Let’s cut right to the chase: we are now at a point in our history where it is desirable – indeed, essential – to raise taxes. This suggestion is so antithetical to everything we hear and read (especially during election campaign), that I am positive it will be greeted with disdain, disgust, and some anger. Why not…we ALL hate taxes (as do I), but there is a powerful case to be made for enhanced taxation as we enter a more turbulent financial era.
Let’s start with two contentious issues. The first, that Americans are heavily and onerously taxed. The second that it is careless and wasteful spending that has created a fiscal “crisis”.
The fact is Americans are not “overly” taxed, at least compared to international standards and the taxes of other developed industrialized nations – most of who have vibrant economies despite their higher tax rates. According to the Organisation of Cooperation and Economic Development (OECD), among developed nations, the United States is ranked 17th in taxes paid as a percent of GDP. Taxes in the U.S. are about 27 percent of GDP, but only about half that number (14.9 percent) are Federal taxes. During the Reagan administration, the Federal take was 18.5 percent. Federal taxes are not increasing despite misinformation to the contrary.
The claim that our corporate taxes are stifling and excessive again is not borne out by the facts. While it is true our rates are high, the actual corporate taxes collected as a percent of GDP, are the lowest of all OECD nations. The very bottom!
Conservatives like to point the finger at “wasteful” spending as the cause of our serious debt and deficits. Of course “waste” is intolerable and inexcusable. But, a more likely cause is the incredible cost of two ongoing wars this past decade – without a single added tax to pay for them. This is the first time in our history we went to war without some mechanism to cover the cost. The Washington Post did an analysis claiming the wars (with all collateral costs) ended up putting us $3 Trillion (with a “T”) in added debt. Included in that figure were not only the direct costs, but interest on the added debt, veteran’s benefits, and rising oil prices.
But the strongest argument to raise taxes is not to pay for wars past, or to justify by our having among the most moderate taxation in the world, but mostly because we are a great nation in serious decline. And to rectify that decline it will take money – taxes -- pure and simple. Starting with our aged and crumbling infrastructure, our roads, bridges, dams, water systems, and other public facilities are in significant disrepair. The American Society of Civil Engineers estimates we are at least $2 Trillion behind in upgrading our nation’s infrastructure. It is analogous to owning a fine beautiful home and allowing it to fall into decline and disrepair. Frankly, it is a disgrace, and there is only one solution – revenue (taxes) to reverse the trend. And the sooner we do it, the less costly it will be.
There are many other areas, where America’s decline is evident. Education, where college costs (especially at our public universities and community colleges are suffering from lack of funding); health care, where some sort of public/private plan is under attack; and rising poverty rates with safety nets are being eliminated due to lack of revenue. None of these are befitting a great nation, and none will bring us back to the shining land of opportunity for which we were always acclaimed.
Republicans assiduously avoid discussing the revenue side of budgeting, preferring instead to focus on the spending issues (especially domestic programs). However, one who has taken a bold and enlightened view is New York Mayor Michael Bloomberg, who has actually suggested that we allow all the Bush tax cuts to expire in order to get our fiscal house in order. He further notes, that by doing this, Obama will have more leverage in negotiating meaningful cuts in spending, and bring a better dialog to budget talks, which have had a bad history of being polarized.
The bottom line is this. Taxes are a “dirty word” in today’s political milieu – and they shouldn’t be. They need an adult conversation. Too much of the talk is based on misinformation and partisanship. One suggested reason conservatives do not like to talk about revenue, is that they have a visceral dislike for anything “government”, and by starving it, they are essentially creating a self fulfilling action on its demise. Moreover, there is no empirical evidence that we are “overtaxed” in relation to other developed nations. In fact, we are not. And lack of revenue is a component in our falling behind in a number of significant ways that are not becoming to a nation of our stature.
In the end, as it regards taxes, they are the dues we must pay if we want to live in a progressive, advanced, safe, clean, healthy, and robust country. The way America should be!