Tuesday, April 19, 2011

Tax fairness pledge or scam?

Recently there have been new reports of a group of wealthy individuals who sent a letter advocating that the Bush tax cuts be allowed to lapse (at least for the wealthy), saying they should pay their fair share.  There is also a group called United for a Fair Economy (http://www.faireconomy.org/) advocating higher taxes on the rich, and promoting a "tax fairness pledge".

People who take the "tax fairness pledge" say they support higher taxes. They also figure out how much more they would have paid without the Bush tax cuts. These people are encouraged to "give back" this extra money.

One might think that the logical thing to do is send the extra money to the government. This would make a statement by paying the "fair" amount of tax. But that's not what United for a Fair Economy says to do.

Instead, United for a Fair Economy suggests that the "Bush tax cut" money be given to charities, in particular United for a Fair Economy or other groups lobbying for higher taxes. So rather than giving the government its fair share, this seems a thinly disguised fundraising technique.

Those individuals who seriously feel they should pay higher taxes can already do so today. There are several way to give money to the federal government, thus paying the higher "fair" tax.

Advocating that tax savings be given to a charity is not the same as advocating fair taxation. If the purpose is to pay more taxes, then the money should go to the government, not to a charity. After all, we don't get to choose where the current tax money goes, so should not be able to choose how tax cut savings are used.

So those who want higher tax rates should put their money where their mouth is. Starting with President Obama (whose income is much higher than $250,000 per year), they should give their tax cut to the government, and provide this information publicly. If the majority of the wealthy donate their tax cut savings, this will provide a powerful statement in favor of higher taxes. On the other hand, politicians who vote for higher taxes while taking advantage of tax savings they oppose are hypocritical. They should set an example for the rest of us.

Note: I don't make over $250,000 per year, so don't have a direct interest in repealing the taxes for higher income. I do save money from the Bush tax cuts, as does my son (making near minimum wage last year), and as did my retired father-in-law living on under $20,000 per year (repealing the cuts will affect everybody who pays income tax, not just the rich).

No comments: