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The "Budget Crisis" is the Product of Tax Avoidance Scams By The Very Rich

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Everywhere you look, from the federal government to the states, to your hometown, "budget crises" abound.   Services are being slashed.   Politicians and pundits from both parties tell us that the good times are over, that we've got to start living within our means.

But more than anything else the budgetary problems we face are the result of  tax-avoidance scams by the very rich that have been going on for nearly 50 years.

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As Ted Rall points out in a new article, there are two states that best illustrate the problems we're up against:  

  • California, where new/old governor Jerry Brown is trying to close a $25 billion shortfall with a combination of draconian cuts in public services and a series of regressive tax increases, and
  • Wisconsin, where right-winger Scott Walker says getting rid of unions would eliminate the state's $137 million deficit.


Never mind the economists, most of whom say an economic death spiral (such as we are currently in) is the worst possible time for governments to cut spending.  Pro-austerity propaganda has, at least temporarily, won the day with most of the American public.   In fact a new Rasmussen poll finds that 58% of likely voters would approve of a shutdown "until Democrats and Republicans can agree on what spending to cut."

But the budget "crisis" is a scam.   It's the product of the rightwingnut "starve the beast" (i.e. starve the government) effort that they've been engaged in for 30 years or more.   There's actually plenty of money out there--but the pols just don't want to take it from the rich.   Why not?   Because the rich are their bread and butter.   The rich are their primary campaign fund contributors!   And as far as the Repugs are concerned, it's much better to break the unions, for they are still a significant source of Democratic fund raising, and may (if not put to death now) come roaring back at some point, much to the disadvantage of Republican candidates all over the country.

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Consider this:   If we could tax the rich at the same rate they are taxed in northern Europe, there would be no need to lay off a single teacher, close a single library for an extra hour, or raise a single fee by one red cent.   Every government could then not only balance its budget, but wind up with a surplus.

And why shouldn't their taxes be increased?!   Over the last 50 years, tax rates for the bottom 80% of wage earners have remained almost static.   Meanwhile, over that same period of time, the rich have received tax cut after tax cut after tax cut!   For example, the tax rate paid by the top 0.01% -- these are people who each currently receive at least $6.5 million a year in income! -- fell by half (from 70 to 35%) in that period.

Times are tough.   Someone has to pay.   So why not start with those who can most afford it because of all the very generous tax cuts they and they alone have received over the past half century, at the expense of everyone else?!

Europe has the world's best food, its best healthcare system and vastly more generous vacation and sick-leave policies than does the US.   It also has one of the fairest ways to generate revenue for government:   a wealth tax.   In Norway, for example, you pay 1% of your net worth in addition to income tax.

So what if we imposed a Norwegian-style wealth tax on the top 1% of US households?   And by the way, who are these people, economically?   We're not talking upper middle class here.   We're talking way above that:   the "poorest' among them is worth a $8.3 million.   This top 1% own 38% of all assets in the United States.   (The top 10% own 71% of all US assets.)

"Such a wealth tax on just the top 1% would raise $191 billion each year, a significant attack on the deficit," Leon Friedman writes in The Nation.   "If we extended this 1% wealth tax to the top 5% of income receivers, we could raise $338.5 billion a year."

But that's just the beginning:   Wealthy individuals are nothing compared to America's money-sucking corporations.

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Business shills whine that America's corporate tax rate--35%--is one of the world's highest.   But that's pure BS.   Our real corporate rate--the rate companies actually pay, after taking advantage of loopholes and deductions--is among the world's lowest!   According to The New York Times, Boeing paid a total tax rate of 4.5% over the last five years.   (This includes federal, state, local and foreign taxes.)   Yahoo paid 7%.   GE paid 14.3%.   Southwest Airlines paid 6.3%.   "GE is so good at avoiding taxes that some people consider its tax department to be the best in the world, even better than any law firm's," reports the Times" David Leonhardt.   "One common strategy is maximizing the amount of profit that is officially earned in countries with low tax rates."

America's low effective corporate tax rates have left big business swimming in cash while the rest of the country goes bust.  

As of March 2010, non-financial corporations in the US had $26.2 trillion in assets.   Seven percent of that -- something like $2 trillion -- was in the form of cash.   Where did they get a good deal of this loot?   Answer:   Mostly from middle-income American taxpayers who, with congressional help, they, the rich, have been chiseling away at for the past 50 years.

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Several years after receiving my M.A. in social science (interdisciplinary studies) I was an instructor at S.F. State University for a year, but then went back to designing automated machinery, and then tech writing, in Silicon Valley. I've (more...)

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