To some Americans, the word “tax” is akin to a “four-letter-word,” and the profanities heard around tax time can prove that public bent.
Though admittedly overly-complex and onerous to file, most people understand the necessity of taxes to pay for the valuable services provided by our government like Social Security, Medicare, education, public safety, roads and the like. But with Congress’s recent game of chicken around the government shutdown and the debt ceiling, as well as the grave impacts of the sequester on needed public services — to keep those services, it’s clear we need to raise revenue somehow.
I’m not sure why there’s an aura of animosity when it comes to taxation since, when one examines public opinion polling, it’s clear that Americans are not against taxes themselves, only unfair taxes. Fair — now that’s a loaded word. While some would argue that fairness means corporations must have a tax rate that maximizes their ability to compete in a global market, most people would say that fair means treating people equally. An example of this idea can be found in the fact that, unlike the average Joe (or Jane), corporations are able to subsidize their tax bills by making use of loopholes that allow them to deduct certain types of pay, like performance-based bonuses for CEOs who make over a million dollars a year. I think you can agree, that’s just not fair.
In addition to making sure that CEOs and corporate entities are paying their fair share in taxes, another important way to bring in needed money to fund the government’s budget and reduce the deficit is to end international tax loopholes that incentivize corporations “sheltering” their profits in tax havens (other countries with lax tax rules) instead of bringing those dollars back to the United States. While you and I are letting fly a few expletives as we bemoan the filing of our annual taxes, huge corporations like GE, Exxon-Mobil and Citigroup that are making billions per year in profit get away scot-free, without paying a single cent in federal income tax. And, of course, armies of industry lobbyists aim to keep it that way.
This inequity is why many welcomed the recent tax proposals released by Senator Max Baucus (D-Mont.), Chairman of the Senate Finance Committee. One of the discussion drafts in his scheme for overhauling the tax code aims to close international tax loopholes along with two other proposals that would reduce fraud and increase simplicity of the tax code. Though these proposed changes would begin to address some of the worst problems with international tax-dodging practices, the proposals themselves have been deemed “revenue-neutral” and are not expressly aimed at funding the government services upon which even multinational corporations depend.