Thursday, March 10, 2016

The Rich and Powerful Always Find a Way to Keep Their Money

Ever since throwing his hat into the presidential ring, Vermont Senator Bernie Sanders has taken the spotlight. And, like my 24-year-old brother might say… he’s owned it.

Time and time again, the self-proclaimed “democratic socialist” has sent Hillary Clinton scrambling to stay out of his larger-than-life shadow.

Promising to make the rich pay for a whole host of to-be nationalized services, Sanders has especially captured the attention of American voters in the 18-35 age range. To some degree, that’s understandable since the demographic finds itself up against a “competitive” jobs market combined with hefty student loan debt.

Then there’s the attention on wage inequality that’s dominated the news off and on so far this decade, whether through the Occupy Wall Street movement a few years back or today’s political rhetoric. So everyone knows the rich have been growing richer and the poor just keep struggling.

Put together, it’s not hard to understand Sander’s appeal. I mean, who doesn’t want a helping hand in a difficult environment?

But as genuine as Sanders seems to be in promising that assistance, he’s destined to fail when the game is rigged the way it is.

Taxation With Representation... but No Positive Results

According to the Tax Policy Center co-run by the Urban Institute and Brookings Institution, Sanders’ plan would involve raising taxes on everyone, with the infamous 1% forking over about 45% of every paycheck to the government to help the 99% out.

That’s in theory, anyway. Chances are astronomically high reality wouldn’t be nearly so nice.

Consider a USA Today piece published this month titled “27 Giant Profitable Companies Paid No Tax.” The article details how big businesses like General Motors (NYSE: GM) and United Continental (NYSE: UAL) made pre-tax profits yet paid no interest tax last year.

That was all through perfectly legal means, too, whether overseas tax rates, accounting rules or other outs. The article goes on to argue those loopholes won’t last forever, but that doesn’t matter much when new loopholes will arise to take their place.

If I sound cynical, forgive me. But that doesn’t make me wrong.

According to U.S. News, the U.S. federal tax code was 400 pages in 1913 and about 70,000 by 2010. Many - if not all - of those additions were placed there with the purported purpose of decreasing income inequality.

Yet most - if not all - have failed epically.

Loopholes Galore!

In large part, that failure is because there are just too many taxes. Well-meaning or not – and I would argue most of them are not – politicians on both sides of the aisle don’t have the time, ability or inclination to keep the current who-owes-what laws straight, tacking on new ones without understanding what’s already there.

But do you know who does keep them straight? The tax experts hired by wealthy corporations and individuals. These intelligent, knowledgeable, resourceful individuals make their livelihoods off of legally working the system to their clients’ benefit.

Adding even more laws isn’t going to phase them. (After the almost 11,000-page Affordable Care Act, they’re used to that.) It’s just going to make more room for more loopholes for them to exploit.


In fact, the only way to eliminate loopholes is to simplify the tax code. Any other way guarantees that tax experts keep their jobs and the rich keep their money... while you’re left paying your full bill.

No comments:

Post a Comment