As our country heads to fiscal insolvency, there is a lot of talk about who is to blame. One side of the screaming minority lays it at the feet of the rich. They say that these evil, bad guys have been taking advantage of unreasonably low tax rates for the better part of two decades, and they have done so on the backs of the poor. The other side of the screaming minority states that the blame lies squarely at the feet of corporate America.
“Of course government officials, and their spending habits, are also to blame,” the more rational contingent of the screaming minority will admit. For these people, however, this symbolic attempt at rationalizing the government’s role in the debate is the end of that part of the conversation. They don’t want to investigate the government’s role in this debacle, and they do not want any action taken.
If the rich do have a role in this dilemma, should action be taken they say. They should pay their fair share, they say. For too long, the “theys” have been prospering in an unfair system, so light your torches and vote Democrat in 2012.
This “tax the rich” political platform is actually something of a winner across the political spectrum. There are enough dupes in both parties to create a platform based solely on “eat the rich”, but at the end of the day will anything actually be accomplished with this platform? Will it resolve our debt? Will it bridge the ever-widening gap of the deficit between that which the federal government takes in and that which it spends? And does it really matter if it accomplishes anything, as long as it eases our feelings of class envy?
The first note to be made is that the top 10% currently pay 69.1% of the taxes as of figures cited on July 7, 2011.* This, while earning only 45.8% of the income. In that sense, the rich are already paying their “fair share”. The second note to make is that if the federal government doubled the taxes of every American that paid taxes in 2011, the deficit would still be 207 billion. Here’s where we reach the refrain, sing along if you want, “It’s not about what we pay, it’s in the way they spend away!”
There is a growing sense among liberals, and even some Republicans, that we can no longer control government spending. The last two administrations have raised the base spending levels so high that we simply can’t return to even 2004 levels. If that’s the case, say current politicians, we must widen our scope to the outliers that affect the deficit. We must increase revenue to the government, and those who do not oblige, such as Apple computers, must be held to account. If it’s the case, we must go after the rich, the somewhat-rich, the super-rich, and the mega-rich. We must also go after corporations, and anyone and everyone (who is not in government) that has caused this debt. We’ve reached a point of no return with those living off the largesse of the American tax payer to turn around now and say that we need to cut their benefits. There are just too many dependent people now. It wouldn’t be politically smart to tell them that the gravy train, the free ride must come to an end.
In a piece sympathetic to Obama’s cause, the NY Times details that: “The White House estimates that Mr. Obama’s plan (to raise taxes on the rich) would raise $866 billion over the next decade, or nearly half of that.”**
So, if our current deficit (spending over revenue) for the current year is 1.326 trillion, then even by sympathetic estimates, the Obama plan would only lower the current deficit to 1.240 trillion. As Obama has said, “It would be a good start.” Fair enough, but what would it be starting?
Due to the fact that no Obama budget plan, thus far, has contained any serious attempts at cutting spending, he can’t even get Democrat support for them. Due to the fact that Congressman Paul Ryan has made some minor attempts at cutting spending, attempts that occur over a ten-year period, he has been demonized. Due to the fact that Republicans held out for spending cuts in last year’s Budget Battle, they were demonized and trashed by Obama and his acolytes in the media. Republicans caved on their modest proposals and basically gained nothing for their part in the battle. Obama has shown that he’s not really about starting something. He would rather focus the entirety of his battle on the politically expedient battle of “tax the rich” to the tune of $86 billion a year in deficit recovering revenue…or nearly half of that.
Yet, if you listen to Warren Buffet, Matt Damon, and now Stephen King this political season should only be about the symbolic “good start” of taxing the rich. They don’t mind the extra taxation—and it doesn’t hurt that we all think that they’re wonderful for saying it—but it won’t accomplish much of anything, until the state legislatures and the Congress and the President get the spending under control.
Liberals don’t see it that way of course. Liberals see the federal and state governments as charitable organizations. They pay their taxes, and they expect their beloved federal government to give it out to the poor. They don’t usually ask for responsible spending in this regard, or that’s not their overriding concern anyway. They simply vote for their guys and magically believe that that guy will solve societal ills with their tax dollars. They want you to vote for their guys too, of course. If you don’t, or won’t, you should at least be willing to fork over massive amounts of money to see to it that their cause succeeds…if it does…and it never does. Regardless, they close their eyes, click their heels, vote for their guy, sign their check with all of the commemorative pens they’ve chosen to mark this occasion when they paid their fair share, and they sleep well that night with the knowledge that righteousness will be done.
There are so many truly righteous charities out there that would be more than willing to accept their generous checks, but liberals don’t send them***. They think voting for the right guy and giving him the tax money resolves their need to be charitable. What’s the first thing the typical liberal says when they run across a feller who is down on his luck? Go on welfare. That’s what it’s there for.
Private charities have proven to be more accountable and less irresponsible with their money than those in the federal government. If they do not follow their industry’s codes of conduct, they get called out, and there are stiff penalties. The federal government usually investigates itself, and they hold Congressional committees, and nothing ever changes. The poor stay poor, the rich stay rich, the deficit keeps rising, the widening gap in the deficit keeps expanding, and everybody keeps getting re-elected.
The second method, through which the screaming minority seeks to reduce our deficit, and eventually our debt, involves taxing corporations more. In a NY Times piece, published over the weekend, we read about how “irresponsible” companies such as Apple, Google, Yahoo, and Dell find ways to circumvent various state and federal taxes by shipping work to locales like Reno, Nevada for the purpose of lowering their tax burden.****
The NY Times piece goes into great detail to describe how Apple avoids city, state, and federal taxes through a number of measures devised by their tax accountants and lawyers. It details how Apple ships its operations to Luxembourg and Ireland to avoid taxes on those operations.
“Apple was among the first tech companies to designate overseas salespeople in high-tax countries in a manner that allowed them to sell on behalf of low-tax subsidiaries on other continents, sidestepping income taxes, according to former executives. Apple was a pioneer of an accounting technique known as the “Double Irish With a Dutch Sandwich,” which reduces taxes by routing profits through Irish subsidiaries and the Netherlands and then to the Caribbean. Today, that tactic is used by hundreds of other corporations — some of which directly imitated Apple’s methods, say accountants at those companies.”
What would happen if Apple showed “corporate responsibility” and kept 100% of their profits and operations in Cupertino, California? What if Cupertino, California, or the United States then managed to pass a law that called for 1960’s era top corporate rate taxation of over 50%?***** Would this lead to solvency in these locales, states, or in the nation, or would the the government officials in these governments simply spend more?
It shouldn’t be about taxing the rich, or taxing corporate America. That should be seen for the side show, the distraction that it is. As Apple Computers, wealthy individual citizens of Maryland, California, and New York have proven if we continue this distraction, they will leave. They’ll pack up their bags, take their tax revenue, and their iTunes downloads, and leave. Most politicians don’t consider this reality, and they don’t want you to either, or if you do they’ll attempt to distract you from it. They’re like magicians, well-schooled in the art of distraction. They have been able to make us look at their “get the rich” schemes for a couple decades now, and while we’ve been voting for them to even the scales on these rich jerks, they’ve been lifting our wallets They tell us to look at the poor, and they raise our restaurant tax; they tell us to think of the kids, and they raise our property tax; and they tell us it’s not for them. It’s never for them. They’re already rich, they say while twirling their mustache, and they don’t mind paying the taxes, so why should you? Then they invest that money you worked so for in money pits like Solyndra, and Sun Power, and a study of the mating habits of the South African ground squirrel.****** Most of them aren’t bad guys, it’s just the way things have always been done in Washington, Cupertino, and California for as long as anyone can remember. So, they’re not to blame for all this, no one is, and everyone is, and both sides are to blame, and…let’s get the rich!