The battle for the budget
American citizens have just filed their annual tax returns, with a final doleful look at the payroll items deducted on their W-2 wage forms. The size of the deductions can induce working men and women to be less sympathetic to the complaints of business executives and investors about their taxes. But it is necessary to have some understanding about how tax revenue issues have become a part of President Biden’s economic plans and the Republicans’ opposition.
Some rock-ribbed Republicans insist that a truly capitalist economic system allows for only limited taxation. At the top of the list is defense. The amount of money that the U.S. spends on defense is consistent with that principle. The U.S. military spending is greater than the total of the next seven largest military budgets of other nations combined. The U.S. spends more than 2.7 times the military budget of China.
Major military budgets are usually supported by conservatives, but there is usually opposition to corporate taxes that are at a high enough level to finance the military as well as the programs to support the welfare and high standard of living of the citizenry. The capitalistic theory is that energetic and ambitious people will take advantage of the opportunities provided by capitalism to develop independent means for sustaining their families.
It has become clear that individual enterprise and the free market alone are insufficient to sustain that high level of life that Americans should enjoy in the modern world. While Americans have pursued individual success, we have permitted the roads and bridges to deteriorate. In addition, we have permitted the water in some places to become polluted, and the air to become a menace to human health.
Americans are becoming more intolerant of these conditions, and support for improvement is building. The problem now is to develop a revenue strategy to finance the improvements. President Biden’s plan is to commit $2 trillion to finance a program to restore and rebuild the nation’s infrastructure. Much of the funds spent on these projects is expected to aid America’s finances: Unemployed workers will have jobs that pay well, and American companies will profit from selling supplies and materials to the projects.
The problem is that the 2017 Republican tax bill signed by former President Donald Trump cut the corporate tax rate to 21% from 35%. A number of large corporations with substantial revenue were also permitted to reduce their tax rate to zero by utilizing deductions permitted by the tax code. There has to be a more equitable tax system, but the public programs have to be more efficiently managed. For example, it is unjustified for 30 Boston police officers to earn more than $300,000 per year.
This is a time when citizens have to be well informed, alert and amenable to change. With our democracy under siege, only an active, intelligent electorate will preserve it.