America needs a tax increasePublished 10:12am Friday, October 25, 2013
It is true, and it is inevitable that if we are to protect and preserve Social Security and Medicare we will have to have an increase in revenue going into the federal treasury.
But what is the alternative? Well, we could make people work longer, we could shrink their retirement income, we could diminish their cost of living balance, or we could end Social Security altogether and save a lot of money. Except it isn’t the governments money, it is our money backed by U.S. Treasury bonds that have never failed, just as in 70 years Social Security has never failed America’s seniors.
Regarding Medicare we could, in this age of increasing lifesaving medical technology, reduce the access of seniors to that technology, and charge them more for less coverage. Effectively, to do so would be to finally and honestly create the “death panels” that Sarah Palin cynically coined in 2009. For if medical science can extend healthy living but seniors cannot afford to access that technology because some among us decide the cost is too high, and then aren’t we economically declaring Death Panels will be the tool to control costs?
We need to raise taxes to protect and preserve these two programs that 80 percent of Americans support.
Raising taxes is not really bad news though, it can be painless for most Americans who are already sharing a big burden in state, local, and federal taxes.
Did you know that corporate taxes today represent their smallest share of federal tax revenue in the last 60 years? While Republicans have been demanding a reduction in the corporate tax rate, now set at 35 percent and among the highest in western nations, the effective tax rate, which represents taxes paid after deductions, is currently at 12.6 percent according to the Government Accountability Office.
Further, more and more corporations, due to the Swiss cheese large holes in the corporate tax code, are actually paying zero taxes. Currently 57 of the S&P 500 are paying no taxes, an impressive number of tax evaders who, among other things, have been known to hide income offshore by overpaying for products assembled in foreign countries to shift the profit out of the U.S.
Clearly, we can and should simplify the tax structure for these corporations along the lines of 25 percent taxation with zero deductions and penalties for diverted income, all of which would allow these international giants to help support the infrastructure they use daily.
We can also raise revenue by ending the folly of the capital gains 15 percent tax rate and restoring it as taxed as all regular income. This has been a boon to the 10 percent of Americans who earn most of their income from equities, including hedge fund managers earning literally multi millions annually and paying lower tax rates than working Americans.
And there is general agreement that the tax code needs simplification and we can do so in a way that raises revenue by closing some loopholes that favor the richest Americans to the detriment of all other Americans, creating an uneven basis for fair taxation.
Finally, everyone may have to chip in a little in higher payments to support Social Security and Medicare by actions like ending the Social Security income contribution ceiling and accepting higher payroll taxes.
In a survey completed in February of 2013 by the nonprofit National Academy of Social Insurance, respondents indicated a willingness to contribute more IF there was not just a protection of benefits but a strengthening of benefits. Respondents wanted, in return for their acceptance of higher premiums, a gradual increase in minimum benefits and a refactoring of cost of living benefits to better recognize the higher inflation of health costs than the general economy experiences.
Some will argue that we must reduce these trusted programs that have served the country so well, that we can no longer afford them. They are wrong, we can and must sustain these popular programs. We simply have to end the unfair tax structure that favors corporations and the wealthy and contribute a bit more to keep our earned benefits secure.
Jim Crawford is a retired educator and political enthusiast living here in the Tri-State.