It is truly a matter of survival as a nation for us to resolve this dilemma.
There are veritable plethora of ways to accomplish the ultimate goal, yet the concept remains the same. It's not a complicated concept: spending more than you generate has some rather serious consequences.
Given the current dysfunction of the federal government, we will likely hear more of the same pointless nonsense rather than viable solutions; bluster and diversion seeming to be their activity of choice, while individuals like you and me try to find real solutions to our pending quandary.
Managing a modern government is complex to say the least, but does it have to be as convoluted as our elected officials have made it?Employing a strategy of intricately woven webs and distraction, we have been hoodwinked by our elected officials into relying on a government whose interests lie in maintaining the status quo rather than correcting the nation’s woes. As they develop systems and methodologies with which to execute those systems in a manner most of us find extraordinarily cumbersome to read, much less understand, we find ourselves and our nation in financial peril.
And there's good reason for their deception:
Our ignorance = their job security?
Well, so they seem to think, but it doesn't have to be nearly so cumbersome and it truly shouldn't be. So let’s raise some questions for our public officials, on both polarized ends of the political spectrum, who have become oblivious to their real job -- that of managing the financial affairs of this nation.
Do we reduce federal debt by increasing taxes for the wealthy?
There is much debate on this issue with some staunchly voiced perspectives of doing precisely that; perhaps not wholly justified according to the Tax Policy Center.
While this report doesn't quite drill deeply into the tax rate of those commonly referred to as the “1%," it does give us an idea of the tax brackets for the majority of us paying taxes in the 5% - 30% tax brackets which, presumably, would include the super wealthy?
Are the numbers clear?
In relation to individual incomes the numbers seem to be clear: most earning over $200,000.00 are indeed paying their fair share on personal income, right alongside those in the lower and middle income brackets.
In 2011 Warren Buffet made an odd and very misleading statement many of us will remember:
Well, this is not quite the display of chivalry and concern over those in lower income brackets as one might first think. We shouldn't be too surprised to learn Warren Buffett’s personal secretary earns an income somewhere between $200,000.00 and $500,000.00 per year based on her adjusted gross income tax rate of 17 percent, placing her in the same tax bracket as Buffett.
So, do the numbers speak clearly? Maybe not.
This seeming equality in tax rates excludes corporations utilizing tax breaks, subsidies, incentives and off-shore corporate holdings to drastically reduce the corporate tax rates.
A disturbing trend in the US shows corporate tax rates plummeting since the early 1950s, dropping from just above 6 percent to 1.5 as a percent of GDP, reported by Tax Policy Center. In the 1980s, our government worked to reduce tax breaks for corporations, achievements which have now been severely eroded.
The Institute of Taxation and Economic Policy report provides further clarification of tax advantages US corporations now enjoy over we the people. And, as Congress questions corporate executives who dodge their questions with answers such as “we pay what we owe,” perhaps we should be asking instead: do we need to examine a change in the corporate tax laws?
The hole in the boat that is the corporate welfare state is a massive leak in revenue for the US which may well be sinking it:
"While the federal corporate tax code ostensibly requires big corporations to pay a 35 percent corporate income tax rate, on average, the 280 corporations in our study paid only about half that amount. And many paid far less, including a number that paid nothing at all. Our report reveals which companies pay their fair share to support the country that makes their huge profits possible, and which companies don’t. Many people will be appalled to learn that a quarter of the companies in our study paid effective federal tax rates on their U.S. profits of less than 10 percent..... 48 of them paid no taxes” - Taxation and Economic Policy
Corporations mean different things to different people and many are traded on Wall Street as publicly-traded corporations such as Pepco, General Electric, etc. Forty-eight of the corporations in TEP's report paid no income tax at all in at least one year of the 2008-10 study and in fact, those 48 corporations increased their profits after taxes due to their ability to receive outright tax rebates for taxes paid in previous years; rebates for which checks were written to them by the government totaling $21.8 billion -- a direct and profound reduction in revenue.
I see at least 2 corporations on the TEP list which received tax-payer bailouts during the same period they avoided taxes; how about you?
Of course, we need businesses as much as they need us, but just as Citizens United provides a thunderous voice in favor of corporate contributions for politicians, those same corporations are also receiving highly damaging and inequitable tax breaks secured by their lobbyist/politician relationships.
Remember! Just as the rest of the 280 studied, those 48 corporations are publicly traded, thereby generating capital from investments which, in turn, result in share dividends paid out to their investors.
We return to Warren Buffet’s income, the source of which is capital gains through investments. There’s far more than sheer coincidence in this arrangement and much, if not all of the 1 percent, the super wealthy are so because they earn their income from this same source -- sources paying little to no taxes.
So, as we ask real questions seeking real solutions to our federal debt we need to look at the entire picture clearly, including an equitable tax system for corporations and capital gains as well as personal income (revenue) as well as reducing government spending (expenses).
Despite the convolution, and regardless of the political perspective one holds, it's still a basic concept; we are all Americans and we must all find a common ground on which to survive -- or we simply will not.