law prohibits disclosing that tax information. These companies were able to get around paying Uncle Sam in various ways, including an ability to use transactions within the company to shift income to low-tax countries, reporting operating losses from prior years and tax credits. Taxpaying Americans should be outraged by how easily accounting maneuvers can be used to avoid corporate tax liability.
• Rising health care costs over the past decade have occurred as incomes for working families have barely budged. Real incomes among working-age families have yet to regain levels prior to the 2001 recession: median income among households headed by someone under age 65 was $56,545 in 2007 compared with $58,721 in 2000.
• This dynamic is captured in the increasing numbers of Americans who are spending large shares of their income on health care. Between 2001 and 2007, the share of adults under age 65 who spent 10 percent or more of their incomes on health care costs, including premiums, climbed from 21 percent to 33 percent. Adults in all income groups spent more of their incomes on health care.
• In 2006, national health expenditures increased at a rate of nearly 7 percent per year, more than two times the rate of growth in the economy. Similar annual rates of growth are projected through 2017.
• Americans spend two times as much on out-of-pocket medical expenses than do residents of other industrialized countries.
• Premiums are growing at rates more than twice that of other indicators, such as wages and consumer price inflation. The average annual cost of family coverage in employer-based health plans, including employer and employee contributions, topped $12,680 in 2008—more than the average yearly earnings of a full-time worker earning the minimum wage.
For the past five-year period, health care costs overall rose by 43%, while the compounded increase in the consumer price index (CPI) was only 17%.
• American businesses are increasingly outsourcing finance, technology, production, and marketing jobs. More than half of all U.S.-owned manufacturing production is now based in foreign countries, and a quarter of the profits of U.S. multinational corporations are made overseas—with these shares constantly expanding. Manufacturing jobs decreased 22% between January of 1998 and January of 2008. (Source: Bureau of Labor Statistics)
• The percentage of the GDP belonging to wages and salaries in 2006 has never been lower at any point over the past 77 years where data was available. (Source: Center on Budget and Policy Priorities)
• The number of Americans living in poverty increased by 5.7 million between 2000 and 2007 to 37.3 million. In 2000, the U.S. poverty rate was 11.3% compared to 12.5% in 2007. (Source: U.S. Census)
• Health care premiums have increased 78% since 2001, with the average employee contributing 143% more to their company-sponsored health insurance than he or she did in 2000. Meanwhile wages have only increased 19% over this time period. (Sources: Health Affairs and National Coalition on Health Care).
• Families making the same commute are spending an average of $2,195 more for gas than they did in 2000. (Source: Testimony of Dr. Elizabeth Warren before the U.S. Senate Joint Economic Committee)
• Food prices have skyrocketed over the last 8 years. 4 dozen eggs, which cost $6.25 in 2000, now cost $9.61, an increase of 53.9%. The price of tomatoes has risen by more than two dollars since 2000. The price of 6 pounds of hamburger has increased 51.3% since 2000, while the cost of 2 pounds of macaroni increased more than 17% in the last year (June 2007 to May 2008). (Source: Center for American Progress)
• 46 million private sector employees in the United States do not have a single paid sick day at work, while 86 million workers do not have paid leave to care for sick children or dependent adults or to bring them to the doctor. (Sources: Bureau of Labor Statistics and Institute for Women’s Policy Research) At the same time, 1 in 5 adults currently have caregiving responsibilities for another adult, a ratio which will only increase as the Baby Boomers reach retirement age. (Sources: National Alliance for Caregiving and AARP)
• Part-time workers are particularly unlikely to have paid leave: 77% do no have paid sick leave and 61% lack paid vacation. (Source: Bureau of Labor Statistics)

Emerson Twain said...

Within this blog, I prefer to make observations and raise questions; insofar as offering powerpoint solutions to social problems would require more time than I have for this activity.

Since I would have to be even more obsessive than the commenter for me to go on to refute all of his attacks, minimally though, I need to point out that no corporations that are taxed will ever pay any of it out their profits, assuming they have any. All taxes on businesses of any kind are passed along in the form of higher prices for goods and services to their customers, as a cost of doing business. He may think they should, but he (and the editors of the Grand Rapids Press, for that matter) should study a little of basic economics before so eagerly shooting themselves in the other foot out of pique. I freely acknowledge that I have a real problem with the notion that government must be of necessity the middleman in, or arbiter of, every economic benefit.

The commenter seems also to be of the opinion that I, like himself, believe that the organizing principles of politics should be about payback or retribution instead of principles--just that I'm on the opposite side the fence from him. Well I don't and I'm not.

Liberty falls within the purview of the individual. Threats or attacks upon the underpinnings of liberty in our society and around the world are my concern, not the defense of any of the many nefarious exploiters of government and individuals, whatever their stripe may be. As for the Grand Rapids Press, it is unfortunate that they and their seven sister newspapers in the Michigan market are under such stress. Certainly the loss of ad revenues to the internet are a factor, but who can say if the economic hallucinations of their editors didn't have something to do with their corporate parent's plans to downsize and consolidate their Michigan operations shortly after the cited editorial appeared?