This page contains a single entry from the blog posted on August 27, 2004 12:53 AM. The previous post in this blog was Quiz. The next post in this blog is He's toast. Many more can be found on the main index page or by looking through the archives.

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Friday, August 27, 2004

Call him irresponsible

If you need another reason to vote against George Bush, take a look at what he's done to the federal tax system. He's cut taxes, especially for the wealthiest, at a time when the nation can least afford it.

I dislike paying taxes as much as the next person -- and I should know, living in Portland, the highest-taxed city west of the Mississippi. But the Bush administration's "idea" of giving the economy a short-term shot in the arm with a temporary tax cut was irresponsible. Its insistence that it's going to cut taxes even further, on a permanent basis, is insanity.


The economy faces a familiar set of problems -- economic slowdown, short-term fiscal deficits, and long-term fiscal gaps. The central feature of the administration's approach to resolving these problems is to cut taxes. With moderate adjustments for expiring provisions (which the administration has advocated in the past) and AMT reform (which the administration has claimed it will address in 2005), the administration's proposals would result in deficits in excess of 4 percent of GDP for each of the next 10 years in the nonretirement trust fund portion of the budget. Given the impending shortfalls in the retirement trust funds, this does not appear to us to be a prudent fiscal strategy. Despite its relentless cheerleading for tax cuts, the administration has provided no coherent strategy for addressing the nation's fiscal problems in the medium term or long term. -- Gale & Orszag, "Fath-Based Budgeting," 99 Tax Notes 139 (2003).

[D]iscontent with our federal and state tax systems runs deep. But there is no corresponding discontent with the government services that taxes buy. Seniors don't want to abolish Medicare. Instead, they want to add a drug benefit. Parents aren't generally arguing for abolition of the public schools; they want to make them better. Drivers complain about our roads, but mainly because they're crowded, not because they exist. We're concerned about the scale of military spending, but relatively few argue we should downsize the military.

In short, there is a curious disconnect between public unhappiness with taxes, and public support for the goods and services that taxes buy. Members of the public seem to think we can continue to enjoy government services even if we reduce or abolish the taxes that pay for them.

At the federal level, of course, deficit spending makes that possible, at least for a while. But the federal deficit is so large, and growing so rapidly, that serious economic problems are likely to emerge sooner rather than later. Even if we dodge those economic bullets, we'll still be faced with the problem of justifying the inter-generational banditry that is involved when we shift the burden of our spending to the shoulders of our children and grandchildren. -- Field, "The Emperor Has No Clothes," 101 Tax Notes 1125 (2003).

And although it was talking about state taxes, the Iowa Catholic Conference gave us some food for thought recently when it said:

1. Spending by the State of Iowa should first assure that the basic needs of all people -- especially those who are poor and vulnerable -- are addressed as a priority before other appropriations are made. Just as in a family's budget, spending for recreation and entertainment should come only after paying for shelter, food, clothing, and other necessities.

2. All citizens have the right and responsibility to contribute to the common good through the payment of taxes. The collection of taxes is an important and justifiable role of government. Taxes are an individual's contribution to the common good. In any society, the common good should be viewed of greater importance than the good of any individual or special interest group. Paying taxes is one way that citizens give something back to society.

3. The State of Iowa should seek and maintain revenues sufficient to meet the basic needs of all, especially the poor and vulnerable. Effective stewardship of resources is always of concern to any branch of government, but even the most careful management of resources cannot overcome a fundamental lack of income. As do prudent families, the State of Iowa should maintain savings for periods when revenues are less than needed. Tax cuts, while popular, should result from a reduction in revenue needs, not as a result of providing favors for special interests.

4. Taxation in any form should be based on one's ability to pay. If Iowa tax policy is to remain faithful to Catholic teachings, it should first assure that the system collects taxes according to one's ability to pay. Catholic social teaching supports a more progressive form of taxation. Our contribution to the common good should reflect our blessings. From those to whom much has been given, much should be expected. Those who make the most profit from our economic system benefit most from the structures and infrastructure that make economic enterprise possible. Tax exemptions and tax incentives should not change the fundamental requirement that taxes should be based on one's ability to pay.

5. All forms of taxation should be fair and just in their treatment of the poor. Taxation can be used as an economic strategy to level income distribution in a society. Systems of taxation can also grant certain advantages to those in different income brackets. Unfortunately, such advantages are often granted on the basis of power and politics rather than on moral principles. Those who are poor should not pay a disproportionate amount of income in the sum total of taxes paid. This is especially true in the case of property and sales tax, which low- and moderate-income people tend to pay in higher percentages of their total income and are therefore considered more regressive taxes. Those who are wealthier should consider their higher tax bracket as part of their Biblical obligation to tend to the "widow and the orphan."

Even if I were on the fence on every other issue (which I'm decidedly not), I would still vote against the current administration based on its tax policies alone.

UPDATE, 1:46 a.m.: One more shortcoming to note here: the administration's abysmal failure (perhaps intentional) to get the IRS the resources it needs to do a competent job collecting taxes from Americans who knowingly refuse to pay. For 2001, the IRS projects that it lost about $280 billion in tax revenue -- that's with a "b" -- to cheating. That's something like four times what it was in 1992. Individuals who hid income accounted for more than half that amount. I hope that at least some of that dough will be spent in New York at the convention.

Comments (4)

Hey, Jack -- you're a tax professor. So how much of that $280 billion in taxes that wasn't collected was rich guys running from the tax man and how much was normal people not filing returns, etc.? What does the IRS need to do the job? No statistics are needed, just a general guess.

How about scrapping the current tax/IRS system, and replace it with the Fair Tax Plan?


$280 billion? I guess Bush was right when he said there's no point in raising taxes on the rich, because they avoid paying them.

Apparently, there are quite a few people that would suggest a completely diffent cure for the disease you just described:


-I do not support at all their views and I basically agree to what you say. However, it's intersting to report others' points of view.

/a note to the un~candidate: usually "rich guys" do not cheat but use multinationals/offshore structures to achieve what others achieve just by plainly cheating (i.e. not filing tax returns/filing incorrect tax returns) - that is, unless Jack used "cheat" as a shorthand expression to mean the whole bunch ;)

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