Paying the Piper
We all know that somebody’s going to have to pay for the record-breaking deficit under which we labor. Right now, foreign investors are footing our bills, but it’s only a loan. The growth promised by supply-side economics has failed to materialize, and our tax base isn’t getting any larger. It’s getting smaller, in fact, because, under neo-conservative rule, taxes have dropped preferentially for the wealthy, while the middle and lower classes earn less to tax.
Dispense with the notion of “making tax cuts [of the past seven years] permanent." The budget is set yearly. No tax settings, high or low or mixed, are permanent. Nor can they be, even in theory, as part of a deficit budget. Tax cuts whose impact on the budget is hidden by borrowing have to be paid for when the loan is due. For every dollar the country spends, the government must collect a dollar sooner or later, and the government collects its dollars by taxing. You can pay now, or you can pay later, but you will pay for all national spending. And the later you pay, the more you’ll pay in the end, thanks to interest charges. The only “permanent” tax cuts you’ll ever see are those coupled to spending cuts, which are in short supply these days, despite the primacy of a party claiming to be built on fiscal responsibility. Speaking of “permanent” tax cuts on a deficit is gibberish. Doo-doo economics, to coin a phrase.
So we’ve racked up enormous bills getting a lot of military equipment—to say nothing of the soldiers—smashed up in a foreign adventure. We’ve magnified those bills, and the cost of already existing expenditures, by putting them on the nation’s credit card, returning a grossly disproportional amount of those very temporary savings to the wealthiest 1% of our population.
Which, it seems to me, makes it clear who should foot the bill when it comes due. Over half the gross dollar amount of the tax cuts went to the wealthiest 1% of earners. Nor was this the simple result of the wealthy earning more, and so receiving a greater portion of the cut. The tax reduction was disproportional; the wealthiest 1% of earners are enjoying a 39.9% reduction in their income taxes, while the middle fifth of earners received only a 12.9% cut. The justification for this imbalance was that the wealthy would be investing the money, making us all wealthier, while the poor would just go and spend the money on stuff like groceries and mortgages. Let’s take that claim at face value. With all this loose cash sloshing around, the wealthiest 1% should easily be able to cover the tax revenues we lost from them since Bush’s arrival. They should easily be able to cover the interest, too, since investment money grows faster than bank interest. And they’ll still have a slim but decidedly positive balance on the whole deal.
If, on the other hand, they can’t cover the tax money they’ve been allowed to withhold for seven years, that’s a different kettle of fish. If the rich have been spending their tax windfall on jewelry and yachts instead of sober investment, or if (gasp!) giving money to the wealthy does not enrich the nation, then they’ve been plundering the national treasury for personal use, and they definitely ought to be held accountable for the tax revenues we’ve lost.
Reinstating the inheritance tax would be a good start. We as a nation hold to independence and productivity as virtues; inheritance money should be even more subject to taxes than money earned by honest labor. Once an heir is an adult, he is no longer a dependent of his parents, at least in principle. An inheritance, passed from one sovereign legal entity to another, is income. Tax it, just like the country taxes everyone else. Reinstating some of the corporate taxation levels we’ve lost, on the same rationale, would be a good place to follow through.
I’m not saying they stole the money; I’m just saying I’d like for the treasury to get it back.