While focussing on the GDP, the mushrooming budget deficit, the trade deficit and the abysmal job creation history of the past five years, not much attention has been paid to a
crucial piece of the larger picture.
Taxes Flatten but Deep Pockets Still Bulge
By Joel Havemann, Times Staff Writer April 17, 2006
WASHINGTON -- A decade ago, when publishing magnate Steve Forbes ran for president, he vowed to deliver a new era of prosperity with a simple change in the federal income tax: Instead of people with more money paying higher rates, all would pay the same "flat" tax rate -- unleashing "the fantastic growth waiting to burst forth in our economy."
Forbes' flat-tax plan was dismissed as simplistic by many mainstream economists and viewed with horror by the legions of special interests that benefit from the deductions and loopholes that flat-tax advocates would eliminate.
Police, fire, the military and education all operate on tax dollars. Add to this the maintenance of bridges, roadways and waterways and THEN we can add the cost of other social services that are provided by...tax dollars.
Reducing the amount of tax dollars collected by default reduces the amount of tax dollars available for supporting the infrastructure of our nation.
By extension, where does your city or town turn when the `cherry sheet' comes up short?
Yes, good citizen, they ask which services you, the homeowner, are willing to pony up for in the form of higher property taxes.
This is always done in the most draconian fashion, not once have I ever seen a list that didn't put teachers at the top of the 'cut list'.
Next month my local school district has asked us to vote for a ten million-dollar property tax override (on top of the 2-1/2 percent that property taxes will rise regardless.)
Failing to approve will cost us the loss of sixteen teachers, what little that remains of school sports programs and any planned improvements to the schools.
Stick `em up!
But as millions of Americans face the deadline for filing their federal tax returns, they are operating in something very close to the world Forbes and other flat-tax visionaries proposed. Without any fanfare or philosophical debate, millionaires and middle-class Americans now pay taxes at almost the same rates.
So what about the "fantastic growth waiting to burst forth"? Has leveling out federal income tax rates produced a cornucopia of financial benefits?
The answer is probably yes -- if you're a millionaire. And probably no -- if you're almost anyone else. Flattened, and thus lower, tax rates have contributed to huge increases in the wealth of the wealthy, but so far most people haven't seen significant economic improvement.
"It's as if Santa Claus dropped bags of money down everybody's chimney," said Leonard E. Burman of the private Tax Policy Center. "Only he dropped extra-big bags in rich people's homes, and extra-small ones in smaller homes."
If I could only make one point, get you to understand just one thing, this would be it: rich people are rich for one reason and one reason only, their money comes from you. You do the work but they get paid. The less they pay you, the more they make.
This is why they're rich and you're not. You don't have two or five or twenty-five hundred people making you ten times what you pay them.
Sometimes it's more, much more. Every employee of Cisco systems earns $611,000 per year for the company...you can bet the janitors and security guards aren't being paid anywhere near that. If they're lucky the managers of cubicle land might make a tenth of that.
Though most pay at least somewhat less in taxes than they did a few years ago, the Federal Reserve Board, in its latest three-year examination of family finances, found that average family income fell by 2% between 2001 and 2004 after adjusting for inflation. In the previous three-year period, average family income grew by 17%.
Thanks to more credit card debt and borrowing against their homes, the 25% of Americans at the bottom of the wealth scale had negative net worth in 2004. On average, these families owed $1,400 more than their possessions were worth.
25% good citizen, we aren't talking about a few stumblebums here, chances are very good you are part of this number.
On the surface the concept of `fair' taxation appeals to us and it should, so should the concept of `fair' compensation...you can't have one without the other.
Advocates of the flat tax have long argued that it would stimulate economic activity, ultimately benefiting everyone. Bush shares that view, though he has not officially advocated a flat tax.
In recent years, lower tax rates do seem to have aided economic growth. The economy has been producing goods and services at a rising pace since the end of the 2001 recession. Unemployment is a low 4.7%.
But the health of the economy as a whole has not translated into gains for most workers. Because of global competition, the decline of manufacturing, weaker labor unions, immigration and other factors, most workers have not been able to obtain higher pay.
In short good citizen, those we depend on for a paycheck are sticking us with the tab to maintain our world, a world they want no part of because we are poor.
Why are we poor, because we make more money for them than we make for ourselves...a situation we had no choice in creating and little choice in sustaining. You can opt out anytime if you want to live in the streets and depend on the `kindness' of strangers.
Hear me well! Society does not exist to serve commerce, commerce exists to serve society! Those who enrich themselves at our expense do so through their control of the law. A society that does not work as ONE to elevates the status of ALL of its members isn't a society at all, it's a forced labor camp!
Welcome to the camp.
Something gets lost when your fellow citizens become your source of income...they stop being your fellow citizens.
If we aren't all in this together then it really is an `us vs. them' situation.
Who among us would argue against sharing the resources of this planet equitably? Who would protest against a prohibition on exploiting others for personal gain?
If 99 percent of us have to live by the sweat of our brow, why do we allow the other one percent to skate, to in fact wax rich off of our sweat?
If we're not all in this together (and quite obviously we're not) are we to sit still while the minority drowns us in a bathtub?
Record corporate profits (along with record CEO compensation) in a time when the social safety net is being shredded and the cost of maintaining our nation's infrastructure is being shifted onto the backs of the wage earner is not only insane but suicidal as well.
The rich get richer (by hoarding the fruit of our collective labor [tax avoidance]) while society crumbles.
If there is to be peace we must live in harmony, equitably sharing the bounty of this planet, our one and only home, each to their own measure. (A social structure that allows for the fact we all aren't, nor want to be superstars. In other words it's okay to do just enough to get by if that what makes you happy...and at the end it's all about the happy, isn't it?)
While this article is about taxes and the importance of sharing the burden of supporting our society fairly, consider for a moment why taxes exist in the first place.
Taxes exist to fund necessary but unprofitable social functions, taxes serve to make these necessary social institutions profitable...very profitable.
This is a key flaw in capitalism, if it can't be done for a profit, it can't be done.
The culprit here is money and the laws regarding its use.
Money serves but one useful purpose to society (and this is where the focus should be) it serves to regulate access to whatever is in short supply.
Failing to recognize this simple fact has given us the social cluster fuck we have today, where money is the be all end all to the individual, where the pursuit of money drives all decisions.
The creation of wealth is the product of labor. With that said, it is only logical that the only way to get money is to work for it.
You surrender your labor (mental or physical) and you get paid for it according to skill/responsibility level by the society that benefits from it, not the bankers and corporations that value only themselves and their personal bottom line. The former is fair, the latter is tyranny.
All humans must be free to rise as far as their skill and ambition, or lack thereof, takes them.
It is only by the elimination of income streams that society will be capable of functioning in a rational manner. (Which means elevating the lot of all humans equally, the `ultimate goal' of any sound society.)
We either advance as one or let the self-centered few enslave future generations for their own enrichment.
Thanks for letting me inside your head,
Gegner