By: Mary von Euler
“Reform” has become an empty word into which different sides pour different meanings, while inequality is something everyone talks about, and nobody does anything about. Unlike the weather, inequaIity is something we can do something about, and our unfair tax system is one place to start by distinguishing tax fairness and tax “reform.”
When the Republicans use the word “reform,” they mean a flat (aka unprogressive) tax, lower corporate taxes, and allowing all the profits of US companies earned abroad to escape US taxes (they call it a “territorial” tax).
When we use the word “reform” (but let’s not), we mean fair taxes: more progressive personal income tax rates, scaling back personal deductions, taxing dividends and capital gains like ordinary income, ending all corporate loopholes, shutting down the use of off-shore tax havens, and restoring the estate tax.
The Republicans have voted down all Democratic efforts to tax millionaires at a higher rate than that imposed on the merely well off. The marginal rate on millionaires should be at least 45%. Although some wealthy people like Warren Buffett care about fairness, urging that we tax income from capital at the same rate as income from work, Republicans and Wall Street Democrats remain staunchly opposed.
While most Republicans want to extend all corporate special tax breaks, a few may propose a deal to eliminate perhaps one or two small loopholes in exchange for lowering the corporate rate; we answer, “No Deal.” Eliminate all corporate special interest loopholes, and a deal might be worth considering. For starters, end all the so-called tax extenders, which cost the Treasury $450 billion over a decade: unjustified and fiscally irresponsible “bonus depreciation,” research credits that don’t foster real research, but have allowed tax deductions for developing flavors for soft drinks, designing new packaging, and machines to replace workers. And end the latest gimmick of “inversion” by which US corporations conduct sales to smaller foreign-owned companies to escape US taxes. We should treat these deals as US corporations if a majority is US owned, and disallow all deferral of taxes on US owned corporations.
And if we want to make a start in reducing gross wealth inequality, we should begin by restoring the estate tax its pre-Bush level.
So let’s talk of tax fairness, and expose the hollow word “reform.”
For more information, you can go to Citizens for Tax Justice (ctj.org) and Center on Budget and Policy Priorities (cbpp.org).Back