Readers Write: US in wrong conversation on taxes; loopholes widen income gap
Letters to the Editor for the weekly issue of November 28, 2011: One reader argues that Americans need to have a conversation about the role of federal government before they argue over taxes. Another decries loopholes in corporate taxation and the widening income gap.
Taxes: What's fair?
In the Oct. 17 cover story "Tussle over taxes," the two options presented for deficit reduction – raise taxes or lower spending – represent two extremes in the discussion, and both are wrong.
Americans first need a discussion on what we want our federal government to do for us, and what is better left to state governments, private industry, and personal and family responsibility.
The federal government is involved in more activities and aspects of our lives than ever before. While some of these activities are appropriate (a strong military and a social safety net), others duplicate state- and local-government functions (education and environmental affairs), and others should not be performed at all.
Once Americans decide on the functions that should be provided by our federal government, strong oversight must be put in place to ensure our tax dollars are being spent effectively. If they are not, ineffective or inefficient programs need to be reengineered or eliminated. When was the last time that happened in the United States?
Once these steps are taken, the issue of taxes becomes straightforward: Establish a fair tax policy that touches all Americans and set tax rates to meet the required spending for the agreed government functions. This means shared sacrifice for all Americans, not just those who happen to make a lot of money.
"Tussle over taxes" failed to mention the alarming loopholes in corporate taxation. For example, General Electric posted profits of $5.1 billion but paid no taxes in 2010. Similar exemptions were enjoyed by giants such as Exxon Mobil, Citigroup, Boeing, and Bank of America. The Institute of Policy Studies states that of the 100 highest-paid executives in the US, 25 took home more pay than their corporations paid in federal income taxes.
Wage discrepancies have also become unfathomable and deserve concrete analysis. As the article states, "the top 1 percent owns more than one-third of the wealth" in the US. Compensation for chief executive officers at the largest US corporations is up 28 percent from last year on average, and cash bonuses are triple what they were before the 2008 recession.
One of America's top-paid CEOs, John Hammergren of the pharmaceutical and health-care giant McKesson, is slated to make $131 million this year. In West Virginia, the average per capita income is about $21,000 per year.
US citizens are in the streets questioning why Head Start, health centers, Social Security, and Medicare face the chopping block while corporate taxation is overlooked. Discrepancies such as these are shattering the American dream for all of us.