It's the big talking point against raising taxes on the rich. The logic is simple and obvious; how can we consider raising taxes on the rich when half the population is getting off Scot free. It is a powerful but ultimately misleading idea. For starters most people confuse federal income tax, with payroll taxes on income which everyone who works regardless of income pays. This fact plays into the more insidious aspect of the logic, hardly anyone would identify themselves as part of the population that gets off Scot free.
Regardless these people are leeches getting the mother of all deals. In fact some of them even make money off of this system. So who are these vagabonds? A new report on tax expenditures seeks to unmask these derelicts. Mostly they’re the elderly, the working poor and people with children. The reason they get these breaks is because for the most part they are living at or near poverty levels and increasing their tax burden would make it nearly impossible for them to live.
I agree it is outrageous that the system is this out of whack. But whats out of whack is that this much of our population is this close total collapse. There was a time in this country that we were actively trying to reduce poverty. Roughly 20% of kids live at or below the poverty level. Think about this the next time you walk past a playground and see a group of kids playing, picture one out of every five of them not eating regularly. The next time you get up for an elderly person on the bus or subway realize there is a possibility they are spending most of their day choosing between paying for their medicine or paying for their food. Inequality in this country has risen to the point that almost half of the population have barely enough money to survive.
I was speaking to a coworker about what our government could possibly due to help fix the punch drunk economy and he suggested we cut the capital gains tax. His reasoning was totally selfish. He had recently completed a transaction that resulted in him having to pay capital gains for the first time in his life. Chances are he will not be paying capital gains ever again yet he believes this is the solution to the current economic doldrums we're in. The modern conservative movement has painted a narrative that the only thing preventing prosperity for all is the man keeping us down.
While there is a lot that could be done to the tax code that could be good for innovation and could help spur the economy, almost none of this would or should effect the wealthy. The people who should benefit from any changes in taxes are real small business owners. It should go to profitable businesses whose only difficulty is floating payroll. For the most part it should not go to multi-millionaires who decide to enter new businesses. The reason is simple the stakes for the wealthy starting a business are completely different then most of the small business owner. The goal of modifying the tax code should be to get people into the market who otherwise would be unable to enter.
Yet all of this is still predicated on the idea that the problem is we don’t have enough businesses meeting the needs of the consumers and this is what is stifling growth. It ignores the fact consumer spending has fallen off a cliff, because nearly half of consumers are spending a majority of their income on the barest of essentials. Yes it is reprehensible that so many people don’t pay income tax, but what is reprehensible is that so many in our country are struggling to the point that the federal government has to show mercy by not taking what is left of their scraps.
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