In a previous diary, Who Pays for War, I described a "War Expenses Surtax" and talked about it in pragmatic, ethics centered terms. In this diary I rename it the "Bush War Surtax" and my purpose is to encourage a national referendum on the Iraq war. I'd like to help turn the 2008 election into such a referendum, using the surtax described here to put pressure on candidates to pledge opposition or support for the war. And for future elections I'd like to help issues of war and peace become more intelligently discussed than they are at present.
I may propose this idea to my own and other influential members of congress but I feel the need to bounce your ideas and others' against it first. I will submit a poll at the bottom of this diary to get some hint of how people think about the most important questions I want answered. You may wish to read that poll now to have a sense of those issues as you read further, but please don't answer the poll until you understand the Bush Surtax proposal I will present and how I think it might induce a referendum on war in 2008. If you think of related issues your comments are welcome.
I once believed that if Democrats would simply cut off the funding the Iraq war would end. Now I think that would backfire, by raising a political issue wherein Democrats are (incorrectly) accused of turning their backs away from the troops, of making sitting ducks out of them.
The proposal I will discuss here also has risks. But I think they are smaller risks and the upside is more likely to end the war with a clear public mandate, not a reversible victory for one party over another. I will discuss some of the risks below. I hope that readers can alert me to other risks through comments.
The following is a copy of my surtax proposal as defined in my previous diary. After that I will present its pros and cons, discuss why I think there are good possibilities for its passage and summarize its attributes in simpler language. Finally I will present my poll.
At the end of each fiscal year, the government will compute the sum of all direct expenses due to its ongoing war activities on foreign soil, plus any costs related to repairing the health of our returning soldiers and the costs of replacing assets lost due to war. That sum shall be divided by total personal income tax receipts for the equivalent tax period and expressed as a percentage of income taxes paid. This resulting percentage shall be designated the "War Expenditures Surtax Rate".
If this surtax rate exceeds 25% it shall be capped at 25%. The surtax each taxpayer pays will be that surtax rate each year times the regular income taxes of that citizen for that year. The surtax is payable over the following calendar year. It will be deducted from wages and called out in a separate withholding classification on the stub of each paycheck. Or it can be paid quarterly with estimated taxes. (No more than 25% of a taxpayer's regular income taxes are assessed as a surtax during any given year, but by this means all citizens shall know that their country is at war and approximately how much it costs).
Any person who was not eligible to vote in all Federal Elections held during the preceding six calendar years shall be exempt from this surtax. The have not yet had a chance to vote for all four of their federal officers, hence they are not yet fully complicit in the war decisions of the United States.
Having risked their lives and limbs for the United States, members of the armed forces, its Reserves or its National Guard shall be exempted from 25% of that year's War Expenditures Surtax for every full month of active duty served in a theater of war. If a soldier serves longer than four months in any one year additional exemptions shall be created against that soldier's War Expenditures Surtax assessments of future years. (Therefore, service in a war theater for a full year absolves the soldier of surtaxes for a total of three years, and further surtax exemptions can be accumulated with additional deployment in other years).
To avoid harming the economy by a sudden jolt the War Expenditures Surtax can be eased into force over a four year period. During the first three years the full surtax shall be charged but a decreasing portion of the amount of the surtax shall be immediately rebated, until a total of $750.00 has been rebated to any given taxpayer each year. The portion to be rebated during each of the first three years will be 75%, 50%, and 25%, respectively. During and after the fourth year none of the surtax will be rebated.
Rebated funds from this surtax, war expenses not included because they exceed the 25% cap and the expenditures of the Iraq War incurred between its inception and the year this surtax is first applied shall be tracked in a separate running account and reclaimed at a rate of ten percent per year starting in the fifth year. However, the add-backs for these transitional rebates will be capped each year by the amount of actual war expenditures for that given year. (Therefore, the surtax cannot be more than double that arising from the actual war expenditures of that year and regardless of pending add-backs it can be reduced to zero in any year where actual war expenditures are also reduced to zero).
Unless renewed or modified by congress this measure shall expire the next year after net interest on the federal debt reaches zero and remains zero for three consecutive years. Yearly surpluses in the federal budget shall be applied toward the reduction of the government debt rather than a decrease in the War Expenditures Surtax for that year.
I estimate that the surtax rate would come in roughly at 7 to 11% for the Iraq war at surge troop levels, and there would be another percent or two more for Afghanistan.
Since this proposal does not have Democrats "turning their backs" on the troops, it is quite possible that Democrats can actually force Bush to sign it even without a great deal of Republican. By attaching it to the next War Supplementals bill, Democrats can safely resend it back, over and over again, each time Bush vetoes it.
Money for the troops will run out forcing Bush to eventually sign a bill with the Bush Surtax still attached. Otherwise he alone will be responsible for failing to protect them. For this proposal has no timetables. It has nothing that can be called micromanaging the war. And the attachment is entirely related to the war: it funds it.
This bill effectively puts the voters in charge and asks them to consider all that is at stake should they wish to end the war or continue it. They will see how much it costs them personally. They must try to create a mandate at the ballot box one way or the other. And the party which loses out has only the people to blame, not the other party.
If passed the surtax will put tremendous pressure on moderate Republican senators to join Democrats, support ending the war, and stop protecting the President. The remaining Republican loyalists will probably attempt to surge politically, mounting a vicious attack on the Democrats using a theme based upon the same-old, same-old: the "tax and spend" sound-bite.
In reality this kind of attack is nonsense because all funds spent by the government must eventually be repaid with additional taxes. Otherwise the country goes bankrupt like the Soviet Union did. Democrats will have to make that as a counter-argument but for once I think they can do that this time. They must emphasize that there are only a few issues which are really valid:
- Who pays for war: ourselves or our children and their children?
- When will it be paid and how much will it cost?
- Should we continue spending this kind of money for war?
Obviously we would pay less than our successors because interest compounds quickly. Our grand-children could end up paying three or four times as much, or even more.
These issues would make an interesting campaign during those last few months before election day and the public will have been educated by it. They are ripe for such a discussion after having put up with eight years of double talk. The public no longer buys the Republican line wholesale. Only the deepest part of the Republican base does that.
The case made against Republicans will also come to something akin to name calling. Democrats can parry by calling Republicans the "spend and tax-the-children" party. Republicans have earned such a reputation: the deficit that was passed on to Reagan was slightly more than 1 trillion; Clinton reduced his deficit by about 1 trillion, thus canceling that out; Bush raised the deficit again and piled on more to the tune of 8 trillion dollars which is owed now. So it follows that the Republican Party has presided over almost the entire 8 trillion dollar deficit we own at this time. So who is the real "tax and spend" party? That 8 trillion dollars will eventually have to be taxed.
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The following summarizes some particularly important features that are built into the Bush War Expenditures Surtax law as described above:
- It is expressed as a surtax, (whose rate would amount to ~10% under Iraq surge conditions), which is applied to the net personal income taxes assessed for individuals each year, not to that person's net income.
- It would be paid by citizen taxpayers over the course of the following year.
- The taxpayer sees it as a separate withholding class on each paycheck stub and in the early transition years a decreasing partial rebate is also seen.
- If the country reduces its reliance on war in any given year, the surtax is reduced in the next year, and can be reduced all the way to zero. Conversely, increasing dependence on war can raise it to a cap of 25% of personal income taxes, (not net income).
- This surtax does not apply to corporate income taxes, to the soldiers who fight our wars or to any person not entitled to vote. Only eligible voters are complicit, along with their elected officials, for deciding to go to war.
- It should be phased in gradually, so as not to shock the national economy.
- During the first four years, while phase-in rebating is going on, this tax is doubly progressive because the rebate in any year is capped at $750.00 per person. High income taxpayers will never see most of their rebate. Later, after it is fully phased-in, the tax is still progressive but only as progressive as regular income taxes are, because it is a fixed percentage of that tax.
- After current expenditures are fully phased in, war expenditures not yet captured due to phasing, yearly 25% caps and Iraq war expenditures for years prior to the surtax will also be phased in for recapture over ten years, beginning with the fifth year.
- In any year during which there are no hostilities no surtax applies, regardless of recapture formulas, which are capped by the amount of actual war expenditures each year. This means that citizens always have the possibility of driving this surtax to zero without changing the law. But they must elect candidates who will keep us out of war.
- Optionally or if necessary for public opinion, this surtax can be accompanied with a concomitant reduction in the tax rates for ordinary personal income taxes. That would be to make it revenue neutral in the first year. But there still exists a tax differential which can be eliminated whenever elected officials foster a peaceful government.
- It can encourage more citizens to vote. They have a visible stake in voting because it will affect their paycheck each payday.
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If the upcoming 50 billion dollar war supplemental is needed before the end of 2007 this bill could be passed and become effective this year. Otherwise, congress could introduce first year changes so that the Bush Surtax withholdings would appear in paychecks by the second half of calendar year 2008. In any case rebates would all but eliminate any surtax assessments for most of the middle class and for all lower income voters. As they head to the ballot box in November, 2008 voters will have gotten a very good idea of their 2009 and later year wartime assessments.
There may be a class of politicians, namely hawks who nevertheless hate the Iraq war, who will have a hard time voting for this proposal. They will not want to give up the freedom to vote for other wars without seriously experiencing the public scrutiny. But that is the point of all this.
They might be satisfied if this proposal were written to be specific only to Iraq. Personally, I do not like that approach, but might compromise if necessary and try for the general case later. As written it is designed to force politicians to think much harder than they do now and look longer for better, cheaper options, like diplomacy, before fighting a war again.
In the following poll I'm interested mostly in the ratios between the first four choices. I have added the last two choices to account for two classes of people whom I suspect might be averse to this idea altogether. I'm mostly interested in comparing the sum of those two classes with the results from the rest. So take your pick between them but please be honest. It's anonymous, but it might be revealing!