Don't Fall for the Tax Scam Jeff Bezos Is Trying to Peddle |
The fourth richest man in the world, Jeff Bezos, told CNBC earlier this week that he doesn’t think people making $70,000 a year should pay a penny in income taxes. For him, that’s a threefer.
First, it gets millions of Americans on the “we shouldn’t ever pay any income taxes at all” train that’s been rolling for billionaires ever since Reagan first gutted our tax code, leading to an explosion of the morbidly rich.
Second, it gets those same average, tax-paying voters on board with Bezos’ second claim, that America’s debt problem isn’t because we’re taxing too little but because we’re “spending too much.”
If we just got rid of — or privatized/profitized — all those pesky “socialist” programs like Medicaid, food stamps, free public highways, fire and police departments, Social Security, food and drug regulation and inspection, air traffic control and TSA, housing subsidies, Pell grants, free public schools, etc., then even billionaires could safely live tax-free.
Third, it means that Bezos will be able to reduce his own labor costs, because the marketplace in which pay rates exist are always exclusively reacting to “after tax” dollars.
Here’s how it works: If Bezos is paying an Amazon programmer $70,000 a year and that programmer then pays $12,000 a year in income taxes (his example, only for “a nurse in Queens”), their after-tax take-home pay is $58,000. That $58K is what they’re actually living on, and Bezos knows it.
So, if their income tax payment goes away, Bezos can drop their pay from $70K to $58K and they won’t notice any change at all in their lifestyle. And Bezos gets to keep the difference.
But there are even more fundamental problems with Jeff’s little tax scam. Back in 1904, Supreme Court Justice Oliver Wendell Homes Jr famously said, “Taxes are the price we pay for a civilized society.” He was right, and it works in two dimensions.
The main one is that taxes represent the money government must collect to cover the cost of the services its citizens have demanded of their elected representatives. With the exception of emergencies like the Civil War and World War II, the money coming into government and the money spent out should pretty much be in balance. And, with the exception of the period since 1981, they historically have been.
When Ronald Reagan first put into place the GOP’s infamous “Two Santas” strategy of running up the debt during Republican presidencies and squealing about the national debt to block legislation during Democratic presidencies, he broke with an understanding and tradition that dated back to George Washington’s presidency.
Reagan tripled what was left of our WWII national debt, which Truman, Eisenhower, Kennedy, LBJ, Nixon, Ford, and Carter had all paid down to a mere $800 billion by 1981. He deficit-spent like crazy, producing an illusion of good times because of the stimulus of all that purchasing, and left us a $2.4 trillion national debt when he handed the reins of government over to GHW Bush.
While both Democratic Presidents Clinton and Obama tried to go along with the GOP and balance or near-balance budgets during their presidencies, the Two Santas spending of GW Bush and Trump has exploded our national debt to $39 trillion, about the same as the sum of all economic activity in the country (our GDP).
As I noted a few weeks ago, if we weren’t paying a trillion dollars a year in just interest on that debt, we could have a national healthcare system and free college education right now.
But keeping us from having nice things — from healthcare to education to housing to an electrified grid — is one of the main goals of the GOP’s Two Santas deficit-spending program.
Each of those programs has to be paid for with tax dollars, and morbidly rich people who are obsessed with making more, more, more want them all killed off.
“We can’t afford it because of the national debt!” is their favorite mantra. “Democrats must shoot their Santa of Social Security and other programs in the face by ‘cutting spending’ before we can talk about taxes!”
The simple reality is that income taxes are largely irrelevant to the lives of working class people. If they got a big tax cut, as noted earlier, their employers would simply reduce their pay to make up for it, or at least freeze it until inflation caught up. If their taxes go up, on the other hand, pressure falls on employers to raise gross (before-tax) pay enough to keep take-home pay where it had been.
Tax increases on working class people, in other words, lead to pay increases, while tax cuts on working class people inevitably lead to pay freezes or cuts, as the history of every tax increase since 1913 and every tax cut since........