The astoundingly wrong and unfair tax changes now being thrust upon the United States by the wealthy-right are harmful to our country for many reasons. But what have very many of the groups who have opposed these tax changes been saying to the American people about this issue? “We must stop these changes.” More specifically: “We must stop these changes; send us money.” And that has usually been the end of their discussions. It is unfortunate that most so-called liberals, and so many progressives, are not squarely confronting the terrible tax situation that currently exists in the United States -- not looking at how the super-rich have hijacked a basic part our government, the basic part that provides funding for the common pieces of our society. As a modern community, we should be properly taxing the excess money now being accumulated in our society. That is, the wealth that is being created through society’s structure, and being created by the work of the people of our country. It is just crazy that this matter is not being debated in more detail; and not even being candidly examined by our media.
This article will look at three aspects of national taxation: personal, business, and separately, a proposed tax on stock market transactions.
I believe that paying one’s taxes is a fundamental civic task of every citizen, and should be a proud duty; this “common-good” aspect is often lacking in much of our modern culture’s thinking. I also believe that there should be some room in our country for the rich – but not for the gangsters. So we definitely do need to return to a system of truly progressive taxation. Basically, I endorse the proposals that we effectively craft, and enact, such an income tax plan; one which would set a considerably higher rate for the very wealthy, but which would also be a system that would allow those who have gained wealth in our society to remain reasonably – and perhaps even more than reasonably – rich. The details of this concept’s reasoning are simple and clear, especially when we consider how income is acquired.
Why progressive taxation? There is this notable point, a reality that is usually not that often brought forward in general economic discussions today: the continuing wealth that the super-affluent people in our country are now accruing, daily, is essentially being created by – or perhaps more precisely, being generated by – our society as a whole. That is, unless a rich individual has a diamond mine in his or her back yard, that person is receiving most of his or her growing (and usually unearned) income from the work of others, and from the larger civic structure of our modern society. This point, this very central fact, was the original motivating reason – and properly so – for a progressive taxation system. A higher tax rate for higher incomes. But you rarely hear this detail being voiced today; rather you hear the constant moaning of the wealthy claiming that their legally-earned money – their money! – is being taken from them by this onerous burden of taxation. To that, I say: phooey. The taxes on the super-rich should be sensibly set at a much higher rate.
That is why, when our modern world developed the income tax concept, progressive taxation was logically seen to be appropriate and fair. This idea arose naturally as people observed how wealth is typically amassed in a community, through society’s civic framework. But there is another fundamental reason for a sliding scale of individual taxation, one not often laid out in deliberate and candid terms. We can see this simple, further rationale – for a progressive system – when we look at the multiplying effect of accumulated wealth, where excess money can grow through its own activity. And with society providing the basic economic structure, it is only proper that society get an equitable portion of these individual gains back, in order to help our civic community continue to operate successfully.
Most often today, media discussions ignore the fact that some seven decades ago, the top tax rate on the upper portion of big incomes was much higher, over 90%. Thus, many present-day people, the millennials especially, are not even aware of this past reality. Rich people were still rich, just not obscenely so. Almost all of the “tax reforms” of the past century – including even some advanced by the Democratic Party – have thrown crumbs to the middle-income citizens, and have then given untold billions to the rich. Of course, since the time of Franklin Roosevelt, the Republican Party has been the prime mover, the main player, pursuing lower taxes for the wealthy. With these changes, the super-rich have, today, been able to buy up our major media companies, and so many other vital elements of our society. To a shocking degree, this is without precedent in the modern history of our country. A great many of our people do not even see how much they are being manipulated. Or how much democracy they have lost.
Once we take a clear-eyed look at our taxes, we can then set fair and reasonable rates for the majority of citizens, those who make up the core of our country. That’s a topic for another time. But in addition, we need to take a deeper look at the many peculiar, and generally inequitable, tax deductions that have been introduced over the years. Some of these were modified by the new tax law, but we can do better. “Tax-diversions” is a more accurate description of this entire system, used most effectively by the rich. This activity is often a quiet shunting of money owed to our government – our society – on over to individuals and to organizations. Taxes must be levied impartially. Then too, we might also stop and consider the larger issue of how we are using tax laws to maintain, and provide for, many of the different components of our society.
The federal government’s corporate tax rate has been set at 35%, a high rate for a country in the developed world. But the reality has been quite different. The Government Accountability Office has reported that in 2010 the effective rate – the true rate – for U.S. corporate profits was 12.6%. Let that sink in. With so many loopholes – deductions, indefinite deferments, odd write-offs, and credits – the actual tax rate became deceptively ambiguous. This has led to cases (such as GE, recently) where giant corporations have earned multi-billions of dollars in a given year, and yet owed little or no taxes. Underneath everything, we need to remember that it is our society’s very existence that allows the corporations to make their money. Their real and clear tax rate should be balanced and appropriate. We can look to other countries, and to our own past, when considering sensible rates. And yet, Trump’s new tax bill dramatically lowers the corporate rate to 21%, but little alters the many odd business-tax write-offs.
Additionally, there is this, from a July 2013 CNN Report: “U.S. corporate tax collection totaled 2.6% of GDP in 2011, according to the Organization for Economic Cooperation and Development. That was the eleventh lowest in a ranking of 27 wealthy nations.”
In so many ways, these methods used for corporate-tax assessment are truly screwy. By design, some items and events that lower a company’s actual tax can be carried over a number of years, but the same items and events that would cause the tax to be paid, are not. This is not an equitable balance. Now certainly there may be times where – for the good of our economy or of our communities – we find that a corporation might need assistance. But this assistance should be done openly, and on an as-needed basis.
Corporations, in general, just hate taxes – a reality that they will readily acknowledge. This profound dislike is built into their fundamental design, and into their operational existence of wanting to keep costs down in order to maximize profits. The manner in which each company today is handling its taxes, good way or bad way, goes to the core of each enterprise’s ongoing character, and demonstrates to society how each of them is being run. We should be considering their behavior, when we look at their positions in our constructed world.
A Tax on Stock Market Transactions
In the United States today, we now have some fresh ideas to re-establish this business tax, including some bills that have been introduced in Congress. The basic idea is to levy a small tax on most stock market transactions. The privately-owned media, however, have rarely reported on these proposed pieces of legislation; the wealthy media owners certainly have no interest in shining a light on such an idea. This concept has been simmering in our country for several years, and is a proposal which is actually the restoration of an older stock market tax (that was similarly small) which was discontinued about fifty years ago, in 1966. The original tax appears to have logically grown out of society’s understanding of what the stock market really is, and how our society has created the social structure that makes it possible for Wall Street to exist. Around the world today, some developed countries, such as Belgium, have some sort of this tax in place, and the Unites States should too. Simply put: this tax would be a ½ of 1% tax (or even slightly less at .4 of 1%) on most of the stock market transactions that routinely occur. It would bring in tens of billions of dollars per year. The money thus collected could then be allocated, first, to directly creating jobs and for economic development, and second, to helping reduce our national debt; along with other uses. In addition, the tax might help rein in some of the great number of transactions that appear to be occurring primarily to churn the stocks, catch upticks, and generate fees – pulling money out of the market without having any other rationale or benefit.
With all the renewed interest in this concept, it is a bit unfortunate that some promoters of the proposed Financial Transaction Tax have – with good intentions – been calling it a “Robin Hood” tax; that is, something which is a taking from the rich to give to the poor. In my opinion, this description is really a misnomer. The tax is by no means a “theft” or any other sort of unfair action. Wall Street owes its continuing existence to our society’s infrastructure, and to the work that our citizens do to maintain our nation. This work, always going on, is quite a task, and this upkeep costs money. We all have to pay our fair share.
Taxation, in the most concrete of ways, is an issue that has an enormous influence on our society’s ability to function well, to function for the benefit of its members. In my opinion, regarding taxes and taxation, DSA could be doing more to help our society, by pushing for better-considered discussions, and by offering some sensible proposals. Paying taxes is a necessity, and it needs to be equitably applied. Accordingly, we have to move away from the crooked view which, sadly, is all too often promoted by some: that only chumps pay their reasonable fair share of taxes. Dishonest and shifty behavior is simply wrong, and bad for society.