To those who might be wondering why the Republican Party
leaders are continuing to support Donald Trump as their presidential candidate
as he does everything conceivable to lose the election and embarrass Republican
politicians everywhere, Paul Krugman provides an interesting perspective. Krugman titled his New York Times article Pieces of Silver, clearly suggesting betrayal on an extraordinary scale is taking
place.
“By now, it’s obvious to
everyone with open eyes that Donald Trump is an ignorant, wildly dishonest,
erratic, immature, bullying egomaniac. On the other hand, he’s a terrible
person. But despite some high-profile defections, most senior figures in the
Republican Party — very much including Paul Ryan, the speaker of the House, and
Mitch McConnell, the Senate majority leader — are still supporting him, threats
of violence and all. Why?”
He suggests a few reasons why party leaders refuse to
dump Trump. The first is that they refuse
to act like honorable people because they are, in fact, not honorable people. He also suggests that they are afraid to act
because they have always known what is only now becoming apparent to everyone
else: the Republican Party’s success has been based on the promotion of white
nationalism. Repudiating Trump would be
the same as repudiating the Party’s voter base.
Krugman chooses to focus on the Party leaders’ long-time
role as enablers of the wealthy.
“But there’s a third answer, which can be summarized in one number: 34.”
“What’s that?
It’s the Congressional Budget Office’s estimate of the average federal tax rate
for the top 1 percent in 2013, the latest year available. And it’s up from just
28.2 in 2008, because President Obama allowed the high-end Bush tax cuts to
expire and imposed new taxes to pay for a dramatic expansion of health coverage
under the Affordable Care Act. Taxes on the really, really rich have gone up
even more.”
If Clinton
wins the election, the top tax rate is not going down, although, conceivably,
it might go up. If Trump wins the
election, they will have the power to dramatically lower the taxes on their
plutocrat rulers.
“So if you’re wealthy, or you’re
someone who has built a career by reliably serving the interests of the
wealthy, the choice is clear — as long as you don’t care too much about stuff
like shunning racism, preserving democracy and freedom of religion, or for that
matter avoiding nuclear war, Mr. Trump is your guy.”
This is betrayal at the Benedict Arnold level—if not
greater.
“But whatever doubts they may be
feeling don’t excuse their actions, and in fact make them even less forgivable.
For the fact is that right now, when it matters, they have decided that lower
tax rates on the rich are sufficient payment for betraying American ideals and
putting the republic as we know it in danger.”
There is another act of betrayal taking place as
Republican leaders continue their assault on one of our most important
institutions, the Internal Revenue Service (IRS). When one considers the level of dysfunction
in our houses of Congress, comparisons with Greece come to mind. However, there is one major difference that
separates us from such a failing state: our citizens are generally willing to
pay their taxes—so far. The
Republican-led congress has been cutting the IRS budget and has been trying to
discredit its functionality in order both to support their small-government
bias and to protect their wealthy allies from rigorous enforcement of tax
laws. Both approaches could have the
dangerous consequence of convincing taxpayers that the system is rigged against
them. “ If dishonesty is common, why should I
be honest?” And then we become Greece.
Martin Lobel provides some insight into what has been
occurring in How Plutocrats Cripple the IRS. This piece was published in The American Prospect.
“For every dollar appropriated
to the Internal Revenue Service, the public collects more than $4 in taxes.
Nonetheless, Congress has cut the IRS appropriations by $1.2 billion since 2010
while expanding the service’s administrative burdens by giving it
responsibility for enforcing laws extraneous to tax collection, such as the
Affordable Care Act.”
“Overall, the budget cuts
reduced IRS staffing by 15 percent since 2010. That budget cut translated into
a reduction of more than 2,200 revenue agents. The result: Tax fraud
investigations plummeted by 43 percent for individuals and 58 percent for
businesses. And that trend is accelerating. In 2014 alone, almost 1,000
enforcement personnel were lost, resulting in 11 percent fewer examinations in
FY2014 than FY2013. And the IRS expects to lose between 2,000 and 3,000
employees this year. What makes it even worse is that many of those departing
are experienced employees who will have to be replaced by inexperienced ones
who won’t get sufficient training—budget cuts have forced an 85 percent cut in
employee training.”
One way to diminish confidence in an institution is to
render it inaccessible and unhelpful.
“Unfortunately, because of the
10 percent cut in IRS appropriations since 2010, there are fewer employees to
respond. In 2015, only 38 percent of taxpayers could get through to the IRS on
the phone. What does that do to a citizen’s respect for the IRS?”
“In response to pleas from seven
former IRS commissioners, Congress did approve a $290 million increase in
appropriations for customer service in FY2016, which should allow the hiring of
up to 1,000 customer-service personnel. This should increase the number of
calls answered this year from 38 percent to 60 percent, according to IRS
Commissioner John Koskinen. Unfortunately, there was no increase in the IRS
enforcement budget.”
Congress also directs the IRS to engage in dubious
practices which seem to consist more of harassment than fiscally responsible
behavior.
“For all taxpayers, the average
risk of being audited in 2014 was just under 1 percent. Interestingly, if
you reported no adjusted gross income, the risk of being audited was 5.26
percent. Why? Because of Congress’s demand for more audits of Earned Income Tax
Credit recipients—who are low-income earners.
Meanwhile, the audit percentage for those who reported between $500,000
and $1 million in adjusted gross income was 3.62 percent.”
And, of course, the wealthier one is, the greater the
opportunity to benefit from a resource-poor IRS.
“Plutocrats, the richest 0.1
percent of Americans, get the most benefit from a weakened IRS. Because they
have the money, the lawyers, the lobbyists, the accountants, and the secret
campaign funds, they are able to ensure that the IRS won’t have the resources
to effectively collect the money they owe to it. Plutocrats do this by devising
tax shelters too complex for the IRS to challenge at an acceptable cost, and by
having allies in Congress who intimidate the IRS from issuing tough regulations
and who cut IRS funding to prevent adequate enforcement.”
“The IRS estimates that only
about 1 percent of wages reported by employers to the government are
underreported, but underreporting could be as high as 56 percent where there is
no outside reporting of income to the IRS. That describes most of the income of
the very rich, which comes from capital income and very complex financial plays
designed to maximize profits and minimize taxes.”
The IRS does try to assess the tax returns of the very
wealthy, but is hindered by its lack of support from Congress and by its lack
of resources.
“At the very top, the audit
figure did rise to 16.22 percent for those who reported adjusted gross income
of over $10 million a year.”
“But many such investigations
into plutocrats’ creative tax accounting were aborted because a great deal of
sophisticated manpower is required to breach the walls hiding tax avoidance or
evasion that are erected by the plutocrats’ army of financial advisers,
lawyers, and accountants. A relatively simple example is a maneuver in which an
investor swaps dividend-paying stocks with a bank, which lends the stocks to a
third party in a country with a low tax on dividends. This transaction provides
no economic benefit except to the lawyers, accountants, and bankers; its sole
purpose is tax avoidance. The bank earns a fee for arranging the transaction,
and the original owner still owns the stock but receives more money than he
would have if he just held the stock and had to pay taxes on the dividend
income. Everyone wins but the IRS—and the other taxpayers who have to make up
the difference.”
“….such swaps generated about
$259 million in fees for Bank of America alone in 2013.”
Lobel concludes with a sentiment quite similar to that
expressed by Krugman.
“The media need to do a better
job of informing the public of what is at stake and what needs to be done.
Voters have to know who has been selling them out to the plutocrats so they can
hold them accountable. Those politicians who have hidden behind the tax-cutting
theology so as to feed off the plutocrats’ money have to understand that
opposing an effective IRS and opposing real tax reform will result in lost
elections. Otherwise, the shift of wealth to the top 0.1 percent, away from the
middle class, will continue to undermine our economy.”
Lobel used this as his lede, but it serves equally well
as a conclusion.
“You pay more because elites use
their influence to pay less.”
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