Tuesday, October 7, 2014

War Tax for the War on ISIS (ISIL)

With the escalation of our “new” war with ISIS (ISIL), how is this going to paid for — with “offsetting costs” (PAYGO) — such as cutting food stamps, rather than raising the capital gains tax rate on the war profiteers?

  • The Revenue Act of 1862 was passed by Congress to help fund the Civil War.
  • The Revenue Act of 1916 and War Revenue Act of 1917 (and the Revenue Act of 1918) passed because the entry of the United States into World War I greatly increased the need for revenue.
  • The crisis of World War II led Congress to pass four excess profits tax statutes between 1940 and 1943. After the war in 1945 Congress repealed the tax.
  • The Korean War induced Congress to re-impose an excess profits tax, effective from July 1950 to December 1953.
  • The Tax Reform Act of 1969 (Vietnam War) The maximum tax rate increased from 25 percent to 29.5 percent in 1970, 32.5 percent in 1971, and 35 percent in 1972 and later years. The alternative tax rate on corporate long-term capital gains income increased to 28 percent in 1970 and 30 percent in 1971.

The Only War (Ever) in U.S. History that was not Funded with Tax Increases

After invading Iraq, Bush didn’t raise taxes to fund the war, but instead lowered the capital gains tax rate from 20% to 15% — the lowest since it was first established in 1921 at 12.5%. After the Bush tax cuts were extended 2 more years in 2010 (as a compromise with the GOP for extending unemployment benefits), and after they expired in 2013 (and with ObamaCare’s new 3.8% surtax), the capital gains tax rate is currently only 23.8% — a lot less than the top marginal rate of 39.6%. (That's why Warren’s secretary pays a higher rate than her boss.)

How is this new war going to be paid for? On the backs of the poor? With more government debt? With less investment in infrastructure, education and research? With more cuts to NASA and our most necessary government agencies — such as the Centers for Disease Control and Prevention, the Food and Drug Administration, Federal Aviation Administration and the IRS (for auditing tax dodgers and their offshore bank accounts).

Corporations hold about $2 trillion in excessive profits, but they aren't hiring or raising wages, so they can afford a war tax. We already paid for the last war with a housing collapse, the Great Recession and mass unemployment. We already bailed out the banks and the auto industry and got very little in return. And if the Defense Industry wants a war, tax them and make them pay for it.

And who will pay for the next natural disaster — especially if it happens in a Red state? The unemployed and poor? The Red states already receive more federal dollars than they pay in with revenues.

It's time Congress passes a new tax bill to pay for this new war.


  1. I would suggest that we raise the capital gains tax to 39.6% (equal to the top marginal rate on regular wages) and lowering the corporate tax rate from a "statutory" 35% tax rate to a FLAT "effective" 30% tax rate (no exceptions) for companies that only invest in the U.S. — meaning, only allowing domestic costs be deductible and excluding investments overseas for multinationals — which would also mean: no longer allowing the deduction of executive compensation pay packages (e.g. stock option grants, etc.) or wages paid to overseas employees.

  2. Mark Thoma: "The Deficit" Is Not "The Economy":

    It's sad that so many people think the way to fix the economy, or the deficit, is to help the people who don't need it rather than helping those who do. Austerity that hurts those in need trickles up -- austerity financed tax cuts help those at the top -- but very little trickles back down again. Tax cuts for the wealthy do little to help the economy, and tax cuts certainly don't help the deficit. The claim that they somehow pay for themselves and reduce the deficit has no foundation in actual evidence, it is also 'quack mediamacro' designed to fool people into supporting policies that benefit a key GOP political contingency.


  3. Kill now, pay later? Disturbing on many levels....

  4. Pentagon: Up to $1.1 billion cost for Iraq, Syria (That was last October, BEFORE the war on ISIS)


  5. ISIS magazine promotes slavery, rape, and the murder of civilians -- all in God's name.


    Polls show more Americans say combat ground troops are needed to be deployed to take the fight to ISIS.


    * If so, then we'll need an excess profits tax to pay for it (since the job creators won't pay living wages.)

  6. Why is it that Republicans/conservatives always blame social welfare programs as the driver of the national debt? Why isn't the defense budget included as a cause? It, too, has risen during the past decade. In 2000 it was about $300 billion, for 2012 over $700 billion. Were defense spending and tax rates restored to the 2000 level, paying for the social programs would be a concern, but not the crisis that Republicans/conservatives now imagine. Ignoring the rapid rise in defense spending makes Republican/conservative “concerns” over the rise in Medicare and other social costs hollow and hypocritical. A genuine concern for the deficit would include concern about the growth in ALL spending AND the cuts in revenues that have added to the deficit.
    The last Republican to balance the national budget was President Eisenhower, he of the 90% top tax bracket, who left office in 1960. Since 1961 the debt ceiling has been raised 78 times: 49 times under Republican presidents, 29 under Democrats. Ronald Reagan owns the debt ceiling raising record, raising the debt ceiling 17 times during his two terms which also coincided with the US going from world's leading creditor to world's leading debtor nation.

  7. I'm only guessing but, I believe the average American citizen is more at risk from a mass shooting by a young "Christian" white man with mental issues who legally purchased a semi-automatic assault rifle, more so than they are from a foreign Muslim pledging an allegiance to ISIS. Of course, if Iran gets a nuke, that could change. But for the time being, most Americans are more at risk from someone who is texting-while-driving. But the mainstream media is driving the ISIS fear (and playing in to the ISIS strategy) by their constant 24/7 micro-reporting of terrorism — because that drives advertising ratings. But it also gives ISIS a lot of free publicity, which only helps their recruiting efforts.

  8. UPDATE (after Brussels bombing)

    A study of every suicide attack in the world since 1980 — over 4,600 in all — finds what 95% of all suicide attacks have in common; it's not religion, but a specific strategic motivation to respond to a military intervention. Religious fervor is not a motive unto itself. Rather, it serves as a tool for recruitment and a potent means of getting people to overcome their fear of death and natural aversion to killing innocents.