The Egyptians levied them on cooking oil. The Greeks and Romans enacted them to fund their military adventures and extend empire. Even one of the apostles was once involved in this unholy business, and when the British applied them to a favorite beverage, it helped gave rise to American independence. I’m talking, of course, of taxes.
After enjoying a spate of fun holidays that started in late November, we now face a date that few welcome— April 15. Aside from tax software vendors, local accountants, and those who prefer to use the IRS as a bank that pays no interest but refunds excess deposits, no one gleefully anticipates this date. It means gathering receipts, filling out multi-paged forms with obtuse language that gives Apple’s software agreements a run for their money, and meeting an onerous deadline to avoid a penalty. If you are into self-flagellation, what’s not to like?
All this might be well and good if the U.S. tax system was fair. But it’s not. It is rigged for the wealthy and industries that have been gifted with loopholes big enough to drive a fleet of Buicks through. And to add insult to injury, these loopholes were written not by your elected representatives but by lobbyists, and are often embedded as riders in no-brainer legislation that has nothing to do with taxes, like laws in support of the apple pie industry and motherhood. That’s a bit of an exaggeration, but you get the idea. The Trojan horse is alive and well. Prepare to be sacked.
Warren Buffet, billionaire CEO of Berkshire Hathaway Inc., complains that his secretary pays more in taxes than he does. That’s because he derives his income primarily from capital gains on investments. In 2012 this amounted to a 17.4 percent rate on his taxable income while his secretary, Debbie Bosanek, paid an average of 34 percent on her income. Buffet thinks this is outrageous and so should you.
A January 2015 report from the non-profit, non-partisan Institute on Taxation & Economic Policy illustrated the inequities of our tax system by examining the tax policies of every state and the District of Columbia. Two findings rose to the top. The first is that we live under fundamentally unfair tax systems which take “a much greater share of income from low- and middle-income families than from wealthy families.” States like Florida and Texas without “a graduated personal income tax and overreliance on consumption taxes exacerbate this problem.”
The second discovery is that “The lower one’s income, the higher one’s overall effective state and local tax rate. Combining all state and local income, property, sales and excise taxes that Americans pay, the nationwide average effective state and local tax rates by income group are 10.9 percent for the poorest 20 percent of individuals and families, 9.4 percent for the middle 20 percent and 5.4 percent for the top 1 percent.”
The reason for this lies in the lasting legacy of trickle-down economics— the theory that as the rich become richer, their wealth will trickle down to the rest of us because their investments will stimulate economic growth. Since Reagan introduced these supply-side economics thirty years ago we’ve been waiting for this to happen. Comedian Bill Maher quipped that trickle-down economics is “like having three dogs and giving a wiener to one of them and thinking, ‘He will share it with the others.’” Instead, the wealthy send their wieners to tax havens in the Cayman Islands.
Corporate taxes are another national disgrace. Citizens for Tax Justice looked at 288 Fortune 500 companies from 2008 to 2012. The group found that 26 of them, including Boeing, General Electric and Verizon, paid no federal income tax.
GE disputed this assertion, though a spokesperson admitted to having “a small U.S. income tax liability for 2010.” He wouldn’t say how much, but the company used various tax credits and deductions created by the federal government and moved a good deal of its profits offshore. Remember those lobbyist loopholes?
Just keep all this in mind as you burn the midnight oil on April 14.
Frank Batavick is a graduate of Gloucester Catholic (‘63) and La Salle University ('67) with over 40 years of experience as a television writer/producer/director for public TV and media companies in IN and NJ. He has also served as adjunct faculty and visiting professor in Communications at colleges and universities in NY and MD. Frank now lives in MD with his wife Dori (GCHS, ‘63), where he is the vice chair of the Historical Society of Carroll County’s board of trustees, editor of the Carroll History Journal, and a weekly columnist and occasional feature writer for the Carroll County Times.