You're probably at least passingly familiar with the angry voices shrieking about the dangers of 'tax and spend' politics, but what actually bothers me is that we really are more about 'tax or spend?' politics. We seem to believe that politicians should solve problems either by taxing the sources, or by spending money to correct them - but oddly, which to do at any particular moment seems to be the crux of most political arguments. All this while Democrats and Republicans accuse each other of being wasteful in their spending and careless in their taxing.
Taxation is something that nobody particularly likes, yet almost everyone who has enough money to spend has to deal with. Sales tax, income tax, property tax, estate tax, windfall tax, taxes on broadcasting services, taxes on fuel, taxes on tobacco... practically everything is taxed, in some way or another. Most people agree that this is at some level reasonable, and their arguments are generally over who should be paying it, and more importantly, why it shouldn't be them.
These taxes, in turn, pay for everything from the defense of our nation and its people from threats such as terrorists and pirates to the maintenance of the roads and railways that enable us to keep goods flowing to where they're needed. In turn, this money is budgeted at every level of government to meet what the elected officials of each layer see as priorities. Neither Democrats nor Republicans are immune from 'tax and spend politics', because ... well, if they taxed people and kept the money, that would be 'tax and keep politics', now wouldn't it?
Lately, however, corporate America has been complaining that they pay too much in taxes, and that instead of them giving the government money, it should be the other way around. And by lately, I mean over the past decade or two. This is the crux of 'tax or spend?' politics -- when organizations insist that instead of paying taxes to the government, the government should spend money to make them more financially successful, under the assumption that their success will indirectly help the community in an amount greater than their tax dollars plus the money given to them. The bailouts and stimulus plans of the past two years are merely the culmination of years of corporate extortion finally visible on a public stage. We even got a preview of it with Enron, but we were distracted from that by a long War on Terror that has yet to make any of us feel safer.
One example of this is a commercial I heard earlier today from the oil industry. The commercial's point of view, basically, was that instead of taxing oil companies on their massive imports, the government should instead be giving them money and real estate to perform more drilling here. Note that nowhere in that sentence does it say anything about these oil companies importing less oil... because, of course, there's no plans to do that. So what, exactly, are we getting in exchange for not taxing oil companies, or on giving them tracts of land to add to the hundreds of sites they're already not using? Is spending money on supporting the oil companies really a better bet than taxing them?
Another bizarre example that has been cropping up lately involves complaints that undocumented workers aren't paying their taxes, or might be getting health care, or might be funnelling millions or billions of dollars out of the country to support their families in other nations. What this overlooks is that corporations have pumped billions and trillions of dollars overseas to offshore - and untaxable - accounts, or invented complicated shell games involving renting their buildings to themselves in order to get out of paying their taxes. (Looking at you, Wal-Mart.) Worse, these corporations are doing this while demanding taxpayer money be given to them to pay for their expansions, citing their ability to offer more jobs as an incentive to extort this taxpayer money... and then laying off thousands of people and moving the rest to work in the new buildings. (Practically every industry involved in the bailouts of the past two years is guilty of this practice.)
So, of course, most people are angry, and not sure where to direct their anger. Democrats blame Republicans, since the problem started on their watch and since there's a widespread perception that Republicans are the voice of the rich. (This isn't entirely true - I've known one Republican who worked at Wal-Mart. Nobody liked him because he was an insufferable jerk who treated his co-workers like peasants. He worked as a freight hauler.) Republicans blame Democrats, since the problem is still here now that they've taken over and things don't seem to be getting much better. Libertarians blame everyone, under the premise that if nobody were elected to office, then whoever caused the problem wouldn't be in office, a tactic similar to shooting every person you meet on the off chance that one of them might want to steal your wallet. Socialists are still annoyed that Obama got elected and that everyone assumes he's the leader of their movement. And then there are those who haven't got time for politics or economic debates, because they've been worrying about whether they're going to lose their job for the past ten years, never mind whether some larger company is busy carrying buckets of taxpayer money onto their private jet headed towards the Bahamas.
Personally, I've decided to do something for the economy. As you may or may not know, I'm working on getting the supplies together to make a more permanent go of BiblioPhoenix, a business focused on recovering books that would otherwise be defaced and destroyed and selling or giving them to people who want them. Is it going to make me billions of dollars? Probably not. But I think of it this way -- any money I do earn from this venture, any money I spend in pursuit of it, and any taxes due on that money, will be flowing into the American economy. Therefore, by supporting my business - and other businesses that focus on the local economy - you support America. Even if my business idea fails, I don't plan on complaining that the 'book industry' is going downhill due to technological competitors and a flagging economy, or expecting that large sums of money will be forthcoming to bail me out if I run out of money and can't afford to continue. Instead, I plan on taking the lessons I learn, saving up for another attempt, and using them for the next business idea I work at.
I am a citizen of the United States of America, and I am a taxpayer, and I will stimulate the economy in my own way. I will be taxed on what I earn, and I will spend money so that I can earn even more, and I will not insist that the government choose whether to tax me or to spend money on me. I'm Austin Cushing, and I'm against 'tax or spend?' politics. How about you?
Austin Cushing, Money Correspondent:
Austin's column, Common Cents, published twice monthly to Gather Essentials: Money, is focused on life below the poverty line and other topics that are of importance to those living paycheck to paycheck.
Austin Cushing is an eccentric writer, consultant, programmer, poet, photographer, and Microsoft-certified database administrator, currently working as an IT consultant. He writes from personal experience and personal opinion, and enjoys finding the humor in even the darkest aspects of the world. In addition to his column, he maintains Gather groups on a diverse range of topics, from gaming to political discourse, and manages a number of popular Gather groups.
You can find all of Austin's Common Cents columns at http://commoncents.gather.com. Keep up with Austin's other postings and Gather activity by joining his Gather network -- just click here and select the orange "Connect" button on the left-hand side of the page.
Food for Thought:
What do you think your community could be doing to improve itself, as it pertains to taxing and/or spending? Your state? Your country?
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Comments: 39
One thing you neglected and which should frighten those who think taxation is a price for civilization is the number of those paying federal taxes dwindles each year "forcing" the government to raise rates on the remaining suckers. The 40% plus who don't pay these 'necessary' (the definition is way too loose on that word) taxes have no reason to want any taxes lower or government to cut back on spending. That this number of non Federal tax paying people approaches parity or worse with those who do pay, you create a client class. What will happen then?
Now the number of those who supposedly represent us and are inclined to minimalize either taxation or spending is minuscule, once that client class becomes permanent (after all, no wants to expand the number of taxpayers do they?), the crash will have to come. We can't support 2/3ds of our annual spending now, even confiscation of assets on the top 20% of the nation's wealthy cannot keep the spending spree alive.
We are on a crash course and since its easier to flee than fight, will the US start enforcing currency/wealth transfer laws to prevent that flight? Your post while having some valid points refuses to look at the logical outcome of decades of such spending/tax policy. You might want to actually look at that before it's too late.
The wealthiest should pay taxes and should not get "Tax breaks." As to who's watch it was on, Republican or Democrat. It has been happening and getting worse for about the last 15 years so both parties are to blame 100% all the time. Politicians are NO LONGER representing "WE THE PEOPLE" The are representing their stock broker and investments and paid by lobbiests to look the other way to vote for this and that and Pork Barrel Spending is huge from both parties. Lobbying should have long ago been made totally illegal. It is pure bribery. Our politicians congressmen and women have long been for sale. Big corps get let off, and execs go scott free or only get a little slap for behavior that the average john or jane doe would go to prison for. It is treason a lot that has been going on. We don't hear all the truth from the media and the media is paid off to lie, or cover-up things. Things if you listen to other countries news you would be shocked to hear about going on in our own nation under our noses.
Our govenment definitely needs to learn to stop spending so much money and to stop creating more government programs for which it cannot pay. We cannot run our household budgets the way the goverment does, nor can businesses run that way.
Personally, I think that there should be no bailouts of individuals, of businesses, or of local governments. If they are failing, they should be allowed to fail. If we did that, people and businesses would have to learn to survive and that the government was not there as their personal source of money.
We have to stop with the mindset that businesses and the rich are the bad guys. That thinking was what Hitler and Mussolini encouraged. It doesn't help anyone or anything.
If we're looking for more equality in financial matters, instead of trying to bring the rich down to the level of the poor or middle class, we should be trying to lift the poor and middle class up and we don't do that by hand-outs, but by offering a hand up.
"If we're looking for more equality in financial matters, instead of trying to bring the rich down to the level of the poor or middle class, we should be trying to lift the poor and middle class up and we don't do that by hand-outs, but by offering a hand up."
First, nobody is talking about bringing the rich down. Not in policy, not in rhetoric. Nor is anyone suggesting handouts as a way to make up for the low incomes of the poor or middle class.
But what mechanism do you imagine that offers a hand up? How do you take a full time worker from being in the poor class to being in the middle class without just exchanging his place with that of another person? How do you grow the income of a class?
Less and less people pay federal income taxes because they are earning less. The mechanism causing that is stagnant wages and incomes while gains are concentrated at the top. I'd like to reverse that mechanism through a healthy upward wage pressure, which naturally comes from full employment. You get that sustainable full employment with enough sustainable consumer demand to warrant full employment, and that consumer demand comes from a sustainable level of consumer income. Thus through means that you do not advocate, you would see results which you ultimately wish was the case in the first place.
However, we're still moving in the opposite direction of growing income inequality (obviously unsustainable) and unsustainable consumer income and spending. And we're all suffering for it as a result because it greatly contributed to the severity of this recession.
I don't understand why anyone is upset over the loans to the automakers. Those companies have kept hundreds of thousands of Americans employed for decades and have paid an enormous amount of taxes. Sales of their cars have generated a large amount of tax. They are only asking to borrow back some of that money in order to restructure. If they file bankruptcy now, businesses and families across the country will also file bankruptcy. Homelessness will be epidemic. If you think your taxes are high now, imagine what you will pay to make up the shortfall of those who fail.
When our obscenely wasteful elected officials were grilling and insulting the CEO's, I was waiting for someone to make a 'pot and kettle' reference. If anyone has expertise on waste, questionable ethics and bad business practices, it is our representatives and senators.
Taxes are a necessary evil that helps build our schools, highways and sidewalks. It even plants trees that are great in helping people to breathe.
I know this may not be a popular view with some conservatives, but I feel financial resources are needed in OUR country at this point in time, not spent on defense or given to OTHER countries to rebuild their societies.
Not that I do not care about others...but let's take care of our own first.
But you rarely hear what those tax dollars are spent for. How many of you would like to pay much higher insurance premiums instead of medicare taxes? How many of you would be willing to stay home and take care of incapacitated, aging parents - now cared for in nursing homes, mostly with medicaid tax dollars? How many of you plan to refuse social security benefits?
Now I am absolutely for financial responsibility. My wife and I are in fairly good financial shape even in these hard economic times. This is due to years of responsible financial management.
The primary issue re: "'tax or spend' politics" isn't "tax" or "spend". It's how corporations get so big as to become "too big to fail". If that dynamic isn't addressed, then the same cycle of "boom-bust" economic cycles will continue.
Finally, good luck with your new business. I hope you do well - but not well enough that you become "too big to fail". However, in the unlikely case that you do, I think you might change your tune about those government "bail-outs".
Governt does NOT *tax* at the source, Austin. Government taxes the Sweat of a man. At the source would not be taxing wages, but at "point of sale" for those
items deemed taxable.
In order to reduce the unfairness of the tax collection a new structure is proposed:
1. Eliminate IRS – this step will relieve huge economic energy and increase productivity that we cannot fathom right now
2. Eliminate the following taxes:
a. Federal income tax
b. Social security tax
c. Medicare tax
d. Payroll withholding
e. Corporate tax
3. Introduce National Sales Tax (NST) at 23 percent. This is adjustable by ¼ percent every two years, but limited to 24 percent.
4. This NST will be applicable to all without exception. But if a family’s gross income is less than, say, $30,000, a tax refund will be phased in as the income decreases.
The basic concept here is to replace all federal tax with one consumption tax. This NST has several advantages:
a. Eliminate billions of hours spent by consumers and corporations to file taxes
b. Increase collection rate and reduce underground economy
c. All will participate because everyone will have to BUY something and the 23% will be built into what we buy.
d. This is a proven tax collection method called Value Added Tax (VAT)
e. This will increase the America’s savings rate – the less you buy, the less we pay in sales taxes
f. Eliminate most special deductions and tax credits
g. Reduce congressional tax lobbying
Weakness includes:
a. Eliminate most tax related accounting industry
b. Some lower income people will pay more tax because they are addicted to spending
We need to take our country back. The socialists need to step back, or we will all fall, regardless of our position in society.
Well, that should leave a HUGE chunk of change to redirect to domestic problems now that we have reduced the military (oh wait, we have just created a problem because now we have a bunch of military come home looking for jobs who are vets and they get preferential treatment for jobs BECAUSE they are vets, as well they should, which causes another catch-22 situation). Still want to redirect funds on the War on Terror????
I'm with Jenn also. Well thought comment Jenn. Thank you for saying it better than I could.
Also, thanks to Austin for the opportunity for dialog on this.
Wilka
This is ridiculous. Ask those who lived through the Great Depression how to survive this recession and I am sure they will tell you that is not to throw money at things - which is what our government is so great at doing. Yes, we have to pay taxes, but we do not need to be taxed to death. We do not need new programs. We can fix the ones we have without overtaxing the system.
I have watched ridiculous road projects where I used to live. They went something like this: When there was a hole in the road, instead of properly repairing it, the road department fixed it short term, rather than long term by laying a thin layer of asphalt over it and then letting cars go over it just a few short hours later, rather than permanently fixing those holes. Why, this craziness?? Because the unions had control over the road department and had decreed it so, in order that those employees could have job security (I am snorting now). Can we apply this same type of logic just for a moment to bridges (say, um the bridge that collapsed in Minnesota just a few short years ago), or how about those levies that failed to hold the water back for Hurricane Katrina and now people are suing?? Are you people seeing my logic here now?
You cannot just slap things together piecemeal and just hope for the best. You have to do better than that. I would hope that people would still have that type of mentality here in America - I guess that is dying away.
ROFL!
People "tightened their belts" and lived through the great depression because they had to. It wasn't voluntary. Likewise, people are forced to do that now. But that's not an answer to the recession. That's a result of the recession.
Plus you do seem to understand that government employing troops has an economic effect, but it is strange that you label stimulus employment as "throwing money at things". Those two stances seem contradictory.
And are you aware that of the portion of our economy that is the government sector (public sector), half of that is defense spending? I think we could have all the troops we need and still save a ton by eliminating expensive and unnecessary defense spending.