American Forum Op-Ed

AMERICAN FORUM

By Susan Shaer

As Supreme Court Justice Oliver Wendell Holmes said, “Taxes are the price we pay for a civilized society.” It costs money to make this country hum. Anyone can see that it would be impossible to have roads crisscrossing the country, federal jails and courts, national parks and monuments, environmental protection that has no boundaries, and a whole raft of other essential services without a nationwide system in which we all have a stake.

Right now, our debt, the deficit and the spectacle of a narrowly averted government shutdown have focused attention on federal spending of tax dollars. To that, I say hooray. I hate looking at my own spending budget, but I know what my priorities are, and what money I have to use, save or borrow against. When we examine our personal finances, we recognize our personal values. Such a magnifying glass aimed at the federal budget will expose priorities of our “civilized” society.

So what are our federal values? We have two sides to the spending budget; one non-discretionary (required spending by law or interest on the debt), and the other discretionary. The discretionary side is where our priorities are displayed full frontal. The current budget allows for 56 percent on the Pentagon, wars and nuclear weapons.

Yes, that’s right. Not to confuse the issue, but that 56 percent does not include veterans’ benefits, or the interest we pay on the debt of past wars, or homeland security. We spend a lot on war, war planning, defense, offense, outdated weapons, overspending on weapons systems cost overruns and more.

It brings to mind the old adage: If all you have is a hammer, everything looks like a nail. If we have the “stuff” to make war, we use it. If we shifted priorities, we could spend more on international development to help countries survive and thrive so they might not be ripe for conflagration. If we had plentiful, well-trained and professional conflict resolution teams, we could rely on them more and boots on the ground less.

Our troops do a masterful job. The outpouring of support for what they have handled in Iraq and Afghanistan, and now in Libya, is appropriate. However, many in Congress are saying it’s time to look at the military budget. The Pentagon does not pass audits. Weapons manufacturers routinely have cost overruns that would not be tolerated anywhere else in the budget. Weapons systems made in various congressional districts are reauthorized even if the Pentagon and the Joint Chiefs don’t want them.

As you look at what you pay in federal income taxes, take a few minutes to think of our country’s values in spending your hard-earned dollars. Last year, in a nonpartisan town meeting effort sponsored by America Speaks in 60 cities across the country, 85 percent of all participants wanted defense spending cut by at least 10 percent, with a majority of participants, 51 percent, supporting a 15 percent cut.

We can have the defense we want and need, plus the security of jobs, health care, education and a clean environment by adjusting our spending priorities to meet our values. It’s time.


Shaer is executive director of the national women’s peace and security organization, WAND, Women’s Action for New Directions.

Copyright (C) 2011 by American Forum. 4/11

GEORGIA FORUM

By Charles H. Kuck

From the perspective of a lifelong Republican, I am always troubled when the State Legislature starts looking at ways to “fix” a problem by getting the government more involved in the lives of its citizens, rather than less involved. That is absolutely the case with the currently pending legislation on immigration. A detailed review of HB 87 and SB 40 reveals that these bills do not reform illegal immigration nor do they enforce laws related to illegal immigration. What they do is increase taxes on every citizen of Georgia by increasing government regulation, create unfunded mandates for every county, city, town, and village in Georgia, and create new private rights of action against every Georgia polity that will result in hundreds of lawsuits that will drain taxpayer coffers and result in little, if any real change on the issue of illegal immigration.

This type of legislation is popular because it gives the perception that the state is doing something, which the federal government is purportedly not doing—enforcing federal laws on illegal immigration. The problem with this notion is two-fold. First, the federal government is doing more than it has EVER done in enforcing the laws on undocumented immigration. The Obama Administration is spending literally billions of taxpayer dollars building fences, hiring border patrol agents, detaining undocumented immigrants and actually deported 400,000 people last year—a record. Second, these proposals do not create any greater degree of enforcement than already exists under current state and federal law.

By September 30, 2013, everyone arrested in Georgia is going to be run through the Secure Communities program, and if they are unlawfully present in the United States they are being held for ICE (Immigration and Customs Enforcement) to pick up within 48 hours.

Without discussing the deleterious details of this program (DWH—Driving While Hispanic), it has resulted in a record number of cases filling our Immigration Court dockets.

So, if these bills do NOT reform immigration, do NOT effectively increase enforcement, and do NOT make Georgia safer, what will they do? They will increase taxes on Georgians, force cities and municipalities to hire previously unnecessary personnel, and make litigation lawyers smile.

These proposals have as their main thrust a desire to make Georgia like Arizona. The bill is designed to make it so hard to live as an undocumented immigrant in Georgia, that such immigrants will leave the state. If this bill accomplishes its purpose it could result in the departure of more than to one million people from the state, along with their tax dollars, investments, talent, and businesses.

There are also at least two provisions which will never be enforced, and which will be struck down as unconstitutional or preempted before they even go into effect, for the same reasons that similar provisions in the Arizona bill were struck down. Provisions dealing with unconstitutional police stops and non-definitions of reasonable cause beg for a judge to overturn this law. The authorizing of private lawsuits against government agencies looks like a lawyer’s full employment act, and business destroying mandates and penalties best dealt with under federal law will simply shut down businesses and cause greater unemployment.

These proposals are bad public policy and bad for Georgia. If our legislators really want to fix the immigration problem they should all take a day and go to Washington, D.C. and demand that Congress fix our immigration system, rather than trying to put a band-aid on a gaping shotgun wound.
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Charles H. Kuck is an adjunct professor of Law at the University of Georgia, and a past national president of the American Immigration Lawyers Association.
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Copyright (C) 2011 by Georgia Forum. 2/11

KENTUCKY FORUM

By Steve Boyce

Many Kentuckians share a frustration with the lack of legislative will to pass real tax reform which has resulted in a decade of annual revenue shortfalls, cuts in essential programs, one-time stop gap measures and a failure to make investments that will move Kentucky forward.

As a member of the Kentucky Forward Coalition, I have grown impatient with yet another state tax reform study, especially since it’s not clear that the study will be transparent or guided by Kentuckians’ values.

The Kentucky Forward Coalition proposes that any revision of our tax structure -- whether coming from the commission that Sen. Williams has called for, or any another -- begins by establishing a set of principles that benefit all Kentuckians and move us forward. The Kentucky Forward Coalition serves or represents a sizeable portion of the people in our Commonwealth, and these are the principles that we lift up as necessary to create a better Kentucky:

• Revenue solutions should sustain a good quality of life in Kentucky through essential investments in good schools, health care, public safety and other necessary public structures and services.
• Our taxes should be balanced, reasonable and fair, with fiscal responsibilities shared equitably among all citizens and businesses by minimizing taxes on low-income people and bringing more balance to our tax code.
• Our tax structure should be sustainable, with reliably constant sources of revenue that grow along with the economy.

If we use these principles to guide reforms to our tax structure, we will all be in a better position to live up to our potential. Kentuckians are smart, resourceful, helpful and creative. We’d all realize our own potential more often by adequately funding the necessary elements of strong communities. This includes good schools with smaller classes, access to quality health care, police and fire departments that have the resources to protect and serve and water that we know is safe to drink.

A lot of ideas get put under the banner of tax reform. Not all of those ideas adhere to principles that reflect our values. Some would allow us to share in our responsibilities equitably and fairly, while others would knock our tax system further out of balance by shifting responsibility away from wealthy individuals and major corporations and onto working families. Some make it easier to pay for the public investments we need to grow and improve the quality of our lives, while others intend to shrink those necessities and turn Kentucky into a place of greater inequality.

Shifting to a tax system based on sales, instead of income, would turn our already out-of-balance tax system completely upside down. It would shift more responsibility to people who are less able to pay -- those whose wages and income have stagnated over the years. We know this from the studies that have already been done, most recently by the Institute of Taxation and Economic Policy. This shift would not benefit our economy, and would be harmful to our families. That’s not what Kentuckians deserve.

A sustainable tax structure means a broad base of taxes. That’s because different taxes respond differently to economic changes, and a broad-based tax system helps maintain and grow the revenues needed. Eliminating individual and corporate income taxes radically narrows our tax base and impacts revenue sustainability over time. That, unfortunately, is the goal of some. This will not help us create the commonwealth that we deserve.

Kentuckians want reform. But reform is not just making something different, but making something better. Better for Kentucky means generating revenue to help create the kind of society Kentuckians deserve and want by modernizing our taxes and bringing balance and fairness to our flawed system.

Every Kentuckian has a stake in our taxes and budget, so we deserve to be represented when recommendations are agreed upon. Any study of reform should invite everyone into the conversation by starting with these questions: What kind of communities do we want, and how should we pay for them? The answers to those questions are defined not by experts, but by our values.
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Kentucky Forward is a coalition of labor, faith, education, health, and community organizations. Boyce is the Chair of member group, Kentuckians for the Commonwealth.
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Copyright (C) 2011 by the Kentucky Forum. 1/11

AMERICAN FORUM

By Mitchell Gold

As a business owner who has created hundreds of jobs over the past two decades, I understand economic policies that build sustainable growth. Yet the billions in tax cuts for the wealthy just signed into law compromise our shared future.

The promise of “trickle down” economics has failed. When recent studies suggest that 1 in 3 working families are near poverty, it defies common sense that some elected officials have prioritized giveaways to the wealthy. This greed and excess is what got us into the worst economic recession since the Great Depression. It defies good business and core American values to pass this burden on to increasingly vulnerable working families, and to our children and grandchildren. How much more damage to the middle class can the country endure?

It’s clear that our political leaders need to shift course in order to build a healthy economy. We need to put aside the myths and rationalizations that excuse the unprecedented greed the last decade has witnessed. We need to have a basic sense of decency and focus on policies that benefit us all.

It’s pretty simple: when Main Street consumers are doing better, we all do better. Or, as the South Carolina Small Business Chamber of Commerce recently said, “We need customers, not tax breaks.”

I started my business in the difficult 1989 economy and sustained other recessions. I know that it’s the customers that drive economic prosperity. With millions of Americans out of work, giving tax cuts to the wealthiest few is the wrong strategy. At one time I paid more in taxes, because I was making more. This is appropriate, since a strong economy is built upon creating economic gains for all Americans, not just a privileged few.

It takes positive values to build healthy families and communities. When we built our manufacturing plant in North Carolina, we invested in environmentally sustainable practices, built an industry-leading day care center, a health-conscious café, employee gym and responsible health care for our over 600 employees. These were expenses our competitors were not taking on, but we knew that by making up-front investments in our people we would all benefit over the long term.

As a country we have forgotten our own history. Public investments like the GI Bill, the interstate highway system and university research grants have provided the environment where some of the world’s most innovative entrepreneurs had the opportunity to build businesses. That’s what makes America great, not greed.

We must recommit ourselves to the foundation of healthy and prosperous communities where everyone has an equal opportunity to succeed. The anger that excludes or divides us is not what has made America strong. A healthy economy includes all people and helps build a foundation for public spaces, civil discourse, religious freedom and an environment that sustains creativity, innovation and peace.

We now face urgent economic and environmental challenges that will determine our global competitiveness and quality of life for generations. Patriotism comes from a willingness to share responsibility, to support our shared interests and to invest in creating opportunities for all through education, technology and infrastructure.

Politicians risk too much when they focus on short-term wins at the expense of the real needs and interests of so many Americans who want to work, serve their country and live comfortable lives with their families. We must remember this as we look ahead to comprehensive tax code reform, deficit reduction and smart investments in our common future.

The recent failure of leadership, those who have sided with the wealthy people who fund their re-election campaigns is shameful. They have failed true family values and have not responded quickly to the millions of struggling Americans who have lost their jobs or are just getting by. This threatens our shared prosperity. That’s why I joined hundreds of other business people and tens of thousands of individuals in signing petitions against the high-end tax cuts.

As we enter into this New Year we must commit to a healthy economy, where Main Street Americans have jobs and money to spend. This will take investment, not tax cuts. We must put an end to the greed and excess that got us into this economic crisis. It will require sacrifice from each of us and require historic leadership with integrity. If our political leaders don’t understand that, then it’s time we find some who do.
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Gold is co-founder of Mitchell Gold + Bob Williams, a $100 million home-furnishings brand he and business partner Bob Williams started in 1989 with an investment of $60,000. He is a member of Wealth For Common Good and founder of Faith In America.
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Copyright (C) 2010 by the American Forum. 1/11

AMERICAN FORUM

By Kenneth Lewis

The national conversation on our fiscal health for the past few months has been about whether to extend the Bush-era tax cuts for households with incomes over $250,000, or to allow them to expire on December 31st. To my amazement, lost in all this controversy and discussion has been any mention of what this would really mean for high-income people in the context of historical tax rates.

During the 1950s this country was flourishing economically and adding new jobs that moved millions of people out of poverty and into the middle class. What kind of tax policy was in place during this period, those years after World War II when the Baby Boomers were growing up?

What was the top marginal tax rate during all eight years of the Eisenhower Administration? 91%! The increase proposed for today’s rates seems paltry, and the top rate seems very low, in fact too low, and incongruent with the needs of the country for investment right now in education, health and infrastructure.

This comparison is also true when looking broadly over the mid-century; during the years from 1935 to 1980 the marginal rates were never below 70%.

One can only wonder what the big fuss is all about.

Right now people pay income taxes on a sliding scale between 10% and 35%. If the Bush-era tax cuts expire on December 31, the rates would return to between 15% and 39.6%. Less than one percent of taxpayers now pay the 35% (according to the Wall Street Journal) and less than four percent pay 33%. If the tax cuts are allowed to expire, the top tax rate of 39.6% would only apply to those whose income, adjusted for inflation, exceeds $363,000 per person.

So in reality, the big controversy over the extension of tax cuts boils down to a mere 4.6% for those making over $363,000! And remember, they pay that extra amount only on incomes over $363,000, not their entire income. Based on the arguments and emotional forcefulness of those who want all tax cuts extended, one would think that the rates we are talking about are historically high rates. Top rates of 35% and 39.4% aren’t even close to historic highs.

At a time when reducing the deficit is a main concern of both the public and of policy makers, it seems incredible that there is even any discussion about this. Letting the tax cuts expire for the top two to four percent of high earners will reduce the deficit by over 700 billion dollars. How can we not do this?

The argument that lower tax rates leads to increased employment is belied by the experience during the Bush Administration. The most massive tax reductions in US history occurred during those eight years, and the increase in employment during those years was the lowest in U.S. recorded history. Lower taxes did not lead to increased employment.

I have benefited enormously from the infrastructure that strong federal, state, and local governments provide. As a businessman I have used more than my fair share of these public institutions and therefore, I want to pay my fair share. That’s why I’m asking Congress to raise my taxes!

There is no valid reason to continue these historically low tax rates for those making more than $250,000 or more than $363,000 during a period of economic stress. This country is in trouble and those of us who have benefitted the most need to step up and pay our fair share. The small rate increase will decrease the deficit by over 700 billion dollars and have no appreciable adverse impact on employment. In fact, I would argue it would stimulate job creation if Congress were to invest in this country again. The House has rejected letting the wealthy off the hook for their fair share. The Senate should act now, do the right thing - and also reject the compromise.
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Lewis is former president of Lasco Shipping Co. of Portland and of the Port of Portland Commission. He is also former national chairman of the I Have a Dream Foundation and a member of Wealth for the Common Good.
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Copyright (C) 2010 by American Forum. 12/10

AMERICAN FORUM

By Holly Sklar

Republicans played President Obama in the tax deal like mortgage hustlers played homeowners. Focus on the teaser rates, borrow more than you need and trust us to work with you to refinance later when rates jump.

The teasers are the needed extension of unemployment benefits – always extended before with high unemployment – and continued tax cuts for non-rich Americans. The President folded on more tax cuts for millionaires and doubled down with a renovated estate tax set at the lowest rate since 1931. And a cut in the Social Security payroll tax, which Republicans will use to gut Social Security later.

The tax deal will cost most Americans and our economy much more than it gains.

Obama’s tax deal falls for the same trap Republicans have been running since the Reagan administration. Cut taxes to reward the wealthy and purposely run up the debt to cause cutbacks later in programs Republican lawmakers don’t like, which is most everything outside the military and corporate subsidies for Big Oil, Big Pharma and other favored big business using small businesses as poster children.

Handed a budget surplus by the Clinton administration, President Bush slashed taxes - breaking precedent by asking the wealthy to pay less, not more, during wartime – and chopped away at the public services and infrastructure that underpin actual job creation and long-term economic growth. Bush left America in the worst economic crisis since the Great Depression, and falling down the world rankings in wages, living standard, life expectancy, economic mobility, education, infrastructure and global competitiveness. The richest 1 percent of Americans had the greatest share of national income since 1928, which was not coincidentally right before the Great Depression.

Today, the too big to fail banks are bigger and Wall Street continues paying big bonuses for playing heads I win, tails you lose with our money. Wall Street campaign donations flooded to Republicans promising to roll back financial reform. Big businesses are sitting on a record pile of cash and liquid assets while small businesses still get the cold shoulder from banks. Millions of Americans have been foreclosed or are in default. One out of ten Americans are unemployed by the official count, which leaves many uncounted. Our infrastructure – much of it built decades ago when the highest-income taxpayers were more productive and less greedy - is rotting. The promised green jobs of the future are increasingly today’s jobs in Germany, China, Brazil and other countries investing more in their economies.

And now comes the tax deal, offering tax cuts that will be paid for next year and the years after by pay freezes and big budget cuts for the services and infrastructure most Americans and a healthy economy depend on. In a twist on the rightwing strategy long known as “starve the beast,” Senate Republican Leader Mitch McConnell praised the tax deal as “cutting off the spigot.”

People used to talk about robbing Peter to pay Paul. Now it’s more like robbing everyone to pay the richest 1 percent.

In the set up to the real robbery, the bottom 20 percent of Americans will save $396 on average in 2011 from the tax deal, the middle 20 percent will save $1,521 and the richest 1 percent will take the lion’s share, saving $76,949, according to Citizens for Tax Justice. The tax deal cost of $424 billion in 2011 will be added to the national debt.

Enabled by Obama, the Republicans will use the increased debt to set up the ultimate foreclosures: Social Security and Medicare. “President Obama and the Republicans will say that the payroll tax holiday is all about stimulating the economy. But don’t be fooled,” said Nancy Altman, co-director of Social Security Works. “There are many better ways to stimulate the economy with that $120 billion the payroll tax holiday will cost, including simply extending the Making Work Pay Tax Credit … And the other, better forms of stimulus pose no threat to Social Security.”

The payroll tax holiday, which will likely be extended, not ended heading into the next election, poses a grave threat. Scrapping the cap on earnings subject to Social Security taxes – now just $106,800 – eliminates the future Social Security shortfall projected after 2036. Cutting the tax while leaving the cap is a gift to those who want to cut, privatize and destroy Social Security under the pretense of saving it.

Like the bait and switch mortgages still wreaking havoc, the tax deal sets up big losses to come.
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Sklar is the Director of Business for Shared Prosperity (www.businessforsharedprosperity.org), which produced “The Business Case for Letting High-End Tax Cuts Expire.” Readers can write to her at hsklar.writer@gmail.com. An earlier version of this article appeared in The Hill.
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Randy Albelda

MASSACHUSETTS FORUM

By Paul Egerman and Randy Albelda

With unemployment close to 10 percent, Congress needs to focus on creating jobs and strengthening our economy. More than ever, our country cannot afford policies that would waste resources needed for job-creating initiatives in the short run and that would increase deficits in the long run.

That’s exactly what extending hundreds of billions of dollars in tax cuts for our highest-income residents would do.

One of us has built prosperous businesses and the other is a public finance economist. From our different perspectives we have learned the same thing: businesses create jobs when people want, and are able, to buy their products.

Paul Egerman

Tax cuts for the wealthy tend primarily to increase their wealth – not their spending in the economy. To increase spending and create demand in the private sector, government needs to put money into the hands of lower- and middle-income families who are struggling to get by and will spend any new income to keep their families afloat.

That’s why economists have consistently found that tax cuts for high-income people are a far less effective means of creating jobs than are tax cuts for lower- and middle-income families, extended unemployment benefits, and direct investment in services like education, health care, and public safety, which lead to direct hiring and put money into the hands of working people who will spend it in the local economy.

With Congress likely to act in the next weeks on the expiring Bush-era tax cuts, there is widespread support for extending the middle-class tax cuts. The debate will focus on whether to extend tax cuts for the highest-earning two percent of Americans – those with adjusted gross income above $200,000 for single filers and $250,000 for married couples.
There is a strong business and economic case for letting these higher-income tax cuts expire.

The bulk of these poorly targeted tax cuts will go to households with incomes above $1 million – resulting in average annual tax cuts for these households of over $100,000, about twice what the typical American household earns in a year.

Most small businesses aren't owned by people in the top-income brackets -- they don’t make enough taxable income ($250,000 a year) to pay the higher tax rates. Only the top 3 percent of people with business income of any kind, let alone income from what most Americans think of as “small businesses,” would be affected. Moreover, high-income households will benefit from extension of the middle-income rate reductions, because a portion of high-income filers’ total income falls within the tax brackets affected by the middle-class tax cuts.

The $40 billion in revenue next year (and some $90 billion over two years) generated by letting the high-end tax cuts expire could be used for a temporary tax credit to spur small-business job creation, or to provide additional aid to the states, and would do much more to generate economic growth and create jobs. Targeted provisions for working families through the Child Tax Credit and the Earned Income Tax Credit also have helped prop up consumer spending and should be extended.

In the long run, terminating the top-end tax cuts will produce substantial deficit reduction once the economy has recovered. If Congress allows the tax cuts targeted at America’s highest-income households to expire, it would reduce both the deficit and debt over the next decade by $1 trillion, improving the nation’s long-term fiscal outlook.

The US currently is experiencing the effects of the worst economic downturn since the Great Depression; reviving the economy and putting people back to work as soon as possible will place the US in a better position to address our deficits and debt in the years ahead. Cutting taxes for the very wealthy will not help the nation as much as keeping teachers and police officers employed, investing in our schools, transportation systems and other infrastructure, and using our resources to help those who need it most.
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Egerman is a businessman and software entrepreneur, co-founder of eScription, Inc., based in Needham, Massachusetts, and is now a member of U.S. DHHS Health Information Technology (HIT) Policy Committee. Albelda is a Professor of Economics and Senior Research Fellow at the Center for Social Policy at Univ. of Massachusetts Boston.
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Copyright (C) 2010 by Massachusetts Forum. 12/10

AMERICAN FORUM

By Sally Jones

“Cut My Taxes!” Americans have heard this cry for years -- and we’ve heard it shouted angrily in recent months. We hear that we pay too much in taxes, that government makes poor use of our money, and that our prosperity would rise if only taxes would fall.

But in reality our taxes have fallen steadily in recent years. In 2001 and 2003 Congress passed temporary tax cuts which will expire at the end of 2010. We must now decide what good or bad has come of that experiment and what tax law we want for the future.

Most of us recognize that one size doesn’t really fit all -- and this holds true for income tax rates. Maintaining a lower level of taxation for the vast majority of Americans makes sense in today’s hard times. But why should we do the same for the tiny percentage of citizens -- a minority to which I gratefully belong -- whose annual earnings exceed $250,000? The American people borrowed $700 billion to give people like me a tax cut over the last decade. Why should they borrow an additional $700 billion to extend the tax breaks?

Congress should let our tax cuts expire for the sake of the country, especially in this economy. Who would lose by this step toward tax fairness? Only those among us who can afford such a loss. Who would gain? All Americans -- including those few of us who would pay more taxes.

We cannot sustain our nation -- not its defense; not its essential infrastructure such as roads, rails, bridges, dams and communications; not its economic place in the world; not the health and education of its people; not its ability to respond to natural disasters such as earthquake, flood or hurricane; not the protections we expect it to provide against man-made disasters, toxins (domestic and imported), buccaneering corporations or hazardous products -- without securing for our government the funding it must have to accomplish all of these things.

Recognizing our shared responsibility -- in the present instance by payment of taxes -- we might live up to the example of earlier generations who left for us a remarkable system of institutions and infrastructure. By abandoning that responsibility, we would betray both our predecessors and our descendants, and we would gain nothing but a temporary self-indulgence, at a price that will impose itself on present and future generations.

Do we bear any collective responsibility? I think so. Consider the example of the season.

On Thanksgiving Day most of us will gather with family or friends or both. We will sit down to tables crowded with the various dishes that speak to us of this special occasion, and indulge ourselves more than we usually do. However much or little else we feel thankful for on that day, we will heartily thank the one or more cooks who toiled in the kitchen to prepare this dinner for us.

We thank the cooks because we have seen their effort first hand. But how many others have contributed to make our feasts possible -- others whom we never think about or credit? Who taught our cooks their skills or created our recipes? Who grew, harvested, preserved or transported the foods? Who built our ovens, plumbed our kitchens, and made our utensils, dishes and tables?

Those of us with high incomes ought to ask similar questions about the plenty we enjoy daily. We could hardly enjoy our success without assistance we hardly notice: the infrastructure that allows businesses to grow and prosper, the law enforcement that protect patents and copyrights, and the productiveness and purchasing power of publicly-educated fellow citizens. Without national investments – supported by our taxes – no wealth would be sustained in this country and those at the top would not have the extraordinary lives they have today. Let us remember to be grateful.

Let’s make sure those outside of the top two percent of Americans can live and thrive. Unless we foster prosperity for our country and for every citizen, all of us will suffer the consequences of living in a society of the ailing, the untrained and inefficient, and the unruly. Let’s pay the taxes -- those of us who can afford them -- to sustain the America that has offered opportunity since its founding. Unless we restore strength to its economy, institutions, and structures, our country will decline - and everyone’s prospects with it.
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Jones is a member of a high-income household in Minneapolis who supports Wealth For The Common Good and its goal of promoting shared prosperity and fair taxation.
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Copyright (C) 2010 by American Forum. 11/10

AMERICAN FORUM

By Brian Setzler

As a Certified Public Accountant and business owner, I know the impact of taxes up close and personal. And the claim that ending Bush-era tax cuts on income over a quarter of a million dollars will hurt the economy, reduce employment and burden small businesses is patently false. Let’s take a look at the evidence.

First off, small business owners rarely have taxable income in excess of $250,000 (gross income would be substantially more as taxable income includes reductions for business expenses, personal deductions and family exemptions). Hiring people and investing in your business actually reduces taxable income, so hiring and investing decisions would be unaffected. At issue is the tax on income, or the money the owner has available to take out of the business.

According to the Congressional Joint Committee on Taxation, less than 3 percent of tax filers with any business income make over $250,000 (couples) or $200,000 (individuals) a year, the thresholds above which the Bush tax cuts would expire, and many of those are not small business owners. As Ed Kleinbard, former staff director of the Joint Committee on Taxation, said, “Every student who is a part-time Web designer, partner in a law firm with a billion dollars of revenue and investor in a hedge fund gets lumped together in the data, along with real small businesses.”

Even if someone does have over $250,000 of taxable income, the additional tax rate is a marginal tax rate, which means they only pay the higher rates on the portion of income over $250,000, not under it. When the rate goes from 35 to 39.6 percent (back to the level under Clinton) in the very top bracket, for example, it doesn’t mean they pay 39.6 percent of their total income in taxes any more than they paid 35 percent of their total income before. They still start at a 10 percent rate for their first portion of income and work their way up incrementally through the tax brackets. They still pay the same rates everyone else does up to that level of income.

Those fortunate enough to make these high incomes will still benefit from the tax cuts on their first $250,000 of income, just like other Americans. The amount at issue is 3.9 percent or $39 for every $1,000 of income above $250,000. You can check out your own tax situation with the calculator at the non-partisan http://calculator.taxpolicycenter.org/ to see how you might be affected.

When someone claims a small businessperson will pay additional taxes of $20,000, that small businessperson must have taxable income in excess of $700,000. If they claim they’ll pay $120,000 more, they have an eye-popping “small business” income of $3 million. Sounds more like a hedge fund manager to me.

Small businesses are crucial job creators, but if lower tax rates produced job growth, we should have seen a boom in new jobs following the tax cuts. Instead, even the Wall Street Journal, not a bastion of liberal economic policy, said President Bush “shows the worst track record for job creation since the government began keeping records in 1939.” In fact, it’s much worse than under President Clinton who increased taxes. As a new report by Business for Shared Prosperity explains, “The Bush administration created just 1.1 million jobs net while the Clinton administration created 22.7 million.”

The choice is stark. Do we borrow $700 billion from China as we did this past decade to pay for tax cuts for hedge fund managers and Wall Street barons -- irresponsibly burdening our children with repaying, a debt with interest we don’t need to incur?

Do we make deep cuts in social services, education and public safety and forgo investing in the 21st Century infrastructure we desperately need to be competitive?

Or do we do the right thing and ask fellow citizens with really high incomes to pay their fair share? These are real choices our Congressional representatives will make in coming days.

Let’s tell Congress that investing in the infrastructure our businesses and well being depend on, educating our children, caring for the sick and the elderly, and investing in the future are what made America great in the first place.
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Setzler is a certified public accountant since 1989 and president and founder of TriLibrium, an accounting and business advisory firm located in Portland, OR.
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Copyright (C) 2010 by the American Forum. 11/10

AMERICAN FORUM

By Frank Knapp

Whether Americans voted for Republicans or Democrats in the mid-term election, one thing is clear: Voters were demanding that Congress focus intensively on job creation on Main Street -- not lobbyists and campaign donors from big business and Wall Street.

Apparently, many in Congress and President Obama, if recent reports are true, either didn't get the message or simply don't care now that the voting is over.

The top legislative priority of the newly "Tea Party-empowered" during the lame duck session is hardly what Tea Party insurgents had in mind. The proposal is to (1) increase the national debt by borrowing $700 billion to $1 trillion over the next 10 years; (2) spend the money on big, non-job producing tax cuts for the wealthiest 2 percent of Americans; (3) use small business as the excuse.

This bad-business proposal is now being pushed in Congress and the media by those advocating extending the Bush-era tax cuts to the top two income brackets. While proponents acknowledge that less than 3 percent of the taxpayers who would receive the tax cuts actually have some business income, they insist that these approximately 900,000 taxpayers are the very successful small business owners who will stop hiring and purchasing if they don't get their tax cut. Wrong, wrong, wrong.

First, almost all real small business owners are middle-class Americans with middle-class incomes. Walk down any Main Street and you won't find small business owners netting over $250,000 a year in profit (dollars remaining after the cost of employee wages and other business expenses are deducted from taxable income).

These middle-income, Main Street small businesses are the ones we really need to help create the new jobs to lift us out of this down economy. There is absolutely no evidence that the wealthiest small business owners create more jobs than those in any other tax brackets. As any small business owner knows, the number of employees does not correlate with profit.

So who are these mysterious high-income "small business" taxpayers in the top two brackets who Congress is considering borrowing hundreds of billions from foreign countries in order to give a tax cut?

Very few of them are what most would consider small business owners. They include partners in large corporate law firms, hedge fund managers, K Street lobbyists, high-powered consultants, Wall Street bond traders and the country's wealthiest
millionaires -- all of whom claim some business income and thus are counted in IRS eyes as small businesses. These aren't "mom and pop" businesses, says Adam Looney, senior fellow at the Brookings Institution.

Not only are the vast majority of these 900,000 "faux" small business taxpayers not involved in job hiring decisions, the tax cut won't even cause them to significantly increase their personal spending to create the demand for new jobs.

The non-partisan Congressional Budget Office (CBO) evaluated 11 policy options in terms of boosting economic growth and creating jobs. It found that "policies that would temporarily increase the after-tax income of people with relatively high income...would have smaller effects because such tax cuts would probably not affect the recipients' spending significantly."

The wealthiest Americans are more likely to save their money from a tax cut rather than spend it, according to Moody's Analytics, Inc.

If we really want to give a tax cut that will create jobs, then we could cut employer payroll taxes on businesses that actually increase their workforce. The CBO estimates this would have six to eight times as much job-creating impact as an income tax cut. The policy the CBO found with the biggest bang for the buck is extending unemployment insurance. It would boost demand by providing income to people most needing to spend it in the local economy.

Alternatively we could create more customers for our small businesses through infrastructure projects, many of them long overdue upkeep or modernization, or keeping teachers and law enforcement officers working rather than laid off. The policy the CBO found with the biggest bang for the buck is extending unemployment insurance -- a direct infusion of money into local economies by people buying for their basic needs.

Increasing the nation's deficit while not saving or creating jobs is just more politics as usual in Washington where those with the most money get rewarded with even more money.

Congress needs to hear this loud and clear. These high-end tax cuts serve K Street lobbyists not Main Street shop owners. Politicians should not use us to justify a very bad business decision.

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Knapp is President and CEO of the South Carolina Small Business Chamber of Commerce.
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Copyright (C) 2010 by American Forum. 11/2010

MINNESOTA EDITORIAL FORUM

By Beverly Caruso

There’s heated debate over whether to extend the Bush-era tax cuts for families with incomes over $250,000.We’re hearing the argument that letting the high-end tax cuts expire will hurt business. Yet I’ve seen first-hand how well-designed tax policy is critical for spurring innovation and business development. It plays a very different role than the anti-tax crowd leads us to believe.

CyberOptics, a leading high-tech company in the area of electronic inspection, was founded by my husband, Steve Case, in 1984, and now employs 180 people in Minnesota and around the globe. How this business came about tells a very different story about the role of our tax dollars – and the public investments they support - in job creation. This is an important story to tell if we want to recreate the fertile ground that allows new companies to start up and become successful, sustainable job creators.

Steve was a physicist and entrepreneur, whose education was financed totally by National Science Foundation grants and scholarships. Later, as a young professor he would again gain our government’s support through a Fulbright Scholarship. The scholarship led us to Germany where Steve deepened his scientific knowledge and met executives in Europe who would become major clients of his new business. Steve always said that fellowship year had a profound impact on his creativity, confidence, and skills. As a professor at the University of Minnesota, his partnership with a government contractor made it possible to conceive of and establish CyberOptics.

Every step of the way, programs funded by our tax dollars paved the way for Steve and CyberOptics’ success. The return on our tax dollars through these investments has been high.

While it’s easy to think that companies like Google and Sun Microsystems are the result of one or two people with the intelligence, creativity, and entrepreneurial spirit to take a risk and win big, the truth is more complex.

Like CyberOptics, these businesses rely on the court systems that enforce patent and copyright laws, roads, railroads and bridges that bring raw materials and deliver finished product, as well as the research and development grants to institutions of higher education, the high-quality primary and secondary public schools that educated generations of American students, and the grants and scholarships to those students during college and graduate school.

I would argue that the reason the United States has been so economically successful since the 1940s, is the combination of regulated capital markets and thoughtful, well-funded public institutions and structures. Steve’s story, like the story of so many American entrepreneurs, illuminates the role that public investment and public institutions play in creating the small companies that are the job engines we so desperately need.

Our country’s problems are large and complex, and we must attend to them now and cease putting them off. According to a report by Wealth for the Common Good, between 2001-2008, tax cuts for the wealthy cost the U.S. Treasury $700 billion, directly adding to the national debt. Retaining these tax cuts will likely cost another $700 billion over the next decade.

One thing we can do is to tell Congress to let the Bush-era tax cuts on the wealthy expire this year. The rise in incremental tax rates on people like me would be modest but the $700 billion in savings over 10 years would be a wonderful investment in the next generation. For those who have benefited enormously from our country’s investment, it’s time to share that opportunity with others. Letting tax cuts for the wealthy expire at the end of 2010 is a good and necessary first step.
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Caruso is a psychotherapist, community volunteer and civic leader in the Twin Cities. Her late husband, Dr. Steven Case, is the founder of CyberOptics, a high tech firm in Minnesota. Dr. Case was killed in a plane crash in June 2009.
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Copyright © 2010 by Minnesota Editorial Forum. 10/10

AMERICAN FORUM

By Peter Heegaard

Congress should do the responsible thing and let tax cuts for high earners expire at the end of this year.

As someone who has benefited from these tax cuts, I believe we must restore balance to a federal tax system that has been tilted in favor of the wealthiest 5 percent for a generation.

I’ve had a lifelong interest in the vital role of social entrepreneurs, the local heroes who take risks to lead innovative nonprofit organizations to solve problems at the local level.

I’m a big believer in the importance of mentorship, of helping the next generation of business and community leaders find their way.

But I also view efficient government and adequate tax revenue as essential ingredients in a fostering the fertile soil for business development and healthy communities. Just as a healthy farm or garden needs a balance of nutrients, our country needs a balanced and fair tax system.

Yet the overheated anti-tax rhetoric is alarming. There are loud voices that will object to any tax and claim that raising taxes on higher income people will destroy economic growth and punish success. They argue that we don’t need additional revenue, that we can simply reform entitlements, cut spending and root out waste.

We should obviously press for greater government efficiency and accountability. But it is irresponsible to suggest that we can proceed without increasing tax revenue. No gardener or farmer would expect their crops to grow year after year without regular additions of fertilizer.

We have racked up over $13 trillion in national debt, thanks to borrowing to pay for two wars and a decade of tax cuts. Yet, we have long overdue investments in education, reducing our dependence on foreign oil, and public infrastructure, such as roads, bridges, broadband access, and market protections. Where will the money come from?

Generous tax cuts for the wealthy, passed by Congress in 2001 and 2003, are due to expire at the end of this year. Between 2002 and 2009, households with incomes of over $250,000 received more than $700 billion in tax cuts, according to the Center on Budget and Policy Priorities. This was essentially added to our national debt.

The higher income people I know didn’t lobby for these original tax breaks and recognize the need to allow them to expire. If we retain these tax cuts, we’ll add another $700 billion to the debt over the next decade. These are funds better spent in deficit reduction and targeted investments.

The retired business leaders I serve with on community boards are thankful for the opportunities we’ve had to do business and grow wealth in this remarkable nation and free market economic system. None of us exist on an island and no wealth can be created without a society that provides a fertile ground of opportunity for everyone.

In the 30 years after World War II, 1947 to 1977, we taxed ourselves at significantly more progressive tax rates than today. The highest earners paid twice as much of their income in taxes in 1960 as they do today, according to a new study by Wealth for the Common Good. With that money we made investments in public infrastructure, affordable homeownership and expanded education at all levels. These far-sighted leaders supported policies that propelled millions of Americans into the stable middle class.

Today, young people are graduating from college with $100,000 in school debt, as undergraduates. We’re coasting along on previous generations’ investments in water treatment facilities, bridges and other essential infrastructure -- and we’re leaving too many talented young people behind. Our failure to make investments today will undercut prosperity for the next generation.

Congress will be under tremendous pressure to continue providing tax breaks to high income groups. Let’s hope they have the fortitude to let mine expire. The fertility of our economic soil depends on it.
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Heegaard is retired from banking and a former Managing Principal of Lowry Hill, a subsidiary of Wells Fargo. He is founder of Urban Adventure and author of “Heroes Among Us: Social Entrepreneurs Strengthening Families and Building Community” (Nodin Press).
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Copyright (C) 2010 by the American Forum. 10/10

AMERICAN FORUM

By Rick Poore

A good friend and fellow businessman once told me, “Give me more customers and I’ll be forced to buy equipment and hire people to meet demand. Give me a tax break without more customers and I’ll just go to Aruba.”

Ending the Bush tax cuts for the wealthiest taxpayers is the right thing to do for small businesses. I’ll say that again: it’s the right move for small business. Let me explain.
I consider myself an example of an average small business owner in Nebraska. I have 30 employees. My business does $2 million plus in annual sales. My personal income as the owner is less than $85,000 a year.

It’s a comfortable living, but ending the Bush-era cuts on the top two brackets won’t come close to impacting me. And it won’t impact the other small business owners I know, either. The top brackets won’t kick in until your taxable income is over $200,000/year for individuals and $250,000/year for couples, and they’ll only apply to the portion of your income above those amounts, not below them. Less than 3 percent of taxpayers reporting any business income (not limited to small business income) earn enough to break into the top two brackets.

But that’s not all. That 3 percent figure includes Wall Street hedge fund managers and K Street lobbyists whose income is reported as business income on their personal tax returns. Not exactly what you’d think of as small businesses, or our nation’s job creators.

Last time I checked, Wall Street types and their K Street friends had driven the economy into a ditch the size of the Grand Canyon and killed over 8 million jobs. Do they really deserve another tax giveaway to reward their efforts?

The idea that ending the Bush cuts for the top brackets will hamper small businesses’ ability to reinvest is a complete red herring. Any true small business that ends up with more than $250,000 net profit flowing through to the owner at the end of the year needs to hire a better accountant and rethink its business plan.

Let’s use me as an example. I gross a lot in sales, sure, but I’m busy reinvesting that money back into my business – buying equipment, promoting my business and hiring more workers. The dollars I reinvest don’t pass through onto my personal tax return so I don’t care if that rate changes a little bit, and neither do the millions of other true small business owners in this country.

Despite all this, some politicians continue to recycle the tired old myth that a small change in the top brackets will hurt business owners’ ability to reinvest in our businesses. There are two possible explanations for this.

First, these politicians have never been close enough to a small business to learn how our taxes actually work. We’ll call that an accidental sin of ignorance. A simple cure is to get out and meet some small business owners in their home states and hear about our day-to-day operations.

Second, some politicians are playing fast and loose with the facts. They know better, but they just don’t care. That’s intellectual dishonesty – a different kind of sin. Not much I can do to help there.

The bottom line is small businesses don’t need another tax giveaway. What we need are policies that restore our customer base by getting people back to work in our communities and putting money in their pockets to spend in our businesses.

Ending the high-end tax cuts would free up close to $40 billion in 2011 and $700 billion over the next 10 years to invest in job creation and rebuild our customer base. That’s what small businesses really need.
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Poore is owner of Design Wear, Inc., a custom screenprinting business with 30 employees in Lincoln, Nebraska. He serves on the steering committee of the Nebraska Main Street Alliance.
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Copyright (C) 2010 by American Forum. 10/10