A moment of truth has arrived for President Obama and the Democratic party. According to the NY Times, in order to pay for meaningful health care reform, Democrats in the House are proposing an income tax surcharge on the wealthiest Americans: a piddling 2% for those earning more than $250,000, somewhat more for those earning $500,000 and still more for those earning $1,000,000 or over. Considering the extreme inequalities of compensation that have been the norm in this country for many years now, this is the sort of legislation that is long overdue. However, according to the Times, it's "an idea that Senate negotiators have all but dismissed as unworkable."
We keep hearing complaints about the cost of "entitlements" (fat-cat-speak for the social safety nets that keep our country from descending into barbarism), but when even the most modest tax increases on the most entitled among us are proposed, all we hear is that such measures are "unrealistic," politically out of the question, "unworkable."
Interesting. Especially in the light of the latest news regarding the Swiss bank UBS, where reportedly as many as 52,000 of the wealthiest Americans, hiding billions from the IRS, will most likely remain safely anonymous, protected by the "honor" of the Swiss government as part of a shameful "deal" with the Obama administration.
If every single Democrat in the House and Senate does not actively support this long overdue tax surcharge on the wealthy, then the name of each and every one opposing it should be posted on every blog on the Internet -- and every store front on "Main Street."
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Yes, I totally agree. I hope some of your readers caught the 7/10 Bill Moyer's Journal on the criminal healthcare system - "good" people, running a vicious system. Meanwhile, 7/11's Washington Post says the proposed tax increase for those "that contribute the most" (sic) will begin at 1% and go up to 1.5 %.
ReplyDeleteIf you bothered to look to Canada for a model of how unversal healthcare can work, you'd see that the tax burden is shared much more broadly between the rich and the middle-class. If fact, Canada has a national sales tax, and the provinces add to that so that we have 8.75% to 18% VAT on everthing.
ReplyDeleteBy contrast, in the US the middle class bitches and moan about how the rich are getting away with it all, while they pay a small fraction of the cost of goverment programs. In the US, the top 10% of earners pay most of the taxes.
We like our medical system, but I for one am amazed by how little the middle class pays vs. the benefits they receive in this country.
So in the end, the richest canadian do pay more in taxes, but so do middle and lower income Canadians. Are you prepared to pay more, or do you want something for nothing?
Thanks, Dave, for the info on Bill Moyers and the Wash. Post. Moyers has become an especially important source for alternative viewpoints, God bless him.
ReplyDeleteTo the Anonymous Canadian:
You may be uninformed regarding the true nature of the US tax system, which is geared rather heavily in favor of the wealthy, though that aspect is pretty well hidden away and rarely discussed. Don't forget the cutoff that limits the liability of the wealthy with respect to the heaviest tax burden of all, the payroll tax (Social Security plus Medicare). If you are a worker you pay over 7% of your income to the payroll tax, and your employer, who is supposed to come up with the other 7%, factors his expense into your pay, so you effectively pay 15%. A portion of my own income comes from free-lance consulting work, which makes me "self-employed," meaning that I'm responsible in any case for the full 15% payroll tax, a huge hit, believe me. To better understand how unfair the US tax system is, I refer you to my blog post called "The C word" (http://amoleintheground.blogspot.com/2009/01/c-word.html), in which I quote from an interview with no less an authority than Warren Buffet: "It turned out that Mr. Buffett, with immense income from dividends and capital gains, paid far, far less as a fraction of his income than the secretaries or the clerks or anyone else in his office. Further, in conversation it came up that Mr. Buffett doesn’t use any tax planning at all. He just pays as the Internal Revenue Code requires. “How can this be fair?” he asked of how little he pays relative to his employees. “How can this be right?” "
As far as "the top 10% of earners" paying most of the taxes, you should be ashamed of yourself. That's a no brainer. If the wealthiest among us are indeed earning far more than the rest of us, it stands to reason their taxes will also amount to far more than what the rest of us pay, why wouldn't it? What's really important is not the amount of taxes they pay, but the BURDEN of those taxes, which is far greater on lower income than high income people. If you're earning 10 million a year, then a 1 million dollar tax is no burden at all, though you may well resent having to pay it. If you earn $20,000 a year then a tax of $2,000 will be a considerable burden indeed and could mean the difference between feeding your family or heading for the food bank.
You would hate to be in Canada. Your burden would go up verses what you pay here.
ReplyDeleteEven so, your own IRS lays out the numbers pretty clearly that the tax burden on the top 10% is not proportional to their share of income. This is from 2006, the latest year the IRS published data on this topic:
The top 10% of households ($108,904+) pay 70.79% of Federal income taxes. The top 1% (> $388,806) pay 39.89% - about 2x share of the national adjusted gross income. As since you're such a student of tax laws, you probably know that many tax credits and deductions are phased out by the alternative minimum tax for these higher income households, which happened to be clustered in states with the highest local taxes.
Of course a poor household earning $20,000 a year cannot pay as much as a rich household. And nobody expects them to. They are key beneficiaries of many of the programs paid for by top earners. You didn't seem to consider net tax flows when point out "burdens."
As for you plaintive bleats about payroll taxes - as I learned when I lived in the US, a lot of that goes to pay for social security which is designed to support the taxpayer's future retirement. Canada has that too.
But in your self pity about how much you pay in taxes you missed my point: In Canada we're all in it together. Rich, middle class and poor contribute more evenly than what you seem to want.
For instance, in Quebec $75,000 (that's $67K in US dollars) gets a marginal tax rate of 39.89% after deductions for payroll taxes. For $375K ($338K US) the marginal tax rate is 48.22%. While clearly the rate is higher for wealthier households, everyone still pays significant taxes. Oh and the Quebec VAT is 12.875% which includes the federal GST. Everyone pays that too.
So if you want broad based healthcare, be prepared to open your wallet. At least in Canada, we're men and women enough to pay at all income levels and not demand something for nothing.
Well I have to admit I forgot to answer your question about whether I'd be willing to pay more taxes for a nationalized health care system. My answer is yes, certainly I would. But more is involved than only taxes.
ReplyDeleteAs for your other arguments, it strikes me that you are cherry picking your data very carefully, including what suits you and omitting what doesn't. For example, we in the States pay for our health insurance and, while that strictly speaking isn't a tax, it is certainly a considerable financial burden. And unless you are literally destitute and eligible for Medicaid, you are expected to pay (through the nose) for Health insurance regardless of how little you earn. There are no subsidies in the US for low income people wanting health insurance.
And as for people earning $20,000 a year being beneficiaries of the wealthy via some sort of mythical government programs you appear to have in mind, that's a load of crap. There were many years when I earned $20,000 or less and I can't recall any such benefits being directed my way.
A large chunck of the payroll tax is used to pay for Medicare, which would be covered in a nationalized program such as Canada's by a general tax, NOT a tax on low income people.
As far as demanding something for nothing is concerned, last time I checked low income people worked as hard if not much harder than the great majority of high income people. The ones getting something for nothing are not the workers, but the bankers whose incomes you so badly want to protect -- and I have to ask why that's so important to you.
And by the way, I don't see Canada as a Utopia by any means, especially if their tax code is regressive. Regressive taxes are unfair for the reason I already provided: taxes are far more of a burden on low income workers than on the wealthy. Or should I say, greedy.
Canada is not unique here in its tax rates. If you look at most industrialized countries with properly financed social welfare systems, the overall taxes are higher and cut deeper into the middle class than in the US.
ReplyDeleteI personally don't care if the rich get taxed more. But if you want universal health coverage, the Canadian lesson is that everyone needs to pay more in taxes. That's the math of such a large and demanding program.
Canada is no utopia, but its instructive and provides us with a different (and WORKING) formula of what's "fair" when it comes to taxes and income redistribution.
So you asked me why I'm taking this point of view? It's not to protect bankers as you suggested. It's that I'd prefer to see an honest search for workable solutions and I'd really love to see American to finally take more personal accountability here.
I think it's telling that the House bill didn't seek to fund expanded coverage partly by taxing current employer supplied health care benefits (including their own). Even though that would be consistent with a progressive tax system, it's not politically viable because the majority of Americans feel that someone else should pay (like the bankers, and anyone else who makes more than most voters do).
As I see it, the problem with taxes in the US is not that the average worker doesn't want to pay more taxes, but that an entire culture has been produced for which taxes are a dirty word, and consequently raising taxes is regarded as unacceptable regardless of how those taxes are raised or who is expected to pay. Thanks to the extreme events of the last year, it's now not that difficult to see that this mindset, like so much else that is wrong with the USA, has its origins in the manipulations of the oligarchs, those among the superwealthy with a lust for power as well as money, who've marketed their ideas just as the advertising industry markets products.
ReplyDeleteThis is the group that promoted the "free market," as though the "freedom" of the market were somehow an extension of Democracy (rather than its opposite). This is the group that promoted the notion that markets must be deregulated, in order to be truly "free," again as though the market were somehow like a human being.
This is the group that literally bought George Bush and placed him in the presidency as their own personal puppet and clown. And this is the group that probably thinks it owns Obama and the Democrats in congress as well. Let's hope they're wrong, but at this point it's not clear what's going on in Washington.
At root, however, this is not really about taxes or money, but about ethics, morals, common decency, generosity and community spirit. I'd be happy to pay half my income in taxes if I could live in a society where everyone had what they needed and was relatively well adjusted and reasonably happy, it would be well worth it to me. I actually lived in such a society, many years ago, in a country that used to be called Yugoslavia, the only country I've ever lived in where there were no beggars, no slums, no poverty, no starvation -- and no wealth. Contrary to the usual stereotype regarding such a society, no one was idle, everyone had a job and worked hard at it, the streets were clean, food was readily available (no lines), homes were immaculate and health care was excellent (with the first woman doctor I had ever encountered). Instead of sitting down and trying to learn from this country how to do things, the Western powers did their utmost to destroy it -- and, tragically, succeeded.
This for me, at least at that time, under Tito, was a Utopian society. Everyone was "poor" by our standards, but it didn't seem to matter, because they had no interest in accumulating crap they didn't need.
You wrote, "As I see it, the problem with taxes in the US is not that the average worker doesn't want to pay more taxes, but that an entire culture has been produced for which taxes are a dirty word"
ReplyDeleteWhen asked directly, it would seem that the "average worker" is not too keen on being taxed themselves and would rather have someone else pay for it:
http://www.nationaljournal.com/njonline/mp_20090706_5915.php
I agree that universal healthcare is a moral imperative. But I've noted that while you rail against the selfishness of the "Oligarchs" you turn a blind eye to similar inclinations among average Americans.
The analysis of polls above found that most Americans would not be willing to pay up to $500 more in taxes per year to fund universal health care. That's less than one percent of the $50,233 US median household income.
I'll cut you some slack in that you're not an economist, but you may want to consider data when you make these kinds of arguments. It's not all as black and white as you'd have it.
PS. Canada actually has a lot of what you seem to want. I live in Motreal. We have less stuff, due to lower wages and higher taxes, but the city is relatively clean, lower crime rates, and the gap between the richest and the poorest is smaller than in your country. Oh... and we're in the West, believe in Capitalism and don't have a fit if someone does well for themselves.
ReplyDeleteBut we don't just let anyone in. How's your French and do you have any useful skills?
Ho ho. Now even the NY Times has woken up and supports the same position I had in July:
ReplyDeletehttp://www.nytimes.com/2009/09/04/opinion/04fri1.html?ref=opinion
Are you ready to shell it out?
Yeah, Anonymous, you're right, Canada does have a lot of what I want. You're really fortunate. Montreal is a great city. Toronto also. And Happy Jacks, in Ft. Erie, is still a great restaurant.
ReplyDeleteAnd yes I'm ready to shell it out, so long as EVERYONE, including the oligarchs and Wall St. greedheads, pays his fair share.
But why are you so preoccupied with higher taxes? That's going to be the least of our worries. If you don't have a job, you don't have to pay taxes, and if you make next to nothing (as do most of us here in the States), then you are already paying the heaviest tax of all, the payroll tax, aka the "poor tax," since it has hardly any impact at all on the millionaires you're so worried about.
I'm preocupied with balancing the budget so that there's something left for the grand kids. If you're worried about jobs, you need to understand that large government debt loads can eat away at the broader ability for business, big and small, to finance growth (and create jobs for people).
ReplyDeleteI have no discagreement with your underlying belief that the top earners could use an additional tax bracket and your country can and probably will raise taxes for that minority. But "fair share" is a little nonsensical and easily deconstructed rhetoric.
Fairness is in the eye of the beholder. You mention payroll taxes as a "poor tax" but with those taxes, much of what people pay is designed in part to directly benefit them in the future (Social Security and Medicaid). Sure they are paying a relative large portion of their income for these basic services, but one can track a more direct personal return from the government for that expense. That does not seem particularly unfair to me, and larger earners pay that, plus a steeply progressive tax structure (when you include income related phaseouts) for larger incomes.
I don't want to equate the entrepreneur who risked her capital and time to be come a wealthier person with the bankers who privatize profits and socialize their failures. But that's what some broad based calls for higher taxes for the wealthy seem to assume.
I personally helped create a company (in Canada) that now gives 40 people well paying jobs with benefits. It was ten years of 70 - 90 hour weeks, hundreds of thousands of dollars of my personal capital that I put at risk, to get to the point where we can now start to enjoy the fruits our our labors. Right now I pay a little over 50% income tax. If I were living in the us, how much in your view would be my "fair share" of taxes?