Eugene weekly., April 14, 2011, Page 14, Image 14

investors enjoy tax-free living under a 1993 law President
Clinton signed. It lets “professional” real-estate investors
use paper losses like depreciation on their buildings against
any cash income, even if they end up with negative incomes
like Trump.
Frank and Jamie McCourt, who own the Los Angeles
Dodgers, have not paid any income taxes since at least
2004, their divorce case revealed. Yet they spent $45
million one year alone. How? They just borrowed against
Dodger ticket revenue and other assets. To the IRS, they
look like paupers.
In Wisconsin, Terrence Wall, who unsuccessfully
sought the Republican nomination for U.S. Senate in 2010,
paid no income taxes on as much as $14 million of recent
income, his disclosure forms showed. Asked about his
living tax-free while working people pay taxes, he had a
simple response: Everyone should pay less.
5. And (surprise!) since Reagan, only the wealthy
have gained significant income.
The Heritage Foundation, the Cato Institute and similar
conservative marketing organizations tell us relentlessly
that lower tax rates will make us all better off.
“When tax rates are reduced, the economy’s growth
rate improves and living standards increase,” according
to Daniel J. Mitchell, an economist at Heritage until he
joined Cato. He says that supply-side economics is “the
simple notion that lower tax rates will boost work, saving,
investment and entrepreneurship.”
When Reagan was elected president, the marginal tax
rate for income was 70 percent. He cut it to 50 percent and
then 28 percent starting in 1987. It was raised by George
H.W. Bush and Clinton and then cut by George W. Bush.
The top rate is now 35 percent.
Since 1980, when President Reagan won election
promising prosperity through tax cuts, the average income
of the vast majority — the bottom 90 percent of Americans
— has increased a meager $303, or 1 percent. Put another
way, for each dollar people in the vast majority made in
1980, in 2008 their income was up to $1.01.
Those at the top did better. The top 1 percent’s average
income more than doubled to $1.1 million, according to
an analysis of tax data by economists Thomas Piketty and
Emmanuel Saez. The really rich, the top tenth of 1 percent,
each enjoyed almost $4 in 2008 for each dollar in 1980.
The top 300,000 Americans now enjoy almost as much
income as the bottom 150 million, the data show.
6. When it comes to corporations, the story is much
the same — less taxes.
Corporate profi ts in 2008, the latest year for which data
is available, were $1,830 billion, up almost 12 percent
from $1,638.7 in 2000. Yet, even though corporate tax
rates have not been cut, corporate income-tax revenues fell
to $230 billion from $249 billion — an 8 percent decline,
thanks to a number of loopholes. The offi cial 2010 profi t
numbers are not added up and released by the government,
but the amount paid in corporate taxes is: In 2010 they fell
further, to $191 billion — a decline of more than 23 percent
compared with 2000.
7. Some corporate tax breaks destroy jobs.
Despite all the noise that America has the world’s
second highest corporate tax rate, the actual taxes paid by
corporations are falling because of the growing number of
loopholes and companies shifting profi ts to tax havens like
the Cayman Islands.
And right now America’s corporations are sitting
on close to $2 trillion in cash that is not being used to
build factories, create jobs or anything else, but act as an
insurance policy for managers unwilling to take the risk
of actually building the businesses they are paid so well
to run. That cash hoard, by the way, works out to nearly
$13,000 per taxpaying household.
A corporate tax rate that is too low actually destroys
jobs. That’s because a higher tax rate encourages businesses
(who don’t want to pay taxes) to keep the profi ts in the
business and reinvest, rather than pull them out as profi ts
and have to pay high taxes.
The 2004 American Jobs Creation Act, which passed
with bipartisan support, allowed more than 800 companies
to bring profi ts that were untaxed but overseas back to
the U.S. Instead of paying the usual 35 percent tax, the
companies paid just 5.25 percent.
The companies said bringing the money home —
“repatriating” it, they called it — would mean lots of jobs.
Sen. John Ensign, the Nevada Republican, put the fi gure at
660,000 new jobs.
Pfi zer, the drug company, was the biggest benefi ciary.
It brought home $37 billion, saving $11 billion in taxes.
Almost immediately it started fi ring people. Since the law
took effect, it has let 40,000 workers go. In all, it appears
that at least 100,000 jobs were destroyed.
Now Congressional Republicans and some Democrats
are gearing up again to pass another tax holiday, promoting
a new Jobs Creation Act. It would affect 10 times as much
money as the 2004 law.
8. Republicans like taxes too.
President Reagan signed into law 11 tax increases,
targeted at people down the income ladder. His
administration and the Washington press corps called
the increases “revenue enhancers.” Among other things,
Reagan hiked Social Security taxes so high that the
government collected more than $2 trillion in surplus tax
by the end of 2008.
DICK MARTIN
For All Your Insurance Needs
• Auto • Life • Home • Business
637 W 7th Ave, Suite 2 | Eugene, OR
dmartin4@farmersagent.com
541-868-2442
EMGE
WHYTE SERVICE
&
CERTIFIED
PUBLIC
ACCOUNTANTS
9. Other countries do it better.
We measure our economic progress, and our elected
leaders debate tax policy, in terms of a crude measure
known as gross domestic product (GDP). The way the
offi cial statistics are put together, each dollar spent buying
solar energy equipment counts the same as each dollar
spent investigating murders.
We do not give any measure of value to time spent
rearing children or growing our own vegetables or to
time off for leisure and community service. And we do
not measure the economic damage done by shocks, such
as losing a job, which means not only loss of income and
depletion of savings, but loss of health insurance, which
a Harvard Medical School study found results in 45,000
unnecessary deaths each year
Compare this to Germany, one of many countries with
Wall to Wall
City Cycling Gear
Bicycle packs, racks, baskets, bells, lights, fenders, rain gear, saddles, helmets,
locks, reflectives, tires, tubes, mirrors, pumps, storage hooks, tools, Xtracycles…
One stop urban cycling ease!
2705 Willamette Ê-ÌÊUÊx{£°{n{°x{£ä
qÀÊ££qÇ]Ê->ÌÊ£äqÈ
Eugene D. Emge
BUBBLE TEA
Pam Whyte
& BUBBLE JUICE
THE BEST IN TOWN!
Hilary Anthony
PAN FRIED
NOODLES
TERIYAKI
EXCELLENCE IN
tax & accounting professionals
Support Eugene Opera, Symphony, & Ballet!
25O5 W. 11th Ave • Eugene, OR 974O2 • 485-21OO
14 APRIL 14, 2011
George W. Bush signed a tax increase, too, in 2006,
despite his written ironclad pledge to never raise taxes on
anyone. It raised taxes on teenagers by requiring kids up
to age 17, who earned money, to pay taxes at their parents’
tax rate, which would almost always be higher than the rate
they would otherwise pay. It was a story that ran buried
inside The New York Times one Sunday, but nowhere else.
In fact, thanks to Republicans, one in three Americans
will pay higher taxes this year than they did last year.
First, some history. In 2009, President Obama pushed
his own tax cut — for the working class. He persuaded
Congress to enact the Making Work Pay Tax Credit. Over
the two years 2009 and 2010, it saved single workers up
to $800 and married heterosexual couples up to $1,600,
even if only one spouse worked. The top 5 percent or so of
taxpayers were denied this tax break.
The Obama administration called it “the biggest middle-
class tax cut” ever. Yet last December the Republicans,
poised to regain control of the House of Representatives,
killed Obama’s Making Work Pay Credit while extending
the Bush tax cuts for two more years — a policy Obama
agreed to.
By doing so, congressional Republican leaders
increased taxes on a third of Americans, virtually all of
them the working poor, this year.
As a result, of the 155 million households in the tax
system, 51 million will pay an average of $129 more this
year. That is $6.6 billion in higher taxes for the working
poor, the nonpartisan Tax Policy Center estimated.
In addition, the Republicans changed the rate of
workers’ FICA contributions, which fi nances half of Social
Security. The result: If you are single and make less than
$20,000, or married and less than $40,000, you lose under
this plan. But the top 5 percent, people who make more
than $106,800, will save $2,136 ($4,272 for two-career
couples).
EUGENE WEEKLY
VEGETARIAN
OPTIONS
AUTHENTIC KOREAN
& ASIAN CUISINE
CHICKEN, BEEF
TOFU, PORK
HEALTHY
HOT SOUP
11:30AM - 9PM MONDAY - SATURDAY 860 PEARL • 686 -1114
WWW.EUGENEWEEKLY.COM • BLOGS.EUGENEWEEKLY.COM