Congress should do the responsible thing and let tax cuts for high earners expire at the end of this year.
As someone who has benefited from these tax cuts, I believe we must restore balance to a federal tax system that has been tilted in favor of the wealthiest 5 percent for a generation.
I’ve had a lifelong interest in the vital role of social entrepreneurs, the local heroes who take risks to lead innovative nonprofit organizations to solve problems at the local level.
I’m a big believer in the importance of mentorship, of helping the next generation of business and community leaders find their way.
But I also view efficient government and adequate tax revenue as essential ingredients in a fostering the fertile soil for business development and healthy communities. Just as a healthy farm or garden needs a balance of nutrients, our country needs a balanced and fair tax system.
Yet the overheated anti-tax rhetoric is alarming. There are loud voices that will object to any tax and claim that raising taxes on higher income people will destroy economic growth and punish success. They argue that we don’t need additional revenue, that we can simply reform entitlements, cut spending and root out waste.
We should obviously press for greater government efficiency and accountability. But it is irresponsible to suggest that we can proceed without increasing tax revenue. No gardener or farmer would expect their crops to grow year after year without regular additions of fertilizer.
We have racked up over $13 trillion in national debt, thanks to borrowing to pay for two wars and a decade of tax cuts. Yet, we have long overdue investments in education, reducing our dependence on foreign oil, and public infrastructure, such as roads, bridges, broadband access, and market protections. Where will the money come from?
Generous tax cuts for the wealthy, passed by Congress in 2001 and 2003, are due to expire at the end of this year. Between 2002 and 2009, households with incomes of over $250,000 received more than $700 billion in tax cuts, according to the Center on Budget and Policy Priorities. This was essentially added to our national debt.
The higher income people I know didn’t lobby for these original tax breaks and recognize the need to allow them to expire. If we retain these tax cuts, we’ll add another $700 billion to the debt over the next decade. These are funds better spent in deficit reduction and targeted investments.
The retired business leaders I serve with on community boards are thankful for the opportunities we’ve had to do business and grow wealth in this remarkable nation and free market economic system. None of us exist on an island and no wealth can be created without a society that provides a fertile ground of opportunity for everyone.
In the 30 years after World War II, 1947 to 1977, we taxed ourselves at significantly more progressive tax rates than today. The highest earners paid twice as much of their income in taxes in 1960 as they do today, according to a new study by Wealth for the Common Good. With that money we made investments in public infrastructure, affordable homeownership and expanded education at all levels. These far-sighted leaders supported policies that propelled millions of Americans into the stable middle class.
Today, young people are graduating from college with $100,000 in school debt, as undergraduates. We’re coasting along on previous generations’ investments in water treatment facilities, bridges and other essential infrastructure – and we’re leaving too many talented young people behind. Our failure to make investments today will undercut prosperity for the next generation.
Congress will be under tremendous pressure to continue providing tax breaks to high income groups. Let’s hope they have the fortitude to let mine expire. The fertility of our economic soil depends on it.
Peter Heegaard is retired from banking and a former Managing Principal of Lowry Hill, a subsidiary of Wells Fargo. He is founder of Urban Adventure and author of “Heroes Among Us: Social Entrepreneurs Strengthening Families and Building Community” (Nodin Press)