A Philosophical Policy Question

I was going to write this post to pose a question about why Israel’s moral standing in the world seems to be so low.  This is a small nation in the Middle East that’s surrounded by people who are hostile to its very survival, and it still thrives.  It’s not perfect by any means, but it thrives and is the only liberal democracy in the region.  But most people seem to hate that Israel even exists.  Why?  Read Richard Cohen’s column).  If you want to comment on this in this post, that’s fine; but I’ll revisit the topic later.  It’s something I really want to explore.

***

Today, though, I read another interesting op-ed about the debate on taxes and budgets that we’re not having and I want to comment on that.

There’s a difference between Democrats and Republicans these days.  Democrats seem to be at least trying to provide a social safety net; Republicans seem to be all – and solely – about providing tax cuts to the richer members of society and cutting spending.  Didn’t we prove that trickle-down economics doesn’t work?

Spending does need to be cut.  But taxes need to go up too (not that anyone particularly likes paying them, of course).  Let’s be real.  We spend too much in entitlements and by funding wars outside the normal budget process, so no one really knows what’s spent.  There’s no way out of this without both cutting spending and increasing taxes.

But some entities – read corporations – need to pay their fair share in taxes as well.  Nearly everyone has seen the story about GE (a very large company by any measure) turned in a 2010 profit of $14.2 billion ($5.1 billion from US operations), and then paid exactly zero in taxes.

Tax avoidance, as opposed to tax evasion, is legal, and isn’t necessarily a bad thing.  Everyone tries to avoid taxes by deferring income in their 401(k) plans and paying employee portions of benefit plans pretax.  But some entities do it a lot better than others.

How is avoiding any US tax on US profits of $5.1 billion even possible or permissible?  GE isn’t the only corporation doing this (see list).  Bank of America, one of the TARP zombies, got a $1.9 billion refund on profits of $4.4 billion.  Exxon Mobil had profits of $19 billion in 2009, and actually got back $156 million from the IRS.  There’s more, too.

Why isn’t Congress – as a part of its budget “debate” – holding hearings and votes on closing the tax loopholes that GE and other large companies legally exploit?  It won’t.  The Republicans won’t stand for it.  The Democrats aren’t much better on this, lacking the backbone to stand up and do what needs to be done.

The small difference here is that Democrats are willing to spend some of the nation’s treasure to help the downtrodden.  Republicans are not, and are instead willing to spend the nation’s treasure to further enrich the rich, paying bare lip service to the struggling members of our society.

This isn’t a battle over entitlements, which desperately need to be reformed if any safety net is to survive long-term.  It’s not even really a battle over deficit reduction, which also needs to be seriously taken on (President Obama needs to do much better on this, as does House Speaker Boehner).  It’s a battle over who owes what in our country.  It’s a battle over fairness and simple decency.

The little guy who’s been creamed in this recession (some people are taking huge cuts in salary from what they made before the recession to their post-recession jobs, if they even have a job), like the example given in Katrina vanden Heuvel’s op-ed (linked above), can’t afford legions of tax lawyers, like GE and Exxon Mobil and Bank of America can.  He’s going to pay his $1,400 to the IRS on a little more than $24,000 in annual income.  How is that remotely equitable to those huge corporations paying nothing, or even getting huge sums back from the government?  Does anyone see any cause and effect with the Supreme Court’s Citizens United ruling, saying that political speech is protected and that corporations are seen as individuals?

It’s bad enough that we’re fighting wars we can’t afford.  The economy is still weak.  Inflation is starting to rear its head in the form of higher food and fuel prices.  Wages aren’t keeping pace with inflation, putting pressure on interest rates.  But the Fed doesn’t want to raise interest rates because of the huge federal debt.

And so the cycle continues.  The little guy is squeezed while the richest among us – especially huge corporations – pay nowhere near close to their fair share.  The political gulf in this nation is widening.  So is the economic gulf.  When does the playing field get leveled at least a little?  I know, I know.  When hell freezes over.

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1 comment
  1. Alan said:

    Obviously you are under the misconception that we live in a true democracy. We live under an oligarchy. Sure the people get to vote on things, but not until all information on the candidate, or subject has been filtered through the media that is in control of the few. Oh, and of course those who we do elect are bought and paid for by those same few.

    As for Israel, if you know the history of Palestine (and not the Israelis one sided history) you would understand. It is the story of, once again, Europeans taking over a region as if they owned it, without regards for the people who were already living there. In this case it was the Zionists.

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