Nobody likes paying taxes. Even those of us who see and enjoy the many benefits that our tax dollars bring us (schools, libraries, roads, firefighting) feel a sense of betrayal when we see the deductions on our paychecks.
 

That’s a fact.

Then there’s a belief.

The belief is that voting for Republicans is the best way to ensure our taxes remain low.

Let’s examine this belief and all the myths associated with it and see how much and what elements of it are true.

High Corporate Taxes under Democrats: It is true that Democrats, as recently as last year, proposed increasing the corporate tax rate from 21% to 26.5%. But this increase was only proposed for businesses making over $5 million in income, not revenue.  And historical data and studies show that reducing corporate tax rates — as Republicans did in 2017  — is not a boost to economic growth, nor do high taxes deter growth.

Instead, lowering corporate tax rates (and handicapping the IRS from ensuring companies pay what they owe) seems to be a boondoggle for lawmakers to benefit their corporate friends or pave the way for post-politics careers.

And actual data refutes the rather persistent myth of the exodus of companies from high-tax states like California. Of course, companies like Hewlett-Packard, Oracle, and Tesla have exploited loopholes in the tax code to declare headquarters in other states, but their businesses in California are alive and thriving because of the ease of finding talent, which stays in California because the state’s policies make it a welcoming place to be.

High Income Taxes under Democrats: Again, it is true that Democrats are proposing higher tax rates – for some wealthy Americans. They have unveiled tax legislation that would raise the top marginal income tax rate to 39.6%, up from 37%, that would kick in for single filers with income over $400,000, heads of household over $425,000, married joint filers over $450,000 and married separate filers over $225,000.

If you happen to be one of these people affected by these rates, ask yourself if it is worth sacrificing that to ensure Americans as a whole are healthier and happier and the country's infrastructure is in good shape?

It is more likely, however, that you are the beneficiary of these tax hikes.

On the other hand, if you don’t happen to be among the wealthiest in the country, it is worth taking a look at the latest GOP tax plan brought out by Sen. Rick Scott of Florida, a plan that is not just a product of his fevered imagination, but very much in line with the Republican philosophy that “everyone must pay taxes unless they are rich enough to avoid them using the loopholes we provide!”

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Some of the highlights of this plan’s impact:

• $100 billion in tax increases on middle-class families;

• An average $1,480 more in taxes each year for 75 million American families — 96% of them making less than $100,000;

• Tax increases for 24 million families of seniors making less than $100,000 per year;

• Tax hikes for another 24 million families with kids making less than $100,000 per year; and

• Sunset of Social Security and Medicare, unless Congress enacts the programs again.

The GOP plan is built on the specious argument that many Americans with low incomes don’t pay any tax, conveniently ignoring the fact that income taxes are not the only taxes people pay. The plan also scales the heights of hypocrisy since the reason the budget is under stress is that former President Donald Trump and the GOP passed a series of tax reforms in 2017 that gave an average of $250,000 to the richest 1% of the population.

By decimating government revenues, Sen. Scott’s plan, in the guise of tax fairness, aims to squeeze the pocketbooks of people who are suffering the most, first from the pandemic and then from the effects of rising oil prices.

Many Indian-Americans have visceral attitudes towards taxation, having seen first-hand the ineffectiveness and corruption of government. But the United States, while dealing with some of those very same issues because of the nature of the human condition, has been historically very good at using tax revenues to provide services to its citizens. And the kind of inequality fostered by Republican attitudes and policies towards taxation can only foster social discontent and unrest.

A fair and equitable tax policy is usually redistributive. And unless one is extremely rich and extremely selfish, all roads lead to the Democratic Party in its quest to make America work for everyone.

Become better informed about the facts around taxation. The resources below link to information around the topic so you understand the arguments and how to advocate for them. Keep checking back here for TSB activities around this issue.

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