The Taxing Issue of Taxation

You all know how the saying goes, “nothing is certain but death and taxes”. However, for generations now the Republicans have been working tirelessly to end taxation (or so they say) far more than they have been working to extend healthy lives. When you look at their campaign rhetoric and legislative agenda and accomplishments, every election cycle taxation is too high and nearly every year in nearly every legislative district they control they have cut taxes. However, you need to look past the bumper-sticker approach to their mission and examine the reality of and need for taxation. Not just taxes in general, but taxation in a way that is fair to the people, generates sufficient revenues for the necessities of government while also expanding the economy in such a way where everyone comes out better. It is possible because it has happened before.

Taxation is as old as society itself. No matter the type of governance a society has, no matter the type of economics that prevails in that society, revenues must be generated to meet certain needs to keep that society in existence. Why is that?

When you live beyond a small communal society, certain things need to be addressed. Things like food supply, living accommodations, skills, education, safety from the elements, and security from those who may mean harm. As the society becomes larger, encompassing more people of more diverse talents, skills and needs over a larger territory, these requirements only grow and become more specific, more complex and more expensive. Communes and small communal communities often rely on bartering for skills and services. However, bartering loses values when the needs grow and become more complex. Thus money comes into play not only to pay for goods and services among a growing population and society, but for the governing institutions to ensure the security and existence of the society it governs.

So larger societies over larger territories require roads, infrastructure, transportation, abilities to bring in water, remove trash and sewage. As technologies improve, specialized skills sets are required to build and maintain these more complex systems. Food and water supplies must be monitored and checked on to prevent disasters. Regulations become necessary to ensure the society that things are built and maintained properly, food supplies and water is safe, air is clean, streets are safe, people are properly educated, institutions are properly staffed to aid in both local, national and international security and diplomacy, militaries are created, trained, supplied and maintained to defend against enemies, relief agencies need to be created for natural and not so natural disasters. The larger, more complex and more populated the society the bigger the need to provide for it to keep it functioning, expanding and stable.

This all of course requires revenues from taxation, which has always existed. Now in years past, only the vulnerable were taxed, forced to provide money for the elites that controlled the society to pay for those services (often known as the “commons”) to keep things in check. Peasants who had little were often forced to pay more than they had to keep the society functioning and the Kings, Caesars, Emperors, Lords, etc. in control and prosperous. Often if a wealthy person ran afoul of the ruling class, the family was stripped of its wealth and the money was used to pay the troops, civil servants, build the roads, infrastructure etc. the keep things moving along. Over time, people began to resent this iniquity in society and slowly things began to change.

Taxation itself never went away, but as democratic Republics began to emerge where the people in theory governed themselves via representatives they voted and paid for (taxation for representation) then the tax system slowly became fairer. Those with the most paid the most, those with the least paid what they could. Certain goods and services that only the wealthy could afford would be taxed to help fund maintenance of the commons. In the case of our country, over time our population, especially after the Great Depression and the epidemic of poverty that swept the nation, came to the realization that government of, by and for the people needed to help the neediest of the people to keep society from collapsing upon itself. The impoverished, the elderly, the sick, the uneducated were a drain on the productivity of the nation. The expense needed to care for individuals was beyond the abilities of most families. This realization actually predated the Great Depression and it was during the Lincoln Administration, trying to bring in enough revenue to fight the Civil War from a population that could barely make ends meet began imposing the first truly “Progressive Tax Code” where the wealthiest who benefitted the most from a stable secure society paid more to maintain it because they could.

Now to continue with this, the wealthiest ended up paying more towards the cost of maintaining our government. Now to be fair, there were poorly implemented spending programs that came up, things that had little to do with maintaining a functioning society. This gave the Corporations who have to bring in the most profit they can and the wealthiest ammunition to go to Congress and argue that government was too big, taxing everyone too much and it had to end.

After World War II, there was a 90% tax rate for the wealthiest Americans. That was the tax rate on the books for the millionaires. Revenues collected were used to pay off the debt ran up for the war, fighting the depression and building a modern infrastructure in the United States under Republican President Eisenhower. However, what isn’t well known about that time is that special tax loopholes were inserted in the tax codes that only benefitted the wealthiest. So the effective tax rate was far less than 90%, but higher than it is today. During the Kennedy run for President, he proposed cutting taxes which he did, but he also eliminated many of the loopholes thus keeping revenues coming in about the same. However, that isn’t told, especially by the Republicans. It was this time they ran on saying taxes were too high for everyone, all government spending was wasteful, government was too big and it had to end.

Under Ronald Reagan, taxes were cut for everyone, that it to say the official tax rates were cut for everyone. What isn’t told is that the loopholes for the rich were placed back in the tax code in the years between Kennedy and Reagan and those loopholes remained when the tax rates were cut again. However, loopholes enjoyed by the middle and working class were eliminated almost completely. For example, Prior to Reagan, you could write off Credit Card and Car Loan Interest rates from your Federal Taxes. That was eliminated. So although tax rates went down, only the wealthiest ended up paying less taxes, the middle and working class ended up paying more to fund government. The concept of a progressive tax code was being turned on its head.

There was even a push from Republicans for a “Flat Tax” that they said would be fairer than the current code. They suggested that a flat tax rate for all Americans regardless of income would be fairer and bring in more revenue. Well consider that for a moment, in simple math terms, a person who earns more money a year will have even more money to spend on other things or ship overseas, a person who makes less would have less money cleared to pay for necessities of life like food, housing, clothing, education etc. placing them in greater need of government assistance. However, government is too big; remember?

So cuts to government programs implemented to help those who can’t earn enough to survive go away so those with more than they could possibly spend in a lifetime, get even more. Republicans want to replace the progressive tax code with a regressive tax code where the biggest tax burden is removed from the wealthiest and placed instead on the most vulnerable people in our country.

Another thing the Republicans won’t tell you is that they want a balanced budget amendment to the US Constitution to balance the federal budget. Now they refuse to raise revenue to meet costs so that would require major cuts in government spending. They refuse to cut spending to the Military, so the cuts would have to come to programs like Medicare, Social Security, government agencies created to regulate medicine, food safety, water safety, infrastructure, police, disaster relief, education and supplements to individual States. Did I tell you? Each State in our Union is already required to have balanced budgets. Red States, usually the least prosperous in our nation ran by Republicans won’t raise taxes on the wealthy and business who do very well there thank you so they depend on Federal supplementary funding via numerous programs to balance their budgets. Now those who have corporations would say that they could provide for citizens was government does, you would merely just have to pay for it at a cost that ensures their profit margins, if you can. If not, well too bad.

By cutting taxes and eliminating spending or complete programs that actually stimulate the economy that in turn create jobs that in turn generate more tax revenue, Republicans have placed more and more on our credit card and no, we can’t deduct the interest rate on that card from our national debt. Their taxcuts have become more and more unfunded and untenable for our economy, especially with increased spending on our military. They still want more tax cuts and are now openly saying they will need to cut Social Security, Medicare and Medicaid to pay for it. These programs came into being by demand from a nation in distress because most families needed assistance to survive in a society that’s continues to be more expensive and wages for the average worker isn’t keeping up with that inflation.

Our current tax code and spending priorities in this nation is a mess, no doubt about it. However the simple bumper-sticker campaign slogan of “Cut Taxes, Shrink Government” isn’t working for this nation and is leading us to economic and societal collapse.

The United States is the largest, most diverse, most advanced, richest nation in history. As such we require a well-funded and well-functioning government to regulate, monitor and nurture this society for the best interests of all citizens. This requires sufficient revenues from taxation that is fair and progressive. Spending priorities must be addressed too. Government spending that has a return on the investment include, but are not limited to Education, Healthcare, Food Stamps and Infrastructure building and repair. Our military spending is bloated and has little if any return on the money spent, even less if we actually continue to engage in wars we need not be involved in.

It’s a simple premise, those with the most can take on a greater tax burden with no loss to their standard of living. Corporations dependent upon an educated workforce, US infrastructure and transportation can afford to pay the nation back by paying taxes to maintain what they need and should pay for it instead of shipping their assets overseas or paying no taxes at all.

Remember, the last Republican tax plan reduced corporate and wealthiest Americans tax rates, but kept all the loopholes in for just them. Many pay little to no taxes, some are even getting money back for taxes never paid. Meanwhile working everyday Americans go paycheck to paycheck fearing loss of their social safety net because their needs don’t measure up to the wants of the wealthiest Americans and the Corporations they own.

Kennedy said it best, a rising tide lifts all ships. The American people are the tide. By progressive taxation to assist them in becoming more productive and successful, our entire economy improves, tax revenues increases, the national debt is lowered and even the wealthiest do better in an improving economy.

It’s the story of Post-World War II middleclass expansion that spanned into the sixties but was cut short in the 80’s by the Reagan “shrink government, cut taxes” fraud on the American people that has started our societal decline. The plan to shrink government and cut taxes ended up shrinking the middle class and cutting their wealth.

We need to turn things back to the right direction and not fall for this crap anymore.

 

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