Smart. Sharp. Funny. Fearless.
Tuesday, March 26, 2019

When Newt Gingrich and Mitt Romney aren’t attacking each other for “vulture capitalism” and “bitter envy,” they often deliver sonorous warnings that the Obama administration is driving us toward national insolvency – that we will soon face the same fate as Greece or Italy. These exaggerated predictions of deficit doom are intended to frighten the gullible, with the ultimate aim of achieving drastic cuts of Medicare, Medicaid and Social Security (and possibly the privatization of those programs for profit). But what the Republican candidates never mention a fundamental cause of the fiscal crises in Greece and Italy when proffering false comparisons with the United States: the impressive levels of tax evasion and underground economic activity in those crippled economies.

If anybody is pushing the United States toward the edge of fiscal disaster, it may just be the Republicans in Congress who insist on slashing the Internal Revenue Service operating budget. According to the agency’s internal watchdog, tax evasion — rampant among the one percent, by the way, both here and in Europe — costs the Treasury around $400 billion a year, more than one-sixth of the $2.3 trillion collected. Rather than hire more auditors to ensure that the wealthy pay their share, Congress actually cut the IRS budget in 2011 — and brought us a bit closer to the impecunious state that Romney, Gingrich and all those debt-conscious Republicans supposedly despise.

  • Share this on Google+0
  • Share this on Linkedin0
  • Share this on Reddit0
  • Print this page
  • 0

11 responses to “How Not To Be Greece (Or Italy)”

  1. freethinker says:

    We dislike our tax system because it is used to reward and punish, not simply to fund government. You are simply throwing another log into the bogus ‘wealthy don’t pay their fair share’ fire. When you talk about ‘essential programs’, are you referring to the $2.6 million paid to educate Chinese prostitutes about responsible drinking on the job? Also seems to me that most of the recent stories about tax evaders were about Democrat politicians. You need to get better at hatchet jobs, Mr. Conason. This bit was pretty amateurish.

  2. RodgerMitchell says:

    The difference is not tax evasion. The difference is, the U.S. is Monetarily Sovereign, meaning it has the unlimited ability to pay any bills of any size at any time. No limits. Greece and Italy and the rest of the euro nations are monetarily non-sovereign, similar to the U.S. states, counties and cities, which do not have the unlimited ability to pay bills.

    If the U.S. collected zero taxes, it still could pay its bills.

    Those who do not understand the difference between Monetary Sovereignty and monetary non-sovereignty do not understand economics.

    Rodger Malcolm Mitchell

  3. pedroan2 says:

    I agree wit freethinker even though I believe freethinker is just as biased as the writer of the article.

  4. Hankk says:

    Mitt braggs about his 90,000 jobs created at Staples, and no one from the media ever ask’s the tough question, “Mitt what wage range are they in?” Well I went to a local Staples and inquired about their wages and found out that the sales clerks make between minimum wage up to $15.00 per hour, wearhouse employees minimum wage up to $11.00 PH and store managers from $15.00 to $20.00 PH. In these types of jobs only the managers help the USA tax base, sorry Mitt, Staples jobs will not get us out of the hole (borrow, borrow)that the GOP put us in. hankk, MI

  5. CharlieSwanson says:

    Compared to practices after WWII until Reagan, “wealthy don’t pay their fair share” is not bogus at all. Some make this claim because they compare only income taxes, forgetting about payroll taxes, which is larger for a great many Americans. For example, comparing the most recent years with detailed data (2006-07) to the last years before Reagan’s first tax cuts (1980-81), top 1% income share went from 8.4% to 21.6% (a factor of 2.6), and federal tax share went from 13.6% to 28.3% (a factor of 2.1). If federal tax share increased at the rate of income share, the top 1% would have paid more than $150 billion per year in 2006-07. This difference more than accounts for the drop in revenue from 19.3% of GDP in 1980-81 to 18.3% of GDP in 2006-07. The disparity has grown since.

  6. Common Sense Patriot says:

    There are truths to this article. Effective tax rates on the super-wealthy fell to 16.6% in 2007, from 42% at the peak of U.S. productivity in the early 1960s, and about 30% during the expansion of the 1990s. The United States has the largest amount of tax evasion measured in dollars – $337.3 billion. But even if every penny of that was paid (which counts only illegal tax evasion, not legal tax breaks that are exploited by armies of tax lawyers and CPAs. The problem is much greater than that. Mr. Conason ignores the biggest source of tax evasion, though most of it is legal due to the politicians they’ve bought and the legislation and special tax breaks they’ve been able to get into our massive tax code — corporations. the tax code is so massive and so complex, only tax lawyers and CPAs can find all the looholes and no member of Congress even comes close to understanding it all. More than one quarter of the Fortune 500 largest U.S. corporations paid little or nothing in federal income taxes during the 2008-2010 period, despite registering profits in all three years. Many had more than one year paying no tax and/or received tax rebates. In 2009 alone, 49 companies earned combined profits of $78.6 billion, yet paid no taxes – and collected tax rebates totaling $10.8 billion. U.S. taxpayers subsidize excessive executive compensation — by more than $20 billion per year — via a variety of tax and accounting loopholes. For example, there are no meaningful limits on how much companies can deduct from their taxes for the expense of executive compensation. Corporate tax dodging has gone so out of control that 25 major U.S. corporations last year paid their chief executives more than they paid Uncle Sam in federal income taxes. Thirty of America’s largest corporations paid a federal income tax rate of minus 6.7 percent on $160 billion of profit from 2008 through 2010 compared to an official corporate tax rate of 35%. All but one of those corporations spent nearly half a billion dollars over those three years lobbying in Washington for laws and rules that favor their interests. These corporations have also spent lavishly on compensation for their top executives ($706 million altogether in 2010). The 10 firms that spent the most on lobbying during the same three-year period fired more than 93,000 American workers. With 13.1 million people still unemployed, tax income is down greatly. No income; no taxes. One of the biggest problems, however, as a few of the comments point out, is the pure waste of taxpayer money on poorly run government. The interest on the national debt alone is staggering. The interest payments on the national debt FY2012 through FY2021 will add up to $5.2 trillion. As of January 1, 2012, the national debt was $15.22 trillion, officially surpassing 100% of Gross Domestic Product (GDP – the value of all goods and services produced by the entire USA in a year). This is up from just 40% of GDP at the end of fiscal 2008 . The nation’s GDP is now $15.18 trillion. Each citizen’s share of the national debt is now $48,692.55 and rising daily. China holds $1.15 trillion of our national debt. The projected national debt by 2021 will be $24 trillion, according to the Office of Management and Budget. The CBO, GAO, OMB and the Treasury Department have indicated that under current law, sometime between 2030 and 2040, mandatory spending (primarily Social Security, Medicare, Medicaid, and interest on the national debt) will exceed tax revenue. In other words, there won’t be enough tax dollars coming in to even pay the interest on the National Debt, let alone reduce it. All discretionary spending (e.g., defense, homeland security, law enforcement, education, etc.) will require borrowing and related deficit spending.” These agencies (CBO, etc.) have used such language as unsustainable and train wreck to describe such a future. If the national debt continues to grow as a share of the economy, an ever-increasing share of revenues will have to be devoted just to paying the interest on the national debt, so that in 2020 interest payments will be nearly as large as all defense spending. Such escalating interest payments will create an unsustainable cycle that would eventually force dramatic adjustments in the U. S. budget. Without appropriate reforms, this path will have serious consequences for the U.S. economy. The United States government has been running large federal deficits for most of the years since the Great Depression, regardless of which party was in control of Congress or who was in the White House. The U. S. Federal Budget has not been balanced and the National Debt paid in full since 1835 when Andrew Jackson (a Democrat) was President. If America’s long-term budget problems were small, they could be fixed entirely by the Republicans’ preferred method, which is spending cuts, or entirely by the Democrats’ favored fix, tax increases. The challenge is not small, however. That’s why nearly every bipartisan group that’s looked at the problem — including the Bowles-Simpson and Domenici-Rivlin commissions — has concluded that some mix of the two will be required

  7. kurt.lorentzen says:

    Although Joe Conason is intelligent, his leftist philosophy continually trumps logic. I’d like to address a few of his comments and a few from posts.

    1) Ignoring the deficit by decrying that it’s not an issue is like ignoring a hole in a boat because the water has only risen to knee level. The boat is still floating, but if it won’t sink on its own right away, it’s a lot more susceptible to waves and storms.

    2) Tax evasion and underground economies are the direct result of oppressive tax structures that take from the consumer and make profitability in business all but impossible. Even with that oppressive tax structure, Greece couldn’t finance its socialism. Just like the US, businesses left the country for greener pastures. The similarities to the current US path are completely obvious for anyone who cares to look.

    3) Monetary sovereignty does not equal unlimited wealth. If that were true, we’d just print up a bunch of paper, pay off the national debt, and just keep printing whatever we needed whenever we needed it. Gold standard or not, currency has a perceived value, and that value is based on domestic output (GDP), credit worthiness, etc. The more global economics become, the more that holds true.

    4) There should be no limit on payroll taxes (social security, medicare) and in fact they should be extended to all forms of income, not just limited to payrolls. Financing Social Security is on thing we can do and must do. But Medicare isn’t so easy. Costs just keep going up, and the unfortunate paradox is that those who consume the high-cost medical services are almost all receiving social security as their income source. In essence, we spend hundreds of thousands of dollars keeping someone alive, only to extend the time they will draw social security (this is from a monetary perspective, not a philosophical one). That double-hit is the chief drain on our tax revenues. There are definitely some other places to cut, but containing healthcare costs is the top priority. Mr. Conason believes that we can tax our way to prosperity – just like the Greeks.

  8. hgltraveling says:

    I was wondering when someone was going to point out that the one percent also have sufficient funds to hire the most “efficient” or most crooked lawyers and accountants who know their way in and around the tax loopholes and rarely, if ever, pay taxes on what they actually have as income because they know best how to shelter and hide it or list it as some esoteric business expense or simply not record the income from the start.

  9. RogerHWerner says:

    Anyone who thinks the rich pay their fair share or don’t misunderstands the nature of the discussion. In California, the top income bracket provides approximately half the tax base. That’s a remarkable figure really. I think the problem is that corporations don’t pay their fair share. Since Reagan, corporations have essentially been given a free ride with citizens of all class picking up the difference. Now I don’t have much sympathy for the top tax bracket since they are largely responsible for the policies that help corporations legally evade taxes. If they would like to pay less then maybe they should be less focus on policies that enable corporations to cheat, sometimes legally and many times not legally.

  10. rustacus21 says:

    … & close to 3 trillion dollars later, the rich are still behind on their tax bill owed THEIR government! But what is a citizen-owned, voter-managed Democracy to do? It’s legislators won’t act, so what’s the alternative? Recall!!! Any public servant viewing this situation from the perspective of “can’t do” should “be gone!!!” President, Senator or Congressperson. It’s very simple. Unless we really have grown into a nation of cowards…

  11. rustacus21 says:

    … besides tax evasion, the single largest grain on the nations economic health is the lack of oversight in making sure institutional corruption (whether on Wall St., Fannie/Freddie, Medicare/Medicaid or IRS) is stopped cold in its tracks. The legislative enforcement is gone, thanx to deregulation & nowhere in government is there the will to, among others, reinstate Depression-era enforcement, which kept corruption to a near non-existent institutional level, til the 1980’s. To avoid redundancy, I won’t say again, it was Conservatives who initiated the pushback, which unleashed the crime-spree which has nearly bankrupt the nation, w/the cover of 2 illegal wars, which kept the nation in contortions until realizing what the scheme was all along. By then (in ’08), it was too late. Greece, Italy & Ireland were all caught up & almost G.B. & France, if not for sheer luck. Imagine what THAT debt crisis would have looked like?! Recall, any 1? 6 month after election, if no action has been taken toward this end, I believe it’s a fair enuff time frame to call those elected officers a failure & “candidates” for removal…

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.