Taxes and 2016: Some Choices

Although this won’t surprise most of you, do read the in-depth feature in the New York Times about how the mega-wealthy avoid paying taxes.

With inequality at its highest levels in nearly a century and public debate rising over whether the government should respond to it through higher taxes on the wealthy, the very richest Americans have financed a sophisticated and astonishingly effective apparatus for shielding their fortunes. Some call it the “income defense industry,” consisting of a high-priced phalanx of lawyers, estate planners, lobbyists and anti-tax activists who exploit and defend a dizzying array of tax maneuvers, virtually none of them available to taxpayers of more modest means. …

…Operating largely out of public view — in tax court, through arcane legislative provisions, and in private negotiations with the Internal Revenue Service — the wealthy have used their influence to steadily whittle away at the government’s ability to tax them. The effect has been to create a kind of private tax system, catering to only several thousand Americans.

These several thousand Americans making use of the private tax system are mostly supporters of Republicans, and donors within this group are behind most of the money going into conservative Super-PACs. A very small number of them are Democratic Party donors, however.

In the heat of the presidential race, the influence of wealthy donors is being tested. At stake are the Obama administration’s limited 2013 tax increase on high earners — the first in two decades — and an I.R.S. initiative to ensure that, in effect, the higher rate sticks by cracking down on tax avoidance by the wealthy.

While Democrats like Bernie Sanders and Hillary Clinton have pledged to raise taxes on these voters, virtually every Republican has advanced policies that would vastly reduce their tax bills, sometimes to as little as 10 percent of their income.

At the same time, most Republican candidates favor eliminating the inheritance tax, a move that would allow the new rich, and the old, to bequeath their fortunes intact, solidifying the wealth gap far into the future. And several have proposed a substantial reduction — or even elimination — in the already deeply discounted tax rates on investment gains, a foundation of the most lucrative tax strategies.

The article goes on to say that the wealthy are not so much buying politicians as they are buying policy. The “income defense industry” has been able to lower their tax bills from roughly 27 percent to less than 17 percent over the past 25 or so years. The industry has also managed to hobble the IRS from going after them, even as the Obama Administration has made closing loopholes a priority.

Again, although there are Democrats who have gone along with this, for the most part it’s the Republican Party that supports it.

While you are at the New York Times, be sure to read “$250,000 a Year Is Not Middle Class” by Bryce Covert. Hillary Clinton has pledged not to raise taxes on the “middle class,” which she is defining as anyone who makes $250,000 or less. Covert argues that those who make $206,568 or more are in the top 5 percent of earners; they are not “middle class.” Further, this pledge will prevent a Clinton Administration from being able to fund programs that really would help the actual middle class, such as paid family leave.

Bernie Sanders and Martin O’Malley both support a policy program that would provide paid family leave as a kind of social insurance, and this would be funded by a 0.2 percent payroll tax increase across the board. I’m seeing Hillary supporters gleefully pounce on this, saying Bernie would raise middle-class taxes and Hillary won’t. But it isn’t quite that simple, as Sanders also has pledged to leave all other taxes on people making $250,000 or less alone. Covert writes,

Mr. Obama, who also made a pledge not to raise middle-class taxes, has seen how limiting it can be. Early last year, he made an effort to levy some taxes on 529 college savings accounts, given that 70 percent of account balances in those and similar accounts are owned by families who make more than $200,000. The revenue from the tax would have been plowed into college subsidies that would reach low- and middle-income Americans.

It was a doomed idea. Some families with closer to median income do use 529 accounts. So adding a tax would, technically, increase some middle-class people’s burden, thus violating Mr. Obama’s promise. Backlash erupted not just from Republicans, but fellow Democrats, and he dropped the idea less than a week after floating it.

IMO this plays into the Republican talking point book about taxes, which says that taxes are an oppressive and horrible drain on the pockets of America, while expecting Americans to spend even more money to pay for things that a tax-funded program could provide cheaply is not.  (See also: health care.) It’s why we can’t have nice things. And it’s a notion supported by the income defense industry.

Also, too: Goats

14 thoughts on “Taxes and 2016: Some Choices

  1. Before there’s an increase in taxes on the wealthy, look for 1000% tax on pitchforks, torches, pikes, axes, large chef’s knives, wagons that can be used to ferry people to the chopping-block, chopping-blocks, wicker baskets, and things that can be used to make guillotines.

    We can’t have the riff-raff even think of taking matters into their own grubby little hands!

    Just think of the hoi polloi, assembling in large crowds, and demanding more cake-crumbs and table-scraps!

    Oh, the humanities!
    It’ll scare the children of the wealthy, who have a hard enough life, suffering from “affluenza!”

  2. GOATS: Cute pictures and reminds me of a guy here in WW that has 2 pet goats and he takes them for a walk at our Federal Recreation Area just like others take their dogs.
    Also, last summer the govt. hired a bunch of goats to clear some brush along the creek. I’m sure it was less expensive than people and the goats sure enjoyed it. They did an excellent job.

  3. “Only poor people pay taxes!”

    Well if you listen to the wealthy only the “poor” uses the services so why shouldn’t they pay the taxes? I was on vacation with my wife several years ago when shrub was cutting taxes, we were having lunch at an upper crusty restaurant near Lake Winnipesaukee NH (Romney territory) and I heard in the most obnoxious new-England mass-hole accent “their the ones who use the services”! I almost blew my top, my wife got me the hell out of there quick! But that is what they believe, conveniently they forget that the majority of gubmint spending benefits us all (if you call the military industrial complex a benefit). Sadly the dirty faced hillbilly rubes think only minorities use the services so they vote right along with the upper-crusters, brilliant!

  4. Hillary Clinton has pledged not to raise taxes on the “middle class,” which she is defining as anyone who makes $250,000 or less.

    That’s what Obama said also. Of course, the very first tax increase he signed in Feb. 2009 was the cigarette tax to help fund an expansion of SCHIP… a 162% increase in a massively “regressive” tax that overwhelmingly hits the “real” lower- and middle-classes.

    Poor smokers deserved it though- Filthy addicts…

  5. Bernie looks like better policy more every day for the people. Hilary may sell herself as moderate and doing what is possible, but the possible is not an uplifting goal. The improbable but desirable is a better aim.

  6. “Only poor people pay taxes!”

    Isn’t that quote Leona Helmsley’s claim to fame? If the Repug’s are looking for a female candidate to nominate as a noteworthy woman to grace our paper currency, then maybe they should offer up Leona in nomination. Aside from that, it could serve as a prophetic fulfillment of a past national admonishment in a covert sort of way for our new corporate overlords.
    Manely, that we rise up and live out the true meaning of our creed.

  7. In honor of the poor bastards that got run over by that spoilxd Victorian child from Texas, daddy had a shotgun!

  8. Yo Granny: I have to respond to any comment that involves goats.

    I see articles from time to time about using goats to clear weeds out. It seems like a great idea to me, as long as they aren’t vulnerable to predators. I’ve seen some clever movable enclosures on the order of a larger “chicken tractor” that seem to fit the bill. Goats can eat noxious weeds, even poison ivy, and they seem to prefer them. I think they could take on Kudzu successfully.

    Regarding the other issues. I am as confused as most people are. For so long, it has seemed like a classic train wreck in slow motion. One of the causes of the wreck is the accretion of power in the hands of a few and their ability to sidestep democratic processes.

    When the Reaganites started pushing for privatization of everything under the sun, it seemed obvious to me that the end result would be to create an oligarchy. I was a callow youth then and naivety and certainty travel together. Today it seems that the oligarchs barely hide their faces.

    Democracy and capitalism work best when they balance each other out. Over the past several decades we’ve seen the democratic side of the equation weakened and the plutocratic side strengthened. Welcome to the new feudalism.

    O.T. -I watched Adam Curtis’ latest documentary, “Bitter Lake” the other day. It’s hardly earth shattering, but, it tries to connect some of the dots that led to the current situation in the Middle east and our inability to comprehend it. I’d recommend it along with his other work.

  9. The cutest thing I’ve seen regarding goats is the goat herder giving his flock a talk ahead of opening the fence and letting them roam into the field. He looked for all the world like a preacher telling his flock to get out there and eat all those weeds. They were so attentive toward him and seemed to be promising to do their best. Goats are the best choice here in the dry Sacramento Valley and we see them everywhere.

  10. Dianne:

    I remember a story about an African American preacher, in Florida, who kept pigs. He would pour their food on the feed trough and give them a short sermon before giving them the “okay” to eat. Now it reminds me of that Gary Larson cartoon with the man balancing a crust of bread on his dog’s nose, saying, “Wait until I say you can have it.” The “thought bubble” above the dog says, “I’m going to kill him!”

    By the way, the first giant batch of collards is done. I did put in a teaspoon of sugar as Pluky suggested and some vinegar. They’re very good, and the goats LOVED the stems!

    ———————————

    A lot of Americans despite a “rugged individual” image, nearly always seem to want a strong authority figure to keep everyone, including themselves, in line. They retain a strong remnant of Calvinism and a belief in privilege and the Just World Hypothesis. To them, it smells like freedom. So when a clueless candidate with an elevator for his automobiles or a blustery projection of their Id comes on the scene, they fall head over heels. They WANT a lord of the manor, as long as some of the serfs are a little further down in the great chain of being. Someone has to keep things in order. What’s good for the lord, is good for the whole manor, like tax cuts and weakened regulatory agencies.

    By the way, if this comment seems a little choppy, I cut it down from a long rant that I wrote for recreation. It seemed unfair to inflict it on innocent members of this blog community.

  11. goatherd,
    Go ahead and post the whole thing! We love to read what you write.

    As for inflicting long rants o n the readers here, I belIeve I have damn near a monopoly on that, over the years! 😉

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