Hyperbole maybe, but there has been a decades long Republican strategy to starve government of revenues to reduce the size and the effectiveness of the federal government. They seek to reduce governments regulatory effectiveness over their business interests while working to shift the federal tax burden off the wealthy and onto average Americans. They enable the wealthiest individuals and biggest corporations as they move huge amounts of capital off-shore to significantly reduce federal tax revenues. Republicans truly desire to shift the real tax burden and reduce available income for those average Americans that sell their labor in order to increase their personal profits and increase the economic stress felt by most Americans. They need us to blame the federal government for our financial stress instead of the real cause, Republican (trickle down) economic policy. Unfortunately, the Republican plan has been working way too well. It almost destroyed the entire global economy.
If a foreign group or government were working to undermine the American economy with these same so called conservative economic strategies, it would certainly be called economic terrorism.
Tax cuts for the wealthy can harm the economy -- big time.
Republicans have ignored (or even tacitly encouraged) the wealthiest individuals and corporations as they removed huge amounts of American capital from the economy and stashed it in illegal off-shore tax shelters or in hedge funds that only circulates internally in the Wall Street casino. Trillions of dollars, at least $13-14 trillion going into illegal off-shore tax shelters by 2007 and untold trillions in hedge fund that only circulates internally in the Wall Street casino, not circulating in the general economy. Trillions that are completely removed from the domestic economy which reduces GNP growth by several times more cumulatively each year. The resulting reduction in economic activity resulted in the loss of untold millions of jobs and significantly reduced federal revenues while creating a world-wide economic collapse. Republicans would rather shift the focus on Fanny/Freddy or the sub-prime loan market. They really don't want any light shed upon the fallacy of right wing economics. The Republican economic agenda is to starve government and increase the economic stress of most Americans to reach their selfish goals.
The extremely regressive payroll withholding taxes contribute more to federal revenues than any other tax.
Today more than half the federal revenues come from the American wage earner through the payroll withholding taxes and the currently less than progressive federal income tax. Wage earners belong to the 90% of Americans that slice up the remaining 10% of the earnings pie left over after the top 10% get theirs. Because of the 7.65% non-refundable payroll surtax assessed upon only the wage earners gross earnings, more of the federal revenues are collected from those who sell their labor than from anyone that sells anything else. Not only is this tax calculated differently than any other income tax, it's collected up front before the wage earner's costs are extracted. All other income taxes are assessed upon profits after all costs are paid. It's time to turn this around.
No everyone shouldn't pay into federal income taxes.
Wages/Salaries were not taxable income until the Victory tax of 1945 and even then it was only meant to be temporary until the debt from WWII was retired. The income tax was never intended to be applied to all Americans and wages/salaries were specifically exempted from taxable income in the tax laws. It was always meant to be levied only on those that reaped the most benefits from our economy, corporations and businesses that have the power to pass the cost of taxes along to their customers. It's time to reverse the decades old republican strategy that slowly shifted the federal tax burden off the wealthy, those that should be taxed, and onto the wage earners, those that should be exempt. It's not to late to reverse this republican tax strategy. In fact, now would be the perfect time to push back hard with a truly progressive agenda of our own.
Reform the federal income tax to a absolutely progressive tax system
Reforming and simplifying the Internal Revenue code would make things right once again. An increase in the minimum income floor from the current $400 to $75,000 and beginning the progressive income tax at $75,001 on all income no matter the source so that no deductions, incentives, tax shelters and loopholes would be required. No special rates for corporations or Wall Street casino gamblers, everyone would pay the income tax on all the income they receive over $75K on the same progressive scale. This would untax most the earnings of most wage earners and shift the real tax burden back on those that have already climbed the ladder of economic success.
What is the difference between the gross earnings of a corporation and the gross earnings of an employee?
We really need to push back hard on the right wing misinformation. Social Security is not a personal insurance policy to which we must pay into directly in order to receive our specific benefits. It's the republicans that always try to tie Social Security and Medicare to the amount paid through the employee's contribution. That's just plain BS. Social Security is a social safety net program and it really doesn't matter how it's paid for. Wage earners are not required to be the sole contributors to the fund. The same is true for Medicare. Both programs would have much more stable sources of funding if the withholding taxes were assessed on the gross earnings of businesses and corporations instead of the gross earnings of wage earners. If the businesses paid the withholding taxes on their gross earnings the rate could be 5% or even less to easily replace the revenues generated by the current 15.3% surtax on jobs, 7.65% of which is already being included in the cost of payroll by the business. If your really believe wage earners should contribute to the system at least calculate the withholding tax the same for both employee and employer. The rate could be lower than 2.5% on each if both calculated the tax on their own gross earnings.
Reform does not change benefits.
The Social Security benefits will not change they will still be calculated on the gross earnings of the beneficiary but the wage earner would pay the taxes indirectly when they buy any product or service. Because the matching 7.65% contribution from the employer actually becomes an increased cost (of payroll) for the business and is worked into price of of their products or services just like any other cost, it becomes an indirect tax. The business collects and remits the tax but the customer actually contributes the funds. The tax is deferred to the consumer which is the definition of an indirect tax (See U S Constitution Article 1, sections 8 & 9). So the wage earner has 7.65% withheld from their gross earnings directly and then pays the matching tax in the form of inflated prices on every product or service they buy. It doesn't really matter how the tax is assessed the wage earner will always be the final taxpayer because we cannot defer our tax liability to others.
Federal tax reform means 25% more payroll dollars in local economies.
Even though the wage earner still will in the end will pay the taxes assessed upon the the businesses through slightly higher prices much more money will be left circulating in the local economies by the increased take-home pay. The business will also benefit by the increased activity of the increased payroll dollars circulating in the local economies. More important, the money will have a chance to circulate in the economy before it's extracted by the federal government. Taking advantage of the multiplier effect of the money circulating even before it's extracted. This will keep more capital flowing through local economies longer which would generate even more demand for products and services. This would increase the multiplier effect of all capital as it circulates through the economy. Federal stimulus programs would be even more effective because taxes are removed after the capital has a chance to flow through the economy and because taxes are no longer removed from the payroll dollar each time it cycles through a payroll. Billions of dollars more would remain circulating longer in local economies creating both more jobs and more tax revenues.
Increase the Financial Transaction Tax to pre 1967 levels
Time to push back hard on the banksters too. There already is a financial transaction tax in America but in 1967 it was reduced to .004%. It's time to increase the FTT back to a half point. Bringing back the FTT won't be as a big deal as some would make you think because it's not like a state sales tax that's added at the register. It's an ad valorem tax which increases the price of the financial instrument, the exchange calculates, extracts and remits the FTT. The buyer does actually pay the tax but it's an indirect tax included in the price of the financial transaction just like several taxes paid by consumers on retail items. Why should all other markets have included indirect taxes and the financial market be completely exempt? The revenues can be used to retire the debt resulting from the Republican government starving trickle down policies that triggered Wall Streets most recent meltdown. Increasing this tax would encourage more long term investment once again and discourage the more speculative investments that caused the boom and bust cycles we have experienced since the tax was reduced.
In conclusion
Extreme concentration of wealth always proceeds periods of intense economic upheaval. Shifting the federal tax liability off the majority of Americans that earn a paycheck would allow them to retain around 25% more of their income to circulate in local economies. This will result in higher demand for all products and services which will generate job creation and increased tax revenues for all levels of government. This is the way to put America back on the path of economic growth with a much larger and vibrant middle class grown from the bottom up as everyone gets a chance to reach the American Dream.
Terrorism or not it's time to push back hard on the Republican economic strategies that have resulted in largest concentration of wealth since the days of the Robber Barons of the 1920's.