Don’t tax you, don’t tax me?
There is an old saying about taxes. Don’t tax you. Don’t tax me. Tax that man behind that tree.
Such a divisive subject as taxes is hard to address without alienating someone. Or should I say almost everyone?
Did you know that no Republican in Congress has voted for a tax increase since the first Mr. Bush was president in October of 1990? That increase was to pay for the first war in Iraq.
Did you know the last decade represented the first time in American history we did not raise taxes to pay for a war? Make that two wars.
Not only did we not increase taxes, we lowered them.
Did you know that federal taxes as a percentage of the economy are at their lowest level since the Truman administration?
Did you know tax collections have fallen to their lowest level as a share of the economy in 60 years?
Since 1978, the U.S. has cut the highest marginal earned-income tax rate to 35 percent from 50 percent, the highest capital gains tax rate to 15 percent from about 50 percent, and the highest dividend tax rate to 15 percent from 70 percent. President Clinton cut the highest marginal tax rate on long-term capital gains from the sale of owner-occupied homes to 0 percent for almost all home owners.
Why we have a federal deficit should be self evident. So let’s be practical.
Those lucky enough to be in the top 2 percent earned over $300,000 last year. You contribute almost 50 percent of all federal income taxes. My gratitude knows no bounds.
While it is true approximately 47 percent of wage earners pay no federal income tax, they do pay more than 9 percent of their paycheck to social security. The 2 percenters pay that same tax, but their obligation ends after they earn a little over $100,000. The young woman serving you your Big Mac pays about the same percentage of total taxes that Mitt Romney paid. Imagine that.
It is not just those in the higher income brackets who will take a hit should we run over the fiscal cliff. It will affect the working poor as well. According to a recent article in the Wall Street Journal, “households earning $10,000 to $20,000 would see a large increase in their overall federal tax burdens, from an average of $68 to $605.” When you make wages that place you below the U.S. poverty threshold, discretionary income is an unknown. Basic math tells me falling off the fiscal cliff will hurt the working poor more than it will the 2 percenters.
There is a lot of talk that says if we increase taxes it will kill jobs. I am no economist, but I ran my own business for more than 30 years. Every time I hired someone it was because I had demand. It wasn’t because I was afraid I would be taxed more than the year before.
Every time I made an investment over the years, the number-one motivation was how much would I make on that investment. The tax I would pay never crossed my mind. I was too busy counting my profits instead of the government’s take.
There are numerous people I know in town who are 2 percenters, who give a lot to charity. One thing these generous people can’t do is assume the responsibility of our government. I am referring to America’s national responsibilities: the care of its sick and its poor, the education of its young, the repair of its failing infrastructure, the repayment of its staggering war debts.
That said, as a nation we have to do something about Federal spending that is getting out of control. Speaking only for myself, Medicare and Social Security seem to be a good place to start.
Let’s face the facts. We live longer today. Delaying the payout of Social Security and Medicare benefits from 65 to 66 is not a draconian event. It will piss off some people, especially my fellow Democrats. But they will get over it as soon as they turn 66.
The number of Americans 65 and older is expected to double to 80 million in the next three decades. As a nation, we can’t afford this safety net in its present form.
To those who say it’s not fair to ask the upper and middle class to assume a disproportionate amount of the tax burden, I say it is Un-American not to. We all have to pay our fair share. That’s called patriotism.
This has to happen if America is to remain strong and true to its ideals. It’s a practical necessity and a moral imperative.
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Joe Aaron is a Sonoma resident, a former FBI agent and a veteran of the securities industry and founder of the a Sonoma-based hedge fund.