Our new Constitution is now established, and has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes.
– Benjamin Franklin
It’s not a news alert that American’s have never liked to pay taxes. We started a war over them, and have never voted for a politician who says he/she will raise them. But in light of the recent debt debate and angst to lower the national debt, it’s important to remember raising taxes on millionaires and corporations could help protect social programs, and create jobs.
In March, the New York Times reported that major companies in the United States paid absolutely nothing in taxes for their record profits in 2010. It wasn’t long after that 60 Minutes took a trip to Eastern Europe discovering American corporations hiding their money where it can’t be taxed. This should have been a moment for the Obama administration and his allies in Congress to call for a major tax reform. Despite vast new financial instruments and companies easily being able to conduct business worldwide, tax reform hasn’t taken place since 1986.
If you took a look at the stock market these past couple of days, you quickly realize the debt ceiling debate was only a artificially problem created by Congress. While today’s employment numbers weren’t the worst we have seen, it still wasn’t good enough. There’s no doubt more revenue is needed, and with corporations still reporting strong profits at the same time American’s are struggling, it is time to seriously look at ways that can bring in more money.
Most taxes collected in this country come from sales taxes or people’s pay checks. But with people out of the job and not spending money we’re not able to use those revenues to pay for the things that we need like roads and teachers.
The balance act being conducted is trying to figure out a way for American corporations to bring the money back to the states and invest it. One idea being floated around is a tax holiday where there will be a set amount of time where corporations can bring back the money from abroad without being taxed. The trick is to figure out a way to make sure the money that is brought back is used to hire people. Versions of this scheme have been endorsed by Obama’s former Chief of Staff Rham Emanuel and former President Bill Clinton, but so far haven’t been endorsed by the President Obama.
Instead, Obama has sought to increase taxes on hedge fund managers, millionaires, and “corporate jet owners.” He has also called for closing certain tax loopholes that can bring in an additional two billion dollars.
Corporations argue that they have to send their profits abroad because their stock holders want to see a profit. Cisco has had to pay back some of those holders because they lost confidence in the company. But corporations should want to pay taxes. If done right it could become a lot cheaper to pay for a employee’s medical bills which would lower their long term costs.
On the political front, there is always some disconnection between people wanting or liking items in a bill and but then still not wanting to pay taxes. We saw in the polls regarding the healthcare debate, that while people liked what was in the bill they still didn’t like what was in the overall package. One of the main reasons a major overhaul of the tax system is needed is so Social Security and Medicare, programs that no one wants to see go away, stay solvent. Price controls for Medicare is only half the battle, it’s never going to be free and new ways need to be implemented to make sure money is going into the system that would keep overall costs low for the majority of Americans.
Certain members of Congress argue they want to reduce the deficit so it won’t burden their children or grandchildren, but paying for items we need now rather than later will be cheaper and create a better economy for them. The reason why we need more revenue is so more money can be flowing through the economy which will help create jobs. With the economy continuing to fluster what is really needed is another, more specific, stimulus package. But unfortunately it’s not politically possible. Americans don’t want their bridges falling or schools lacking the supplies it needs to teach their children. People are needed to fill these positions and the taxes collected from them will help stabilize our social programs. Thus the world keeps turning.
Benjamin Franklin, businessman, inventor, and founding father, was right when he said the only thing certain was death and taxes. It is part of the way the world works that help create jobs that supports families and their livelihoods. Deficits are a long term problem but it will be better to raise revenues now to pay for the future.