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Common Sense Taxation

Message Betsy L. Angert
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The only question is as to sustaining the change [to higher taxes] before the people.   I believe it can be sustained, because it does not increase the tax upon the "many poor" but upon the "wealthy few" . . . 
~ Letter to William S. Wait, March 2, 1839, reprinted in Collected Works of Abraham Lincoln, volume 1, p. 148.  Rutgers University Press. (1953, 1990).

I go for all sharing the privileges of government who assist in bearing its burdens. 


~ Letter to the Editor of the Sangamon Journal, June 13, 1836, reprinted in Collected Works of Abraham Lincoln, volume 1, p. 48.  Rutgers University Press. (1953, 1990).

copyright © 2008 Betsy L. Angert.  BeThink.org

The chap was well-dressed, as was his wife.  She expressed her disdain with her husband's choice.  He would cast his ballot for John McCain in this election year.  Taxes were his only concern.  This lovely lady declared herself an active Democrat.  She had been a Clinton supporter, Hillary that is.  Now, she was decisively behind Barack Obama, and proud of it.  I might not have known this or much else about the couple of strangers; however, in the year 2008, everyone seems anxious to share political concerns.  

Times, as the adage states, are "tough."  Yet, life goes on.  Families still celebrate birth dates, nuptials, and anniversaries.  People continue to purchase gifts, although most do not feel they can afford to shop.  Persons do not purchase until they drop.  Instead, individuals in stores stop and chat of the financial crisis.  They speak of fears and folly.  Countless recount tales of pink slips received.  Others anxiously await what they cannot predict.  Will they soon be among the 6.1 percent unemployed Americans?  

Those in malls understand the woes and are apprehensive they might be next.  With more citizens out of work, millions find they cannot pay the mortgage.  Ruthless subprime rates raked many United States residents over the proverbial coals.  Home loan representatives, who indulged in illicit although not illegal, practices, have helped cause an abundance of foreclosures. Many Americans are out on the streets.

Rage, resentments, and calls for a revolution, are rampant.  However, on the issue of tax policies those who benefited under the Bush plan want no change.  Dollars held tightly in the palm of an individuals' hand make sense to those such as this stylish gentleman I met more than a month ago.  

For me, the discussion of government assessments began long before America became acquainted with "Joe the Plumber."  It commenced when I met a couple whose names I do not know.  Perchance, as I tell this tale, I will call them John and Jane Doe.  The man, woman, and I did not exchange names, although we had an extensive conversation.  The three of us were in a second-hand store.  Still, we all wondered whether we could afford to buy even one item.  

Today prices are high.  The cost of living soars.  Incomes are depressed; dollars are too.  Small businesses suffer.  Workers employed in large and smal companies fear they will not be able to survive.  In September 2008, 159,000 jobs were lost.  This monthly calculation is the worst seen in five years.  Americans are not surprised.  This computation confirms what most have felt.  The economic downturn is severe.  Hence, the trepidation for higher taxes.

Talk of tariffs adds to the daily stress people experience in hard economic times.  John Doe expressed, for him, the only issue of import is levees.  His spouse Jane sighed.  Restless, she pleaded to her husband, "There is more to consider."  However, her husband remained resolute.  This genteel gent was concerned with his own fortune, not with societal failures.  The proposal presented before the public by Barack Obama says persons such as "Joe the Plumber" and the fine fellow who stood before me are reminiscent of Socialism.  Republicans and Independents who see themselves as rugged individualists react strongly to the idea of wealth redistribution.  Democrats attempt to remind all Americans of history.

A prominent Republican, Abraham Lincoln, first introduced the strategy that would rearrange the division of riches.  During the Civil War, as costs to run a nation and sustain a war effort could no longer cover expenses, President Lincoln imposed an income tax, a progressive rate of return applied to revenue.  Responsibly in 1862, the then President of the United States choose to seek and preserve fiscal common sense.  Unlike the current Commander-In-Chief, the former Chief Executive believed budgets must be balanced.  Thus, citizens were charged a fee on income in order to pay for the conflict between the States.  

The Civil War Commander also grasped an awful truth; if war is profitable, people will prefer the fight,  President Lincoln hoped to ensure economic gain would not be an incentive for bloody battles. While his plan worked, the prosperous protested, just as they did during the Persian Gulf conflict.

Commander-In-Chief Lincoln struggled in his efforts to find a way to pay for the Civil War.  Initially, President Lincoln turned to bankers to pay for the battles.  After all, the citizens called barons of capitalism, in a derogatory fashion, had the money and the means.  Yet, then, just as now, financiers would not fund what they thought an uncertain future.  

In the nineteenth and twenty-first centuries, lenders groused; loans are liens. Repayment is required.  The individuals of yesteryear who wished to secure and retain personal profits were more than reluctant to part with cash.  Indeed, they refused.  The stranger who stood before me and "Joe he Plumber' might relate.  They too do not want to contribute a penny more of their cash to assist the country.  Miserly might best describe the early proprietors of principal.  The term may also apply to the gracious gentleman in my presence, the person I refer to as John, or to "Joe," the man who fits pipes for his wages.

President Lincoln may, too, have been as these fellows are, early in his career.  However, wartime realities transformed him.  As Chief Executive of a country divided, Abraham Lincoln realized the toll discordance takes.  Lincoln learned to consider Thomas Paine a prophet.  He acknowledged, as the astute author penned in Common Sense, as the population increases, individuals and small clusters of people can no longer care for themselves, friends, and family.  Nor can a modest collective control the chaos that comes when people are overwhelmed by a desire to be the one and only.

John may wish to ponder the wisdom his wife expressed.  Plumber Joe may want to join him.  What the two thoughtful men might define as Socialism is, what Thomas Paine and Abraham Lincoln would classify as a society where government is of, by, and for the people.

Perchance, the truth of what became self-evident after the Republican experiment of 1862 had a profound effect on what occurred decades later.  The excise became permanent with the adoption of the Constitution's 16th amendment in 1913.  Earlier the Supreme Court had rejected the duty; however, Congress, members of the Grand Old Party and Democrats together, overturned the decision.

Income tax has allowed America to civically function and build communities that flourish for near a century and one half.  For the last one hundred years, citizens of this country have endured, enabled by a tax system that secures education for all.  The current tax structure redistributes wealth so that we all might travel on paved roads, feel safe on secure bridges, and enjoy the creature comforts of cheap electricity, and access to ample water.  John McCain, Sarah Palin, "Joe the Plumber," persons of their ilk, and perhaps John Doe may prefer to be without the luxuries Americans take for granted.  Fear of what they characterize as Communism or Socialism, could cause our society to crumble further.

That is exactly what the person I refer to as Jane, John's  life-long partner, had endeavored to communicate as the three of us exchanged philosophies on the floor of A Consignment Shoppe.  Jane attempted to assert the Bush Administration engaged in redistribution.  George W. Bush gave to the super-rich and took from the poor and Middle Class.  The trickle-down theory was in truth a splash up.  The abundantly affluent were doused in dollars.  Common citizens crumbled under the weight of the wealthiest gains.

Jane hoped she could explain, as did I.  Our efforts proved futile.  Neither of us had, close at hand, the evaluation of experts.  Perhaps, had John been able to see the charts and graphs, had he read the terms of an agreement with Barack Obama or with John McCain, he would have recognized as Thomas Paine, Abraham Lincoln, and we did. 


Barack ObamaJohn McCain
New Tax CutsRefundable "Making Work Pay Credit" of 6.2 percent of earnings up to a maximum earnings of $8,100 per worker

Refundable "Universal Mortgage Credit" of 10 percent of mortgage interest for nonitemizers up to $800 
Eliminate income tax for seniors making less than $50,000 per year

Make Research and Development and renewable energy production tax credit (wind, solar) permanent

Extend childless Earned Income Tax Credit (EITC) phase-in range and increase phase-out threshold; increase EITC phase-in rate to 45 percent for families with three or more children; increase add-on to EITC phase-out threshold for married filers to $5,000

Make Child and Dependent Care Tax Credit refundable and equal to 50 percent of child care expenses less than $6,000

Make saver's credit refundable and change to a 50 percent match of the first $1,000 of contributions 
Rename the Hope Credit the "American Opportunity Tax Credit" and expand it to a refundable credit of 100% of the first $4,000 of college expenses

Mandate automatic 401(k)s and automatic IRAs

Allow first-year deduction of 3 and 5-year equipment, deny interest deduction (expires after 2013)

Reduce maximum corporate income tax rate from 35 percent to 25 percent (phased in by 2015)

Increase the dependent exemption by two-thirds (phased in by 2016)

Convert Research and Development credit to 10 percent of wages incurred for Research and Development, make permanent

Capital GainsIncrease maximum capital gains rate to 20 percent for those earning more than $200,000 ($250,000 for married couples)

Require information reporting of basis for gains

Make permanent current rates on capital gains and dividends, (0 and 15 percent)
2001/2003 Tax CutsPermanently extend child credit expansions, 10, 15, 25, and 28 percent rates, and changes to tax implications of marriage

Restore 36 and 39.6 percent statutory income tax rates in 2009

Restore phase-out of personal exemptions and itemized deductions (PEP and Pease) for households making more than $200,000 ($250,000 for married couples), increase the PEP and Pease threshold

Make permanent all provisions other than the estate tax repeal
Alternative Minimum TaxExtend and index 2007 AMT patchExtend and index 2007 AMT patch, further increase exemption by additional 5 percent per year after 2013 (temporarily)
Estate TaxMake permanent estate tax with $3.5 million exemption and 45 percent rateMake permanent estate tax with $5 million exemption and 15 percent rate
SimplificationProvide taxpayers with simple returns the option of pre -filled tax forms to verify, sign, return to IRSCreate optional alternative tax with two rates and larger standard deduction and personal exemption
Revenue Raisers and Tax HavensEliminate oil and gas loopholes

Close loopholes in the corporate tax deductibility of CEO pay

Tax carried interest as ordinary income

Reallocate multinational tax deductions

Impose a windfall profits tax on oil and gas companies

Require publicly traded financial partnerships to pay corporate income tax

Codify economic substance doctrine (requires transactions that qualify for tax benefits have economic justification beyond those benefits)

Create an international tax haven watch list of countries who do not share information with the U.S. and require greater financial disclosure to decrease tax shelters

Repeal domestic production activities deduction

Eliminate oil and gas loopholes

Unspecified corporate base broadeners

HealthIncome-related federal tax subsidies for health insurance purchased through new health insurance exchange

Require employers to provide insurance or pay a percentage of payroll to support the national plan

Small business healthcare tax credit of 50 percent of employer paid premiums

Replace exclusion from income for employer sponsored health insurance with refundable credit of $2,500 for individuals and $5,000 for families who purchase qualifying health insurance


As economic experts evaluate the numbers, calculate the computations, and consider how the Presidential challengers will pay for public works and raise revenues, the conclusion the nonpartisan Tax Policy Center professionals reach is a resolute reminder from the past.  If John McCain is elected, American wealth will be redistributed as it was under George W. Bush.  The smallest percentage of the population, the select few who qualify as super-rich will prosper.  Should voters place Barack Obama in the Oval Office, we the poorer Middle Class will survive, perchance, even thrive. 
The two candidates' tax plans would have sharply different distributional effects.  Senator McCain's tax cuts would primarily benefit those with very high incomes, almost all of whom would receive large tax cuts that would, on average, raise their after-tax incomes by more than twice the average for all households. Many fewer households at the bottom of the income distribution would get tax cuts and those tax cuts would be small as a share of after-tax income.  In marked contrast, Senator Obama offers much larger tax breaks to low- and middle-income taxpayers and would increase taxes on high-income taxpayers.  The largest tax cuts, as a share of income, would go to those at the bottom of the income distribution . . .

The infrastructure [the supply of power and water, public transportation, telecommunications, roads and schools,] the luxuries that make life in America lovely will not exist without taxes.  The discreet dude, John Doe, who spoke of his stocks, bonds, and levees imposed on income could have come to the conclusion that if we hold on tightly to what we, as individuals have, our hands are not open and free to build a greater communal wealth.  The Oracle who resides in Nebraska understands this.

The "Sage of Omaha" thinks the strategy Barack Obama wishes to exercise is wise. The multi-billionaire investor states Barack Obama "is going to bring outstanding ideas" to the White House.  Warren Buffett worries that America, under John McCain might stay the course that has not served us well.  As the nation's economy free falls into a downward spiral, Warren Buffett reasons. 

"I think that the US has followed and is following policies which will cause the US dollar to weaken over a long period," he said.

After voicing support for Obama, Buffett nonetheless noted the US economy had managed to do "awfully well" despite a depression, two world wars, and many financial crises.

"They say in the stock market ... buy stock in a business that's so good that an idiot can run it because sooner or later one will," he added.

"Well, the United States is a little like that.  We can take a little mis-management from time to time," Buffett said.


The Presidential candidate, McCain understands that Mister Buffett may muse of more than his personal pocketbook.  However, John McCain grieves not for one vote lost.  Senator McCain and his handlers trust in human nature.  Common people disregard the good sense of one who is unaffected by the financial crisis.

The Arizona Senator has faith; if he devotes his attention to everyday Americans, he can still win the presidency.  The people's choice is a reflection of how the public feels about the economy. If John McCain can convince John Doe, the man who might be an Investor, and Samuel Joseph Wurzelbacher, the self-described soon-to-be owner of a profitable small plumbing business, that Barack Obama, like Abraham Lincoln before him, is a Socialist, Senator McCain will be successful in his bid for the White House.  

Granted, if McCain become President, John Doe may not be provided for.  Jane, his spouse, and I are sure Senator McCain will not care for our needs, but then Commander-In-Chief aspirant and Arizona affluent, McCain does not want the vote of those who recognize the rich reaped greater treasures from the Bush redistribution of wealth plan.  Senator John McCain does not desire the vote of Obama supporters, such as billionaire Warren Buffett, who he cannot sway with slams of Socialism.  

John McCain's only wish is to seize a commitment  from constituents who have not learned from history.  The abundantly affluent Arizona Senator desires to hold on to those voters who are apprehensive.   He seeks support from citizens who declare, as the Republican candidate does, the proposed tax plan of Presidential hopeful, Barack Obama, is as Abraham Lincoln's redistribution of wealth strategy was, "Socialism"

References to the past and hopeful future . . . 

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I am an Educator, a student of life; I am an Author. On each path I learn from you and with you. Indeed. we all teach and study. Together we advance awareness and acumen. We learn, grow, and glow greater. Please peruse my prose at BeThink.org and (more...)
 
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