Nel's New Day

April 15, 2015

Tax Day: Bad, Good, Ugly

Filed under: Budget — trp2011 @ 9:11 PM
Tags: , , , , ,

On Tax Day 2015, far fewer people waiting in line because of electronic filing. Wealthy people increasingly pay less and less since the 90-percent tax rate for the richest filers in the 1950s. Every time that the GOP controls Congress, the wealthy benefit from additional tax breaks, and corporations get more subsidies. Every year, the United States has less and less investment funds for the infrastructure, education, climate change, job creation, etc. Corporations have dropped their share of federal revenues by almost three-fourths since the almost 40 percent in 1943 to only 11 percent now. The less that the wealthy and corporations pay, the more the bottom 80 to 90 percent of the people have to shell out.

The corporate tax rate may be 35 percent, but their actual payment is about 13 percent, less than a large percentage of people pay. Some companies pay no taxes. FedEx made profits of $5 billion between 2010 to 2012 and received $10 billion in federal contracts between 2006 and 2012, yet paid no income taxes. With billions of dollars in profit, Verizon and Pfizer paid no taxes while receiving billions of federal tax refunds. In 2013, corporate tax breaks cost U.S. taxpayers $176 billion in revenue, $1,328 per household. These corporate tax breaks have more than doubled since 1993. More is spent on corporate welfare than traditional welfare. Tax breaks, 17 percent of benefits going to the top 1 percent of households, are equal to more than the entire U.S. discretionary budget each year. The revenue loss of over $1 trillion each year is over 1.6 times the 2013 budget deficit.

estate tax

Instead of trying to close loopholes on Tax day, House Republicans are arranging a gift for the top 0.02 percent of U.S. households. Calling the estate tax the “death tax,” GOP members of the House announced a vote to repeal the tax on 4,700 estates out of 2.6 million deaths—one-fifth of one percent. The median household net worth was only $81,200 in 2014. Instead of paying the 40-percent rate, this 0.02 percent owe a rate of only 16.6 percent estate tax, because it applies to only an estate’s value of over $5.43 million. No taxes are required for the first $5.43 million.

If the law isn’t changed, the estate tax will bring in $246 billion in the next decade. Less than 1 percent of federal revenue, “it is significantly more than the federal government will spend on the Food and Drug Administration, the Centers for Disease Control and Prevention, and the Environmental Protection Agency combined,” according to the Center on Budget and Policy Priorities. A common complaint is that the estate tax hurts small and family businesses, including farms. In 2013, the 20 farms and businesses worth under $5 million paid a tax rate of 4.9 percent.

While House Republicans care for the wealthy, they have a budget to eliminate food stamps for 11 million people through a 34-percent reduction. That $125 billion cut from the Supplemental Nutritional Assistance Program (SNAP) will cost the economy 286,000 jobs. As families have less to spend on food, that reduced purchasing power ripples through the economy, translating into job losses not just in grocery and retail stores but also in trucking, warehousing, food manufacturing, farming, and other industries. Money for the wealthy does nothing for job creation, but a woman testifying about her past experience receiving food stamps said, “Without this program, I wouldn’t have been able to start my new career.” Just one week of the proposed estate tax cuts could feed more than 337,000 children for a year. The GOP answer to helping hungry people is charity. I suggest leaving both laws the way they are and create a GoFundMe collection for the top 0.02 percent who pay estate taxes.

This year’s Tax Day is memorable because Congress passed a sane law to end to the annual need for Medicare “doc fixes”–and in a grandly bipartisan manner. Only eight of 100 Senators voted against the bill, two of them the declared GOP presidential candidates Ted Cruz and Marco Rubio. The House passed the bill by 392-37. The bill got out of Congress just hours before Medicare providers would have had a 21-percent cut in payments.

The new law also funds the Children’s Health Insurance Program and community health centers for two more years. Republican Senators also failed to get a “repeal Obamacare” amendment attached to the bill. Senate Majority Leader Mitch McConnell said the bill’s passage is a sign that Congress is “back to work” under Republican leadership. And it took them only 105 days. (More details about the new law here.)

Sen. Bernie Sanders (I-VT) spent his time on Tax Day introducing a bill to recoup $590 billion from 83 companies using offshore tax havens to avoid paying taxes. Senator Elizabeth Warren called on lawmakers to break up big banks and change tax rules that benefit Wall Street.

Abraham Lincoln died 150 years ago today. He is the “Republican” who the GOP drags out into the media to show how wonderful today’s GOP members are. Here is the tweet from the GOP to commemorate his death:

abraham lincoln

And that’s Tax Day 2015.

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