Can Congress Take Up the Challenge?
Note from the author: I wrote this piece in November 2011 and asked the question if there was someone in Congress gutsy enough to take up the challenge. No one was, and I doubt if there is one now, even with the conservative influence in Congress on the brink of disappearing completely. The column is reprinted verbatim:
Republicans will miss a golden opportunity to call Democrat's and the Obama administration's bluff between now and Thanksgiving and one-up them if they don't reverse their posture by proposing to tax the rich.
With one fell swoop, the Republican Party could advance a proposal that would immediately pay down, if not eliminate, the national debt and at the same time erase the decades-old stigma that the party stands only for the rich.
At the same time it would expose the reality that both major parties are currently owned by special interests, including the rich.
To do this, the party must launch a campaign of education about taxes which shows that both major parties cater to the rich. Most importantly, Republicans must be prepared to expose their own greed in previously introducing and supporting sinful and vulgar parts of the U.S. Tax Code.
To my knowledge, no one – certainly not leading politicians nor elite intellectual commentators occupying media-centered centers – has come close to explaining why in some cases the rich pay a smaller percentage of their income in taxes than do those in lower income ranges.
It is because they have tax shelters, of which those with moderate incomes can't take advantage. Those that can use perfectly legal deductions to avoid paying trillions of dollars in income taxes yearly, leaving those that can't to make up for those revenues lost.
Warren Buffett and other billionaires know this, which is why Buffett feels safe in hypocritically calling for the rich like him to pay more taxes. He knows that if anything at all is done, politicians – Democrats, Republicans, Tea Partians, Libertarians or Independents – aren't likely to plug those tax evasion rules. They have too much at stake themselves.
Conservative Republicans, though, could upend the political landscape and turn the tables on Democrats by proposing to plug those loopholes. They could then truthfully say that it is they, not liberals, who want to soak it to the rich.
In short, Republicans would call Democrats' bluff by saying, “Okay, you say you want to tax the rich. Let's do it by removing those tax shelters.”
Then, they could sit back and watch Democrats' contortions as they struggle with the dilemma of keeping the perception that they are the party of the common people versus protecting the rich and special interests by providing them tax relief.
Let's begin by eliminating, through legislation, the biggest tax shelters of all for the wealthy: the tax-exempt status of non-profit foundations, including the so-called charitable foundations.
The proposal would be to eliminate, effective January 1, 2012, retroactive to January 1, 2011, the tax-exempt status of all organizations, whether they be called foundations, charities, churches, advocacy groups – i.e., there would no longer be any non-profit, tax-exempt organizations.
The result, of course, would be that nearly all such organizations in existence now would go out of business, and trillions would flow into the U.S. Treasury.
And the rest of us wouldn't be paying taxes they avoid, to support agendas with which we don't agree. We would also feel at least the promise that eventually our taxes could be reduced because of the new money flowing into the Treasury.
Those organizations that remain would be taxed just as any other organization, corporation, partnership, etc.
Gone would be foundations supported by people like Buffett, George Kaiser and George Soros, as well as those of New Gingrich, Mitt Romney, John Kerry and think tanks like the Heritage Foundation and the Brookings Institute.
Gone would be their ability to avoid paying taxes the rest of us have to make up for.
Gone would be the leaders of foundations or other organizations, such as United Way, Habitat for Humanity, American Red Cross and UNICEF, who draw million-dollar-plus salaries and tax-exempt perks.
No one really knows how many trillions of dollars would begin flowing into the treasury when donations to tax-exempt organizations are no longer tax-deductible. Without a doubt, the ability of politicians to reward special interests would be severely diminished.
No longer would someone like Ted Turner be able to donate $1 million to the United Nations, avoiding $1.2 million in taxes over a period of time.
No longer would a national food chain donate to an educational “initiative” and make money doing it through tax savings, in addition to the favorable “giving back to the community” publicity.
No longer would a corporation's or charitable foundation's donation to PBS or NPR to “sponsor” a program result in an advertisement that is tax deductible.
Most importantly, no longer would taxpayers be forced to contribute to agendas with which they don't agree, such as that of ACORN, Bill and Melissa Gates, Bill Clinton, Newt Gingrich, John Kerry, the Rockefellers, ad nauseum.
It is vulgar and obscene for a system to exist which allows an entity to promote a political, social, economic or any kind of agenda and have it paid for by unwilling taxpayers. Gone would be most, if not all, “Political Action Committees” and “get out the vote” groups.
Are there Republicans or Tea Partians gutsy enough and bold enough to make this proposal, even though it is almost a surety that an organization that supports them would be affected and cease to exist?
To be sure, Republicans would be charged with conducting class warfare, a charge that would be truthful. But the charge would be a washout, because it exposes Democrats, too.