Sunday, September 20, 2015

The GOP Mantra: Less Taxes, Less Regulation, Less Government

The GOP likes to say they are for getting the government jack boots off our necks, as if American citizens are being oppressed by a tyrannical government every day in their daily lives. But yet, for over 200 years, people from all over the world continue to come here — and by any means possible, sometimes risking their lives. Why?

When most Americans first wake up in the morning, are they dreading government oppression? Or are they dreading having to go to work for an over-demanding, mean and overbearing boss — while barely earning enough money to pay for food and rent? One example of "better" government (not "less" government) might be a government law to raise the federal minimum wage, because their boss is too cheap and/or too greedy to pay them a fair and living wage.

Would a good example of "less" government oppression and tyranny be to eliminate all speed limits, stop signs, school zones, crosswalks and traffic lights as they're driving to their crummy job?

If Americans really gave this some serious thought and asked themselves: "How is government [laws and regulations] bad for me and how is government good for me?" — many people might be surprised at how much better off they are WITH "government" — and that "better" government (not "less" government) is really what we need. After all, there's always room for improvement.

Yes, we are jealous and angry about smug government workers making more than us and getting much better benefits (pensions, etc.); but that's because they belong to labor unions — and most private sector workers no longer belong to a labor union to demand higher wages (to keep up with inflation) and to negotiate for better benefits (like retirement plans, vacations and paid sick days.)

And yes, there is fraud in government (just like there is in the private sector). And yes, we sometimes resent it when too many government workers take their good jobs for granted when so many of us are suffering with low wages, no benefits at all and are forced to work in part-time or temporary jobs. The worse offenders would be, not typical government workers, but our politicians who go to work for corporate lobbyists after we vote them out of office — many times, the very people who work for the government and also berate "government".

So yes, we do need "better" government (and more honest politicians) — but not necessarily "less" government, who actually do the people's work.

But at the same time, we shouldn't begrudge and envy government workers if they are better off than the rest of us; but instead, we should try to make our own working conditions, benefits and wages better by ALSO joining a union (Read my post: What Anti-Union Workers Should Know)

Since we need tax revenues to fund government and hire government workers (whether it's a good government or a bad government), here's a brief mention about the current tax code:

Even though the very wealthy pay much more in taxes than anyone else (because they make so much more than anyone else), as a "percentage" of their income, they pay less than the poor. One reason is because of the low tax rate on capital gains (where the very wealthy generate most of their income), and because capital gains isn't taxed at all for Social Security.

Most of the GOP tax plans want to lower the capital gains tax rate (even lower than it already is), or not tax capital gains at all. Also, most members of Congress refuse to eliminate (or even raise) "the cap" on Social Security taxes.

Below is the 2015 tax rates for individuals on wages (per Forbes). I added the capital gains tax rate for comparison. If you look at wage data from Social Security, and then compare it to the tax brackets above, it shows:

  • About 64% of wage earners make less than $40,000 a year (most falling into the two lowest federal tax brackets.)
  • About 95% of wage earners make less than $120,000 a year. I mention this because after the first $118,500 an employee earns ("the cap"), they no longer have to pay the 7.65% Social Security tax.

2015 tax rates

Now note that the 3rd lowest tax rate is for capital gains income (at 23.8%) — and capital gains income is not taxed at all for Social Security. But a neurosurgeon is taxed at 39.6% on income over $413,201 and pays tax for Social Security up to the first $118,500 — but a CEO, hedge fund manger, or investor making several million dollars a year with stock options or carried interest is only paying a 23.8% tax rate and pays no Social Security taxes at all on this income. If a CEO has a "base salary" of $0, they also pay no Social Security tax if their income is only derived from stock option grants and hidden in other benefits.

Now consider this: Because wages have been stagnant or declining for the past 35 years, most workers haven't also been able to contribute more in tax revenues to fund government and the Social Security trust funds. Stocks are UP, corporate profits are UP, but more and more workers are leaving the labor force due to a lack of jobs, and many of the new jobs are part-time, temp and on-call in our new "gig" economy. Meanwhile, the CEOs are raking in huge salaries, but paying less as a percent of their incomes to tax revenues.

Besides more tax cuts (meaning less tax revenues to fund any government, "good" or "bad"), the GOP also wants less regulation and less government workers. Soldiers in the military and police officers are the only government workers the GOP wants to increase. But this is what less tax revenues, less regulation and less government workers would mean:

Less auto and safety recalls; less people to clean up oil spills; less people to oversee food and drug safety; less people in inspect containers at ports and airports; less people to audit tax dodgers; less people to monitor safety conditions at work places; less people to inspect bridges, roads and railways; less first-responders at FEMA; less regulators at the SEC; less people overseeing medical and old-age facilities; less building inspectors; less people fighting wildfires in the northwest; less air traffic controllers; less inspectors investigating plane crashes; less government research; less people at the EPA testing the air and water (etc.) — and probably less speed limits, stop signs, school zones, crosswalks and traffic lights while driving to work — and probably less government workers at the DMV processing driver license renewals.

The GOP wants less regulation and less government, but just much less law and order when it comes to big business, but more soldiers and police to protect the interests of the rich from the heathen (everybody else.)

With a growing population (up 33% over the last 40 years), we don't need LESS government workers, we need MORE government workers to do the people's work. But there is also lot a fraud in government (like bank regulators being captured by the banks). So we also need BETTER government. Which means, we'll also need more oversight of government workers — which means, we need to hire more government workers to watch the government workers ;)

And to do this is, we need more tax revenues, which means we'll need to reform the tax code so that capital gains income (investment income) is taxed at the same rate as regular income (income from wages). But the GOP also wants to completely eliminate the tax on capital gains income too. So what does that tell you? Less taxes, less regulation, less government — and a lot more income inequality.

Meanwhile, our infrastructure is crumbling, government institutions and major corporations are being hacked, the Social Security trust funds are in danger, sequester has cut our military, (etc, etc, etc), — all because the GOP wants "less" government. Now the GOP wants to build a wall on the Mexican border. Where will they get the money without either raising taxes on the rich or cutting government services for everyone else?

1 comment:

  1. Pope Francis denounced "trickle-down" economic theories in sharp criticism of inequality. In his most authoritative writings as pontiff, Francis decried an “idolatry of money” in secular culture and warned that it would lead to “a new tyranny.” He strongly criticized an economic theory — often affiliated with conservatives — that discourages taxation and regulation:

    “Some people continue to defend trickle-down theories which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world. This opinion, which has never been confirmed by the facts, expresses a crude and naive trust in the goodness of those wielding economic power and in the sacra­lized workings of the prevailing economic system. Meanwhile, the excluded are still waiting.”