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My Turn: A fair tax system? Seems unlikely

  • TRUESDELL



Saturday, November 11, 2017

The media are reporting what the politicians choose to tell us about a proposed tax cut (or possibly tax reform), but I would like to know some of what they are not telling us.

I remember Reagan’s tax cuts. They were going to spur economic growth that would “trickle down” to everyone, and economic growth was going to balance the budget. At the end of his term, the net worth of the top one percent had tripled, the middle class was shrinking, and the deficit had ballooned greater than in any period before in peace time.

President Clinton left his administration with reducing federal deficits and surpluses projected into the future. President Bush promptly got Congress to pass another tax cut that even without two wars, had components “off budget” that would have increased deficits. He also oversaw the beginning of the great recession that wiped out the modest gains of many lower middle class Americans who believed that working hard, and investing in home ownership, would allow them to accumulate a nest egg for retirement.

Now, we are being told that lowering the tax rates will result in more money for all workers and raise the economic activity by allowing corporations to keep more of their profits and hire more workers. They make unrealistic predictions of future economic growth to justify the inevitable rise in deficits, which will fuel inflation and hit the poorest of the poor the hardest.

The assumption that corporations will spend profits on increased wages, another claim, is a pipe dream. I don’t doubt that wages will rise in the short-term because the unemployment rate is very low now, and there is competition for competent workers. No doubt the politicians will claim credit they do not deserve.

More likely, the profits will be spent on higher dividends for stockholders (raising the income of the wealthy), on investment in worker-saving machinery (including robots, thus displacing workers), and on lobbyists to extract more tax advantages for those who need them least.

Economic growth and the expansion of the middle class require demand for the goods and services produced. It seems to me that a boost to the disposable income of those most disposed to spend it would more reliably come through a minimum wage increase. It is unconscionable that in a country with enough wealth to provide for everyone, that people working full-time, and more than full-time, cannot earn enough to support life and must seek charity to survive.

What I would like to know is: What are the special loopholes in the tax code that allow rich individuals and corporations to pay little or no taxes? Which corporations are receiving tax breaks, reaping huge profits and spending millions on lobbying and political activity? How can economic forecasts be made while trying to force through legislation without waiting for the Congressional Budget Office to finish their calculations?

Regarding the estate tax, how is it good for the country for those with massive wealth be able to pass it to their heirs with no tax? If the estate is not taxed, then the individuals who inherit should be taxed on the income they receive. Otherwise, the tax code is creating a permanent upper class and starving the government of revenue it needs to pay for itself. Surely, a million dollars or five million dollars exemption is sufficient, and excess amounts should be taxed.

My brother asks, “I would like to see a graph of what all the small business represent that are supposed to benefit and in turn create jobs. Are we talking about doctors, lawyers, franchise owners, CPAs, owners of businesses? Which of these are going to create more jobs?

“With capital so cheap now (interest rates), how will putting more money in ‘their’ pockets create more jobs? (We don’t really know who ‘they’ are without some definitions and a graph.)

“When are politicians going to raise the gas tax to pay for roads, bridges, etc.?”

I would like to be able to believe that tax reform would make the tax code more fair, but I just don’t see it.

Judith Truesdell lives in Shelburne.