Tuesday, March 29, 2011
When Only Volunteers Pay Taxes
A friend of mine married a woman from Sweden quite a few years ago, and he was telling me once about one of his first visits with the in-laws. The father-in-law was a successful and prosperous businessman, so by way of making dinner-table conversation, my friend asked if it was true that taxes in Sweden are really high.
The reply was something like this: Yes, I pay a lot of taxes, but I’m proud to do it. That’s because I’m proud to live in a country where there’s no homelessness or serious poverty; where everyone gets adequate medical care and a good education; and where new mothers can take time off from work to be with their babies. People like me, who have done well for themselves, have an obligation to pay a bit more so that nobody is left completely behind.
That utterly un-American sentiment came to mind last week when I read in the New York Times that General Electric, in the most recent year for which the figures are available, had paid no federal income tax whatsoever on $14 billion of profit.
Now I don’t know what a fair tax would be on a large corporation that does business all over the world. There’s something to the argument that we have to be mindful of what other countries are doing in the taxation area and mindful of the effect of taxes on investment.
Even conceding all that, a company that makes $14 billion in profit should pay at least as much tax as, say, the total paid by the teachers at a large public high school. Call that class warfare if you will, but you can’t deny that the first shot was fired by the company that paid no taxes.
California has practically been brought to its knees by the insane notion that every tax increase has to be subjected to a vote of the people. That results in every tax cut becoming permanent and any proposed increase becoming a near-impossibility because people always find a way to rationalize saying no to paying taxes. If they could vote on price increases for food and gasoline, they’d reject nearly all of those, too.
The federal government still has the power to raise taxes, but it’s a phantom power because one of the two principal parties refuses to consider any tax increase whatsoever, regardless of circumstance. This, despite the fact that federal taxes as a percentage of GDP are the lowest they’ve been in 60 years.
With all the wailing about the deficit “crisis,” there seems to be a collective blackout about what happened in this country the last time the country ran up a huge debt because an administration cut taxes and increased national security spending simultaneously. Handed that mess, Bill Clinton got a modest tax increase through Congress, without a single Republican vote, and seven years later, the debt crisis was a thing of the past. Instead of acting as if drastic cuts to Social Security and Medicare are a necessity, perhaps we should restore the Clinton-era tax rates and require General Electric and its corporate brethren to pay at least something. If cuts are needed after that, they should at least be manageable.
When I was growing up in a conservative suburb of Los Angeles, the teachers at our public schools drummed it into us that much as we might dislike it and gripe about it, we had an obligation to pay taxes, just as we had an obligation to serve in the military if called. It all seems so Swedish now. We have a volunteer army these days, and it’s increasingly looking as if we have a volunteer tax system as well.