We (should be) in This Together
This week, the New York Times ran a powerful op-ed by billionaire Warren Buffett. In the piece, Buffett implores Republican leaders to stop “coddling the mega-rich” and stop trying to balance the budget on the backs of the poor. Instead, the billionaire insists that Congress ask the wealthy to pay their fair share.
So, what prompted Mr. Buffett to call out Republican leaders?
Well, as you no doubt know, earlier this month, Congress finally came to an agreement with President Obama that lifted our federal debt ceiling to avert an economic catastrophe. BUT, as part of that agreement, 12 members of Congress have been selected to be part of a “super committee” that is charged with reducing the deficit.
Reducing the deficit is a good goal. But Republican leaders are already refusing to close corporate tax loopholes or to ask the super-rich to contribute their fair share as part of the deal—and the committee hasn’t even met yet. Instead, they demand cuts to vital services like Medicaid, Medicare, and the Affordable Care Act, which will cause major harm to the most vulnerable among us, while leaving intact tax giveaways to Big Oil, egregious loopholes that allow corporations like General Electric to pay $0 in federal taxes, and write-offs for corporate jet owners.
With Republicans steadfastly undermining the process, I wanted to build on Mr. Buffett’s plea (with a little help from Jon Stewart at the Daily Show) and explain why revenues MUST be part of any deficit reduction package.
We DON’T have the highest corporate tax rate
When Republican leaders push back against efforts to close corporate tax loopholes and ask corporations to pay their fair share, immediately they bring up a talking point that America has the “highest corporate tax rate in the world” and that raising taxes will eliminate jobs.
Here’s the truth. While on paper we have a “high” corporate tax rate, because of loopholes, write-offs, and giveaways, American corporations actually pay some of the lowest taxes in the developed world.
According to Salon.com:
Our statutory tax rate is comparatively high. However, as empirical data prove, our nation has one of the lowest effective corporate tax rates in the world, meaning that the tax rate most corporations actually pay after exploiting write-offs and loopholes is absurdly low.
Want to know what some major corporations paid over the past couple of years? Here are a few sobering statistics from a new Citizens for Tax Justice study:
- General Electric paid negative 3.2 BILLION in federal taxes;
- Verizon paid negative 705 million in federal taxes; and
- Honeywell International paid negative 482 million.
These corporations were given money despite earning a combined 18.3 billion in profits.
So when Republican leaders lobby against closing corporate tax loopholes, what they’re really saying is they would rather give money to multi-billion dollar corporations than protect vital health care services for our seniors, children, and people with disabilities.
The Truth about Medicaid
A popular target for the “cuts only” approach Republicans are fighting for is the Medicaid program.
For those of you who don’t know, Medicaid is a vital program that helps seniors, children, and people with disabilities gain access to health services. Across the country, 5.9 million seniors in nursing homes rely on the program to support their long-term care needs. 28.8 million children depend on Medicaid for pediatric care. And for the 8.8 million people struggling with disabilities, Medicaid is a vital lifeline they wouldn’t otherwise have.
And if that weren’t enough, a recent Families USA study shows that across the country, Medicaid supports millions of dollars in business activity and thousands of jobs.
In what universe is a program that helps the weakest among us, supports the economy, and creates jobs considered “wasteful spending” that should be cut?
Here it Is, Your Moment of Zen…
While this seems like a complicated issue, it’s really anything but. Jon Stewart breaks down the issue showing that half the households in America, in aggregate, control a mere 2.5% of our nation’s wealth.
Closing some ridiculous corporate loopholes and asking the mega-rich to pay their fair share could raise $700 billion dollars without having a negative impact their day-to-day lives.
But despite this fact, some Republican leaders are calling for higher taxes on the poor, while fighting to cut health care services. To them, it’s okay to take from the poor and eliminate their access to health care to pay down our deficit, but it’s not okay to ask the rich to stop writing off their corporate jet.
So What’s the Point?
None of this is to rail on corporations or to attack the mega-rich. The point is: We’re all supposed to be in this together.
Reducing our deficit is an important goal, but if the super committee is going to be truly successful, it will need a balanced approach that ensures that those who are suffering the most in this economic downturn aren’t asked to bear the largest burden.
That means protecting programs like Medicaid, Medicare, and the Affordable Care Act. And as Mr. Buffett says, asking the mega-rich to pay their fair share.