Not all taxes are created equal
By G. Michael Dobbs
April 11, 2011
It's tax time and the annual issue of rendering unto Caesar what is Caesar's has top of mind awareness.
There are those who are in the processing of preparing and filing our income taxes such as myself so taxes are a topic of conversation.
Taxes are also on the forefront as the budget debate rages on in Washington, D.C. As I wrote this on April 7, I'm not sure that by the time you read this if we will have a fully functioning federal government or not, so bear with me a moment.
I was listening to "Market Place" on WFCR the other evening and heard Robert Reich, the former Secretary of Labor and Massachusetts gubernatorial candidate, deliver one of his weekly commentaries.
I think Reich would have made an interesting governor. He's a smart, canny guy.
Here is a quote from that commentary that stuck with me: "For decades now, America's top earners have been pulling in a larger and larger share of the nation's total income. Over the same period though, their tax rates have steadily declined. In the 1950s, the top marginal income tax rate was 91 percent. Now it's 35 percent. Even when you include deductions and credits, the super-rich are now paying a far lower portion of their incomes in taxes than at any time since World War II.
"Meanwhile, capital gains and dividends a big chunk of their income were taxed at 35 percent as recently as the late 1980s. Now, they're taxed at 15 percent. And the estate tax has now vanished for estates under $5 million or $10 million a couple.
"If the rich were taxed at the same rates they were taxed a half century ago, they'd be paying some $350 billion more this year in federal taxes. That would be trillions of dollars over the next decade a major contribution to eliminating the deficit."
This is what I don't understand. I earn a lower middle class wage and yet proportionally I probably pay far more taxes than someone in the top earning brackets. Is that fair?
I can hear the tapping on the keyboards now from my more conservative readers writing that I'm some sort of socialist advocating a re-distribution of wealth. I'm not a socialist. I'm an American and I thought that all men using the term generically folks were created equal. So shouldn't our tax obligations be equal as well?
There is plenty of "wealth re-distribution" in this country and has been for years. Some of it comes from people earning a wage. Some of it comes from people making investments. Some of it comes from government helping those who need help because the theory is, at least in some quarters, that we want to build a better society.
With the wealthy getting richer, the middle class shrinking and more poverty in this country, clearly the wealth re-distribution is going generally in one direction and it's not headed to my neighborhood.
I don't want something I haven't earned, but there is no good reason why I should have to subsidize the rich through my taxes.
My situation is shared by millions of Americans and yet in all of this debate in D.C., I haven't heard members of Congress address the issue of taxes from the root level. They speak about how taxes are spent and making sure the wealthy are protected from tax increases.
By cutting the budget, some in Congress believe there will be a transformation of government. All I see is a preservation of the status quo for the wealthy and corporations. Nothing will change other than services to the working poor will be cut.
My buddy Jake at City Jake's Café home of the best fries in Springfield has been speaking to me about the Fair Tax movement. Yes, in between bites of delicious food, politics are discussed and yet I never go away with an upset stomach, even though Jake and I are at the opposite sides of issues.
Basically, the Fair Tax would replace all of the current federal income taxes with a progressive national sales tax. It would have no deductions, no loopholes and no exemptions. The amount of tax you pay is based on how you spend.
While I'm not completely sold on it, it is at least a step forward in a real discussion about taxes. Check out more at www.fairtax.org
Hey, agree with me? Disagree? Drop me a line at email@example.com
or at 280 N. Main St., East Longmeadow, MA 01028. As always, this column represents the opinion of its author and not the publishers or advertisers of this newspaper.