Tag Archives: dues

Paying Our Way

Complaining about taxes is more American than mom and/or apple pie. People clearly resent having to pay them, work hard at minimizing and/or evading them, and use sayings that yoke their payment to death (“nothing is sure but death and taxes..”)

Dissing taxes is just deeply embedded in the culture. That negativity obscures what would otherwise be obvious; taxes are the “dues” we pay for our membership in society.

I have always wanted to do a cost/benefit analysis, comparing what we get for paying those dues with what we would pay on the open market for the same services. (Garbage collection versus scavenger services, police versus private security, etc. etc.) I lack the data and the expertise to perform that analysis (how do I value paved roads or public parks?), but I look longingly at Scandinavian countries with tax burdens that are not–despite the mythology- much higher than our own combined burden, while relieving citizens from the costs of higher education and health care.

Admittedly, America’s tax system is manifestly unfair–and for the obscenely rich who can afford the very best accountants and lawyers, U.S. taxes are easy to evade.

If taxes are–as I insist–our dues for membership, the assessment of those dues should be equitable–and the system should be transparent enough to persuade taxpayers that everyone is paying a fair share. As economists and pundits never tire of pointing out, the American tax system is both ridiculously complex and wildly tilted in favor of the wealthy.

One of the most vocal of those critics is Robert Reich. Reich was Labor Secretary under President Bill Clinton; he now teaches at Berkeley, and he is among the many economists who have pointed out the folly of those repeated tax cuts for the rich.  Such cuts remain a GOP article of faith, despite the fact that the supposed benefits of such cuts have never materialized.

Last year, Reich penned an essay advocating increased taxes on the rich, and providing 7 ways those taxes might be levied. As he said in his introductory paragraphs

Income and wealth are now more concentrated at the top than at any time over the last 80 years, and our unjust tax system is a big reason why. The tax code is rigged for the rich, enabling a handful of wealthy individuals to exert undue influence over our economy and democracy.

Conservatives fret about budget deficits. Well, then, to pay for what the nation needs—ending poverty, universal health care, infrastructure, reversing climate change, investing in communities, and so much more—the super-wealthy have to pay their fair share.

Reich followed up with “seven necessary ways to tax the rich,” including such items as repealing the Trump tax cuts, imposing a wealth tax on those he designated as the “super wealthy”, raising the top marginal rate, taxing stock transactions (he says a tax of just $1 per $1,000 trade would raise $777 billion over a decade), and closing various loopholes.  (Just closing the carried interest loophole is estimated to raise $14 billion over a decade.)

Biden has already taken one of the seven steps Reich enumerated–giving the IRS sufficient funding to conduct audits and go after the federal income taxes currently being evaded by the rich. He calculates that just going after  the richest 1 percent would generate $1.75 trillion over the decade.

As Elizabeth Warren has long argued, a wealth tax imposed on the super-wealthy should be a no-brainer.

Wealth is even more unequal than income. The richest 0.1% of Americans have almost as much wealth as the bottom 90 percent put together. Just during the pandemic, America’s billionaires added $1.3 trillion to their collective wealth. Elizabeth Warren’s proposed wealth tax would charge 2 percent on wealth over $50 million and 3 percent on wealth over $1 billion. It would only apply to about 75,000 U.S. households, fewer than 0.1% of taxpayers. Under it, Jeff Bezos would owe $5.7 billion out of his $185 billion fortune—less than half what he made in one day last year. The wealth tax would raise $2.75 trillion over a decade, enough to pay for universal childcare and free public college with plenty left over.

I’m not so naive as to think these changes to the tax code would make the rest of us sing happy songs as we paid our taxes, but a system where everyone is obviously paying a fair share would go a long way toward mollifying a lot of us.

I’m also not sufficiently naive to think that these changes have a chance in hell of passing a GOP-majority House.

Eventually–if the culture wars subside, and we elect people actually interested in governing–we might emulate countries with better cost/benefit ratios.

We can hope…

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Pay Your Dues!

I recently saw yet another study that attempted to quantify just how much money is lost to national treasuries by reason of what is politely called “tax avoidance.” 

The report, from an organization named the “Tax Justice Network,” is touted as the first study to thoroughly measure how much money each country loses each year to corporate tax abuse and private tax evasion. Its calculations were based upon data that had been self-reported by corporations to tax authorities.

I realize that one person’s loophole is another person’s policy choice, but with that caveat…

The research found–unsurprisingly–that wealthy countries are the primary drivers of tax revenue loss. (I say “unsurprisingly” because you have to have money to evade taxes.) Wealthy countries contributed most to the total of $427 billion in losses annually. Those losses, as the report noted, affect the ability of countries all over the world to provide services to the public.

This report puts numbers to the problem, but any sentient citizen is aware of the arguably pathological aversion to taxes displayed by many wealthy citizens and corporate entities. Certainly that’s true in the United States, where politicians with straight faces equate taxation with theft, and bemoan the extraction of dollars from presumed self-made “makers” to support those they dismiss as “takers.”

Probably the best response to this mischaracterization was Elizabeth Warren’s smackdown  a few years ago:

There is nobody in this country who got rich on their own. Nobody. You built a factory out there – good for you. But I want to be clear. You moved your goods to market on roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn’t have to worry that marauding bands would come and seize everything at your factory… Now look. You built a factory and it turned into something terrific or a great idea – God bless! Keep a hunk of it. But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.

Economists are quick to point out that economic growth–and the ability of wealthy Americans to prosper in an economy heavily dependent on consumption–requires that those at the bottom of the income distribution have disposable income sufficient to spend in the marketplace. Corporate bigwigs don’t create jobs–job creation is a function of demand. (No one is going to be hired to produce more widgets if few people have the resources to buy those widgets.)

What I always wonder, however, is whether these “captains of industry” treat their country clubs and other membership organizations the way they treat their countries. How would the Orange Menace react if members of Mar-A-Lago declined to pay their dues?

Those golf courses need tending. The clubhouse roofs and mechanical systems require maintenance. The properly servile “help” won’t be there to bring you your Scotch and soda if they aren’t being paid. Etc. Why don’t the same people who presumably understand the need to pay dues adequate to keep these organizations functioning acknowledge that–as members of the polity–they have similar obligations to the country?

Because they do know better.The loss of those billions of dollars isn’t accidental.

“A global tax system that loses over $427 billion a year is not a broken system, it’s a system programmed to fail,” said Alex Cobham, chief executive of the Tax Justice Network.

The ability to evade paying one’s membership dues–the chutzpah required to be a “free rider” on the contributions of others– doesn’t mean that a businessperson is “smart.”  To the contrary, it demonstrates just who the real “takers” are.

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