The past year of bipartisan wrangling over Healthcare in the District of Corruption has confirmed the Congressional policy of diverting the public’s attention from the pending urgent reform of the present Wealthcare law, more popularly described in our politically correct vernacular as the Federal Income Tax Code. It’s not my intention to bother you with a listing of all the inequities buried in that law or to disturb you with an economic analysis of the diabolical rationing of taxes on those influential investors that benefit from long term capital gains.
However, I want to point out how little attention the issue of Wealthcare receives from the all-powerful media today. Their silent agenda is not to trouble the public with explaining how the system of progressive taxation benefits the Have-a-lots (corporations and individuals) and not the Have-nots.
Try to understand that this is not a screed in favor of oppressed taxpayers and the professional tax preparers, all who would like our State and Federal Income Tax Codes to be simplified. It is my humble desire to call your attention to what has become a secret negotiation going on continually behind the scenes in Congress prompted by the “will of the taxpayers” who demand “no more taxes” yet insist on more military action, more entitlements, and more government surveillance of the numerous services provided by federally sanctioned agencies.
For example, the pending controversial “minimum tax” issue is a ruse to pretend that Congress is truly concerned about the diminished purchasing power of the after-tax income of middle class taxpayers. Indexing is not a serious solution to amending the law in force. Likewise, any conversation about increasing the capital gains tax rate is a smoke screen to delay touching that “big investor” privilege.
Meanwhile, no effort will be made by the Congress to allow the significant losses of individual taxpayers due to the collapse of the stock market to be deducted from normal income. The meager $3,000 limit on deductible investment losses doesn’t restrict those taxpayers who have large gains on investment transactions from which huge losses can be deducted. Equal treatment under the law is thereby guaranteed, but favors the wealthy.
Wealthcare is predicated on the undisputed principle that everyone should pay their “fair share” of taxes. What is an individual’s fair share cannot easily be calculated anymore. Income tax rates have fluctuated over the years since they were established in 1913. These rates depend on the needs of the government, not the needs of an individual who must raid his savings, if he has any. It is well-known that paying taxes is inevitable like death, but it is not so well known about how corporations are favored, and why unearned income like capital gains should be treated separately from earned income such as wages and salaries.
A few examples are necessary though.
1.) The tax treatment of stock options permits delaying the payment of taxes on executive “bonuses” for the current year because the amount of profitability is unknown until the option is exercised. But let’s not go into details because the man in the street doesn’t have to worry about that privilege in the tax code.
2.) An individual has to pay taxes on all income no matter where that income originated – in the US or outside of it, but corporations do not.
3.) Some dividends are taxable, others are not. Why? Don’t ask me.
Wealthcare is the job of a few Congressmen and legislators who are beholden to well-paid lobbyists that influence how hidden taxes, fees, and tariffs are put on the books. The system hasn’t changed much over the years. The favoritism has helped the rich and the poor at the expense of the middle class. Unique entitlements for government workers is another example of the “liberty and justice for all” incorporated in our democratic system that favors certain influential factions of the populace. All for the betterment of our society, no?
Increasing taxes is the new untouchable “third rail” of politics. Congress has espoused the philosophy: no new entitlements without specifying the revenue to pay for them. However, in any tax system that is tied to income, fluctuations of income due to recessions, unemployment, and loss of market create a decrease in revenue flow to pay for government services. Borrowing is usually available to finance the deficit during the bad times, but government surpluses are rare and usually lead to higher government expenditures rather than reducing debt. Optimistic forecasters of tax revenue abound in government offices, so states like California are constantly in fiscal trouble. Of course California Proposition 13, another “third rail” for legislators, won’t be touched. The inequities created by that legislation need attention, but whoever is benefitted and pays less property tax rejects any effort at tax equalization put before voters.
Such is the dilemma for fixing the various inequities latent in the State and Federal income tax codes. Income redistribution (Wealthcare) like the redistribution of medical expenses (Healthcare) is a high powered political game in any democracy that favors some taxpayers at the expense of others. Blatant inequities are obvious to those knowledgeable taxpayers who are aware of the discrimination built into the income tax codes, but apparently not to the elected legislators who approve the laws pertaining to all the facets of Wealthcare.
Most American citizens realize that life in the US isn’t fair, just, and beneficial to all citizens or even to a large majority. We accept that “Wealthcare” like “Healthcare” is best managed by a few elected representatives because taxation without representation is called tyranny and taxation with representation is called democracy.