Category Archives: Taxes

Teapublican Lie #16.

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“Cutting Medicaid and Medicare will save money.”

Anyone who would say this is either lying or doesn’t understand how the healthcare industry works. 

If you kick millions of people off of Medicaid and raise the cost to seniors for Medicare, they will put off going to the doctor as long as they can. Minor ailments then become major ailments. When they’re finally forced to seek help, they have no place to go except the Emergency Room where the costs of treatment can be as much as 100 times that of a doctor’s office or clinic. Since most hospitals are mandated by law to accept all patients, regardless of their ability to pay, the costs are passed along to patients who have health insurance.

So the Teapublicans who don’t want to help pay for someone else’s healthcare treatments through an efficient, well-managed government program will actually wind up paying much more through the rise in premiums for their health insurance policies, through increased taxes, or both.

Our nation’s healthcare costs are already four times the cost of healthcare in other advanced nations. Cutting Medicaid and Medicare will only make things worse.

“Obamacare” (more precisely, Nixoncare, Dolecare or Romneycare, since they proposed the program first) will definitely help. It will offer healthcare insurance to 55 million people who are currently uninsured, and it will institute some cost containment measures to an industry that has seen costs rise at a rate more than ten times the rate of inflation.

But it doesn’t go far enough.

According to a hospital CEO whose opinion I respect, this nation needs to return to a form of managed care (Health Maintenance Organizations). Under the system, the healthcare providers would be charged with keeping us healthy. The providers would also be charged with following best practices, which have been shown to produce the best outcomes, and limiting unnecessary or unproven care.  (Or, in Teapublican terms, “death panels” with the responsibility to review extreme procedures that are proposed for patients with terminal diseases.)

This is one of the most important steps in solving our healthcare crisis as noted in a 1990s study by the MIT Sloan School of Management.  That study showed that, in the US, more than 70 percent of all healthcare expenditures occur in the last six months of a patient’s life. In other words, we tend to ignore our health until something goes drastically wrong.  Then we spare no expense to prove that the diagnosis of a fatal condition is essentially correct.

It’s clear that we need an entirely new approach to healthcare and “Obamacare” is an important first step.  Repealing the Patient Protection and Affordable Care Act will only make things worse. So will the other Teapublican proposals.  We can’t throw the poor off of Medicaid, cut Medicare for the elderly, maintain our out-of-control health insurance system and cut the deficit.

The healthcare industry and the economy are like a large, overinflated balloon. If you push one place, it expands somewhere else.  To make improvements, you have to change the entire entity at once.

Teapublican Lie #14.

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“Immigrants steal our jobs.”

That’s been a common accusation since the very beginnings of our nation. Previous generations despised the Irish, Italians, Germans, Scandinavians, Eastern Europeans, etc. for simply trying to eke out a living. Nothing has changed in the present day, except that now the charge is leveled against Latinos.

In discussing her book, They Take Our Jobs! and 20 other myths about immigrants, Avi Chomsky, historian, teacher, and coordinator of Latin American studies at Salem State College says, “When people claim that immigrants take our jobs, underlying the statement are some flawed ideas of how our economy works. They don’t understand that the world economy is extremely integrated.”

“In the US, there is a dual labor market,” she says. “One category consists of good jobs that offer security, benefits, decent pay and safe working conditions. The second category consists of jobs that are dangerous and unpleasant with no security and low wages. The jobs in the second category have always been done by those who are politically excluded, such as undocumented workers. By politically excluding workers, employers are able to exploit them. And others in our society rely on people doing these jobs.”

In reality, the number of jobs taken by immigrants is a very small percentage of the jobs shipped overseas by our corporations. Moreover, immigrants actually create jobs because they purchase food and automobiles, and they rent or buy homes. They also pay sales taxes, property taxes, income taxes, even Social Security and Medicare payroll taxes. (In 2010, it’s estimated that illegals paid $12 billion into Social Security. Yet they are not eligible for any of the government services provided by those taxes.)

As Chomsky states, “The debate on immigration is a way of creating a scapegoat for very real problems, like the economy, even the environment.”

Teapublican Lie #13.

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“Social Security is a Ponzi scheme.”

Governor Rick Perry must have scraped this BS off the bottom of his cowboy boots, because it smells a lot like Texas fertilizer.

You see, far from being a Ponzi scheme, Social Security is insurance – insurance that guarantees a dignified retirement for hard-working Americans in our old age. Without it, we would likely be treated to scenes of the elderly living in cardboard boxes and digging through dumpsters for their meals.

The premiums for this insurance are paid by withholding less than six percent of an individual’s annual income up to $106,000 per year.

Currently, Social Security has a $2.5 trillion surplus, but given the impending retirement of Baby Boomers, it’s estimated that the program will not be able to make full benefit payments in 25 or 30 years. However, contrary to what Teapublicans would have you believe, Social Security can be easily fixed with relatively minor tweaking. (As with all insurance plans, the premiums for Social Security need to be increased from time to time.)

One option is to raise the income cap to include income above $106,000. (This hasn’t been done since the Reagan administration in the 1980s.) Another option is to remove the cap altogether, which would assure the solvency of Social Security far into the future. Yet another is to limit benefits to only those who actually need them – retirees with annual household incomes of less than $30,000, for example.

Social Security can be fixed.  But not if the media and voters keep listening to Teapublican lies.

Teapublican Lie #12.

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“The US government is going broke.”

In May 25, 2001, Grover Norquist of Americans for Tax Reform told National Public Radio’s Mara Liasson, “I don’t want to abolish government. I simply want to reduce it to the size where I can drag it into the bathroom and drown it in the bathtub.”

Teapublicans have been trying to bankrupt the government ever since.

Yet, despite their efforts, the United States still has the world’s largest economy with a Gross Domestic Product (GDP) estimated at nearly $14.7 trillion in 2010. That represents approximately one quarter of the global GDP.

Our current problem, as economist Paul Krugman has stated, is “insufficent aggregate demand.” As a result, we do not have enough revenue to cover our spending.  Moreover, much of the money spent is misallocated. To fix our economy, we need to increase tax revenue from those who can most afford it. And we need to create jobs by spending on necessary projects while interest rates are at all-time lows.

But, instead of dealing with the real issues, Teapublicans are using the debt crisis they created to destroy labor unions, to eliminate employee benefits, to depress salaries and eliminate our safety nets (the so-called entitlements).

Contrary to Teapublican accusations, these programs are not responsible for our growing national debt. Social Security and Medicare are funded by payroll taxes while our defense spending is not. 

According to estimates, our annual military/security budget is $1.1-$1.2 trillion, or 70-75 percent of the federal budget deficit. It has doubled since 9/11. And much of the defense budget is squandered through poor oversight, lack of planning and corruption. In fact, the Commission on Wartime Contracting stated that as much as $60 billion was lost to waste and fraud in Iraq and Afghanistan over the past decade!

The US is not broke.  But if we keep electing Teapublicans, we soon may be.

Teapublican Lie #11.

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“Obama is anti-business.”

Since Obama was elected president, the stock markets are up more than 31 percent and profits for large corporations are at all time highs.

That’s anti-business?

When CNBC’s Jim Cramer was interviewed on Hardball with Chris Matthews, he said he couldn’t understand why big corporations hate Obama. He said he asked corporations what they dislike. They mentioned taxes and regulations, but taxes under Obama are the same as they were when Bush was in office. And they couldn’t name a single regulation they want changed.

“There’s never been a better guy in Treasury than Tim Geithner,” Cramer said. “I really don’t understand why they don’t like Obama. They just don’t.”

Cramer may not know. But I think I can tell you why big corporations don’t like Obama. He hasn’t sold out to them like Teapublicans have. And like most Democrats, he still represents working people and the middle class.

Teapublican Lie #10.

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“President Obama’s Jobs Plan is Class Warfare.”

Teapublicans haul this one out every time a Democrat talks about raising taxes on the wealthy. It sounds terrible, doesn’t it? How could anyone be for dividing America into classes based on privilege and wealth?

Oh, wait! Teapublicans have been pursuing policies of class warfare for decades!

Thanks to Teapublican policies, 400 people now control 50 percent of the nation’s wealth, a combined $1.5 trillion. Their average net worth is $3.8 billion – a 12 percent increase from last year! Meanwhile, the bottom 90 percent have an average annual income of just $31,244 per household.

While the wealthy pay a federal tax rate of 15 percent on profits from their investments, middle class families pay a federal income tax rate of 25-33 percent on their salaries. While the corporations’ share of federal tax revenues has dropped from more than 30 percent in the 1950s to less than 10 percent now, individuals’ share has remained at more than 40 percent. At the same time, payroll taxes (for Social Security and Medicare) have gone from 10 percent to more than 40 percent!

But there has been even more bad news for the poor and middle class. In the past 10 years, incomes for the top 20 percent of Americans have increased dramatically while incomes for the bottom 80 percent of Americans have dropped! And while the Great Recession forced millions of American workers into unemployment lines, corporate CEOs and bankers have paid themselves multi-million dollar bonuses.

No, John Boehner, Mitch McConnell, Mitt Romney, Rick Perry and Michelle Bachmann, making those who have benefited the most from our country pay their fair share is not class warfare. Continuing the Teapublican policies from the past 30 years is.

Teapublican Lie #9.

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“Cutting taxes on the wealthy creates jobs.”

This lie could only have been generated by wealthy contributors to political campaigns. But let’s examine it anyway.

Both political parties acknowledge that the vast majority of jobs are created by small businesses and, most especially, by new businesses. Yet, for investors, these businesses often entail a great deal of risk – something the wealthy are generally adverse to. So the wealthiest Americans tend to invest their money, instead, in large corporations which offer greater security.

Moreover, most of the incomes for the wealthy are the result of capital gains (generated by selling stocks for more money than they paid for them). This income is now taxed at the unbelievably low rate of 15 percent. That’s lower than the income tax rate for most of the middle class! It begs the questions, “How much farther can we cut taxes for the wealthy?” and, “How will that create jobs?”

Teapublican Lie #8.

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“Most Americans don’t pay taxes.”

Lately, Teapublicans have been saying that 51% of Americans don’t pay any taxes at all. They say that those Americans should be forced to “have some skin in the game.” They call them the “Freeloader Class.” And they blame them for the nation’s economic woes.

While it is true that 51 percent of Americans did not pay federal income taxes for tax year 2009, it is not true that they did not pay taxes. It’s not even true (as Teapublicans suggest) that they are lazy, welfare recipients content to sponge off society. In fact, many of those who paid no federal income taxes in 2009 were among the wealthy and the upper middle class!

From an article by PolitiFact.com, Bob Williams, a tax policy specialist at the nonpartisan Urban Institute-Brookings Institution Tax Policy Center, said there are lots of popular tax breaks, which are sometimes called tax expenditures. “We estimate they total more than a trillion dollars a year in reduced taxes and, in fact, the bulk of those go to the top end of the income distribution,” said Williams.

As for the rest, they are mostly the elderly living on Social Security and those working at minimum wage jobs that don’t make enough to pay federal income taxes. (According to the 2010 Census, one in six Americans now lives below the poverty line.) Yet these people still pay taxes. Many pay payroll taxes for Social Security and Medicare. All pay sales taxes. Many pay state income taxes and property taxes (even if they rent). And most pay gasoline taxes, beer and liquor taxes, etc. So they do, indeed, “have some skin in the game.”

The real freeloaders are those who are living off the hard work of others – those who have inherited fortunes from their ancestors, Wall Street bankers who are paid enormous bonuses to gamble with others’ money, and those who, by a stroke of luck, have found themselves in a position of power – and taking advantage of a host of tax shelters created by politicians to protect their benefactors.

Teapublican Lie #7.

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“Raising taxes on millionaires will hurt small business.”

After all, most small businesses are owned by millionaires, right? Rrrrright!

This whopper seems to stem from the Teapublican definition of small business. You see, they define small business by ownership rather than brands, offices, employees or income. In other words, since Cargill is a closely held, privately-owned company, Teapublicans define it as a “small” business. Similarly, they define Koch Industries as a “small” business. In case you don’t already know, these are the two largest privately-held corporations in the world! Both measure their profits by the billions. Yet Teapublicans lump them into the same category as the owners of the small clothing store on Main Street or the corner café!

In the interest of full disclosure, I’ve been a small business owner since 1987. Moreover, I’ve served hundreds of small businesses as clients. As it happens, I have also completed projects for Cargill and Koch Industries. I can tell you beyond the shadow of a doubt that those companies have absolutely nothing in common with small businesses. And I can tell you that 99 percent of the other clients are not owned by millionaires, let alone billionaires.

So, President Obama and Congress, go ahead, raise taxes on millionaires and billionaires. Most small business owners will thank you for it.

Teapublican Lie #2.

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“US corporate taxes are the highest in the world.”

You’ve heard it over and over during the past 2-1/2 years. Not only from Teapublicans. But from supposedly authoritative sources such as the US Chamber of Commerce. So let’s examine this myth more closely.

While it is true that the corporate income tax rate for the US is 34.2% (which includes a state tax rate of 6%), that is not significantly higher than the corporate tax rate for many other developed nations, and it’s less than Japan’s. Brazil has a rate of 32.5%; France and Germany have tax rates of more than 31%; Australia 30.8%; Canada 28% and the UK has a rate of 25.4%.

More to the point, this is not the rate that most large US corporations actually pay. In fact, the effective tax rate for large US corporations (after deductions and subsidies) is less than 18%!

For example, 12 major corporations made $171 billion in profits from 2008 to 2010, yet had a negative income tax rate of 1.5 percent! And the most egregious example is GE. Last year the global conglomerate generated $10.3 billion in pretax income, but ended up owing nothing in US federal income taxes. In fact, it recorded a tax benefit of $1.1 billion!

Moreover, employer payroll taxes in the US are just 7.7% – less than Korea, India, Mexico, Poland and most of the developed world. And since the 1940s, the corporate share of all federal income taxes has dropped dramatically. In 1940, corporations paid 43 percent of all the federal income taxes collected in the US. But, in 2010, that percentage was only 8.9 percent! Indeed, the US raises less corporate tax revenue than most developed countries.

So though the US has the world’s 2nd highest corporate income tax rate, the rate actually paid by US corporations is much lower. In fact, our effective tax rate is less than that of even Mexico, India, Vietnam, Korea, China and Russia. And that’s the truth!