Pay my share,
But it’s a shame;
Wish the rich,
Would do the same.
Some serious and high-minded rich people calling themselves “Wealth for the Common Good” think they might ought to pay higher taxes. Not only themselves of course, but all upper-income Americans as well. Got bucks? Pony up! As you might expect, this feeling is not rampant among the prosperous set, so it is good for their personal safety that the “Wealthers” cannot be readily identified by hair color, tattoos, or other insignia.
The burr under their saddle is that the rich actually pay a lower percentage of their total income in taxes than do the poor. In my state, Connecticut, this inequity plays out as a 6 percent rate for the richest vs. 12 percent for the working poor. These calculations lump in sales, property, income, excise, service, phone, electric, and all other manner of public levies.
Appropriately then, the heaviest Washington in-fighting just now is the hand-to-hand combat over the humongous tax breaks the rich received during George W. Bush’s presidency. They expire at the end of this year, and include both income and estate taxes.
You won’t be astonished to hear that aside from the “Wealthers,” the fat cats want to keep those breaks. Or that most Democrats want to reclaim that lost revenue for higher purpose. But the rich, while few in number, are many in lobbyists who make colossal campaign contributions. Who knows what will happen?
More subtle is the question of what should be taxed in the first place. The current hoopla in Washington is over adding a few cents in sales tax to soft drinks, a reasonable health as well as revenue proposition because of the empty calories. But what about the heavy stuff — say, stocks and bonds? There’s no tax on them at all, even though we pay plenty for almost every other kind of transaction. A five-tenths of 1 percent levy on the purchase of basic securities, and maybe two-tenths on those yummy credit default swaps, would raise big bucks and hinder our current bent for wild speculation.
As would a similar tax on traffic in foreign currencies. That is one of the most speculative arenas in all investment and can have a thunderously devastating effect on the economies of small nations. Billions are made and lost, but transactions go totally unassessed. Taking a tiny cut for government would dampen world financial game-playing, while boosting both our Treasury and those of the small countries that need help the most.
The Obama administration opposes any such new levies because, like most other world capitals, Washington is deeply influenced by Wall Street and its equivalents around the globe. Bankers and brokers don’t want anyone rocking their boat.
Neither do online retailers, the ones you order from on your computer. They have a fat deal going too by not charging the same tax on their goods that you would have to pay downtown. These tax-free transactions, even when the law says you’re supposed to pay, have helped impoverish states, cities, and Main Street merchants. Again, lobbyists for the big online companies and retailers have deterred Congress from ordering an effective collection and monitoring system.
Corporations play a similar decadent game with their own books. They shuffle profits from high-tax states to low-tax ones, or to ones with no corporate tax at all, or even to other countries. Not long ago The New York Times ran a photo of Ugland House, a palm-fringed office building in the Cayman Islands where 19,000 separate companies are registered in order to avoid taxes back home.
In this season of budgetary trauma, politicians and media are more inclined to focus on which painful service cuts we must regretfully endure. Those that injure the poor are most popular. New taxes, rules, or enforcement aimed at squeezing a fair share out of the rich are less often mentioned. That’s one big reason our country is in such a financial mess.
OtherWords columnist William A. Collins is a former state representative and a former mayor of Norwalk.