Season of the switch

Published 12:13 pm Wednesday, January 19, 2011

As the new year begins with angry grumblings coming from the conservative wing of our political “leadership” about the growing national debt, I keep trying to make sense of the scenario playing out on the national stage.

The extensions of the “Bush tax cuts” have been bought by the Congress for: a) legislation to repeal “Don’t ask, don’t tell” (ending prohibitions against gay persons serving in the military), b) ratification of the START legislation (approving a treaty with Russia to reduce nuclear warheads to new, lower levels), and c) extending unemployment benefits for an additional 13 months.

The price of the continuation of those cuts in dollars to the U.S. Treasury is estimated to be $801 billion. As my great aunt Blanche used to say, these two points of view don’t “gee-haw.”

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It looks to me as though we are being told one thing, but seeing the exact opposite being done. I’m sorry conservatives – the Laffer curve really is a Laugher – lower taxes don’t generate higher collections.

While attempting to find a logical line of reasoning that makes the extension of those tax cuts help with lowering the national debt, I ran across a Dec. 17, 2010 article in the New York Times.

This article reported that 98 percent of US households earn less than $250,000 per year (the cut off line Democrats proposed as an upper limit for extending cuts).

The idea is that the middle class will be more likely to spend the money (putting the money in circulation), while the upper 2 percent would be more likely to put the money into portfolios; such investments decrease the money supply and has a smaller effect on bolstering the economy.

The same NYT article reports that the median income for that 98 percent group is $55,000 (for a family of 4), and the savings they enjoy from the tax cuts amounts to $2,700, or approximately 5 percent of their base income.

The average savings for the upper 2 percent is slightly more than $44,000. That’s quite a difference. When the progressives attempted to negotiate regarding the tax cuts, they offered to raise the income ceiling for those who would keep the cuts in place to $1 million, but that wasn’t enough for the conservatives.

The constant carping by supporters of the lower tax rates – that the “rich” already pay the majority of tax revenues – is accurate. That makes sense to me. Obviously if you are making a lot more money, you should be paying a lot more in tax – duh! How hard is that to figure out?

It is also true that your rate should be higher – those who benefit most should pay most. Those demanding lower tax rates for the wealthy apparently don’t have a grasp of the history of taxation in the United States. Or maybe they don’t care that their (dare I say it) class now pays almost 1/3 the rate (35 percent is the highest rate now) that was being paid in the 1940s and ‘50s.

The highest rates paid then ranged from 81 percent to 91 percent as the nation tried to regain its footing after the great depression.

At the end of 2009, news stories circulated reporting that the Fortune 400 (the wealthiest 400) paid tax at the rate of 16 percent due to various loopholes. With these supporting facts, reinstating the tax rates for the upper 2 percent makes a lot of sense to me and continuing to give breaks to those who need it least seems not to be in the best interest of the vast majority of Americans.

I do agree with conservatives who complain about the waste in government spending, although I doubt we could agree on how that would be best resolved. To me the so-called “Republican agenda” has never seemed to represent the values upon which the nation was founded – equal opportunity and Christian principles.

For the life of me I can’t understand how any rational person could still honestly trumpet the idea of the Bush tax cuts knowing that they were in place as early as 2003 and seeing that the economy has melted down to the current level since then.

Have we just sold out common sense for a blip in the profit margin?

After puzzling over the absurdity that those elected to do the business of the nation seem to be working against the best interest of the majority, two ugly possibilities began to emerge.

The first is that congressmen and women are all paid $174,000 per year (this year). In their position it is a small jump to get over that $250,000 line and thus congressmen would have to pay the increase.

That’s a depressing thought. The second is even less appealing: Congress is really working for the corporate entities and lobbyists who contributed so much to their campaigns.

My solution for this argument is to allow those in the upper range of income to EARN tax cuts by performing some national service for the benefit they desire. These same people are the first to rail about welfare recipients.

Pay them to repair the infrastructure, or to clean up hazardous waste sites, or to work in the National Park System. I say it’s their turn to be criticized for wanting the government to continue to give something to those doing nothing.

Don Weathington is a retired psychotherapist and business owner who lives in Gillette Woods at a place called Birdland.

Editor’s note: Following this column, Mr. Weathington has asked to take a leave of absence from his column for health reasons. The Bulletin wishes him all the best in getting well soon.