Taxes, Taxes, and More Taxes

"Don’t tax me; don’t tax thee; tax that guy behind the tree."
(attributed to former House Majority Leader Tip O’Neill)

Washington,DC- Although there is a grim realization that taxes and civilization have an association, they are hardly well-regarded.  One can say, “nothing is inevitable except death and taxes” (and then note that estate taxes after death makes the inevitability even more pointed.)

Or one can cite the sobriquet by Jean-Baptist Colbert, French Finance Minister under Louis XIV, that, “The art of taxation consists in so plucking the goose as to obtain the largest amount of feathers with the least possible amount of hissing.”

Currently, in the United States, there is a whole lot of hissing going on.  In many respects, tax payers are “hissed off.”  

Foreign observers tut-tut the United States for failing to bring coherence to its fiscal circumstances. These observers either fail to realize or deliberately ignore that we are engaged in an existential political/economic struggle over what kind of society we will endorse.  It is the most defining such struggle since the Great Depression of the 1930s, which gave rise to compromise instituting some elements of a welfare state (social security, farm supports, food stamps, bank deposit insurance, etc.) while leaving other elements of free market capitalism unaffected.  But if our backs are not yet up against the wall, we are on the “warning track.”  Even with full, booming economic recovery, it appears impossible to sustain the current levels of social security, Medicare/Medicaid, and unemployment welfare with current tax revenues.  And the projected surge of aging “baby boomers” with expanded demands makes the imperatives for change even more compelling.

Perhaps we can be draconian and with “sequestration” make substantial social service spendingcuts across the board.  But a bird cannot fly on only wing, so (if only for amusement) let us alsoexamine where more tax “feathers” can be plucked.

Tax the Rich.  The “fiscal cliff” deal appears to have increased taxes on those with family income above $450,000 to approximately 40 percent.  But let’s assume that rates could be vastly increased--even doubled--remembering that they were 90 percent in 1940s-50s. There seems, however, to be a reduced tolerance globally to being plucked, perhaps below the 75 percent mark which galvanized movie actor Gerard Depardieu to depart France for Russia with its 13 percent income tax.

Tax the Elderly.  The tale is now that the elderly (ever increasing from retiring “boomer” generation) is now sucking the life-financial blood from the young.  They are receiving more in social security/Medicare/caid funds than they contributed during their working lives.  It is an effort to lay a guilt trip on oldsters for ostensibly damaging the futures of their grandchildren.  Hence, benefits should be clawed back through taxes, slower cost-of-living increases, and delayed access to benefits.  But there is another facet deserving consideration.  The generations now enjoying old-age benefits paid in blood for them:  WWII (405,000 killed; 670,000 wounded); Korea (35,000 and 92,000) and Vietnam (58,000 and 153,000).  The currentgeneration(s) benefit from these sacrifices and certainly are not dying in comparable numbers; they should not grudge for paying in treasure as they are no longer paying in blood.

Tax the Middle Class.  That’s where the money is.  And about two-thirds of the population so defines itself.  You get more money from the middle class by taking away their deductions:  home mortgage interest; charity; property/sales taxes; property damage.  And you raise ceilings for paying social security and Medicare from salary pay checks.  Raise capital gains taxes especially for home sales; boost estate taxes (taxing the dead is easy).

And Gas Taxes.  U.S. gasoline is approximately $3.50/gallon of which 12 percent is taxes; countries such as Germany, Netherlands, and Denmark pay over $9/gallon.  Every penny of tax increase would raise $1.75 billion--so just think of what a dollar tax increase, pro-rated over a decade would deliver.  

Or a “Goods and Services Tax.”  The last great pot of gold--a national sales tax endured by most of the rest of the world--but which to date the USA has managed to avoid.  Economists love it as theoretically the least damaging for economic growth.  Regressive aspects can be adjusted by exemptions, e.g., for rents, basic necessities.   Citizens are far less enthusiastic, knowing the price of everything will rise.  But the payoff, depending on the rate set, could be hundreds of billions of dollars.

But there they are--an entire herd of ox waiting to be gored.