When Senator Lindsey Graham told reporters on Tuesday that Mitt Romney’s foreign investment accounts don’t trouble him because “it’s really American to avoid paying taxes,” he must not have realized that he was calling his party’s nominee-to-be a liar.
“As long as it was legal, I’m OK with it,” said the South Carolina Republican. “I don’t blame anybody for using the tax code to their advantage…It’s a game we play. Every American tries to find the way to get the most deductions they can. I see nothing wrong with playing the game because we set it up to be a game.”
Graham assumes – no doubt correctly – that Romney sent his money offshore to avoid taxes. But the Republican candidate and his flacks have repeatedly insisted that the Romneys’ admittedly minimal tax bill was not reduced at all by their remarkable maze of holdings in Switzerland, the Cayman Islands, and Bermuda. It is “the very same” as if he had kept those millions of dollars in the United States, or so they claim.
But Graham clearly doesn’t buy that alibi. In fact, nobody does. And eventually Romney may be forced to realize complete information about his investments that may yet indicate the extent to which he and his family have escaped taxation. .
Meanwhile, what Graham unwittingly evoked with his clumsy endorsement of tax avoidance is the specter of Greece — a nation whose fiscal drama incites endless Republican prattle about the need for austerity. Warnings that as a nation we are on “the road to Greece” have become a favorite Republican cliché, regurgitated by every politician who wants to be considered for vice president as well as by the presidential candidate himself.
“You call that forward?” Romney said mockingly of an Obama campaign slogan last month. “That’s forward over a cliff, that’s forward on the way to Greece.”
What Graham, Romney, and all the other Republican politicians and pundits consistently fail to mention – or perhaps don’t know – is that the central Greek problem isn’t over-spending per se. The central problem is the Greek government’s failure to collect what taxpayers (especially wealthy taxpayers) actually owe under the law.
That’s because over the years so many Greeks have adopted an attitude toward taxes resembling that of Romney and Graham. Indeed, Greece has developed a culture of tax evasion, with wealthy citizens sending their money out of the country and poorer citizens bribing officials or conducting their business off the books. The amount of tax owed but not paid in Greece is estimated at roughly a third of total receipts – or enough to cover the nation’s deficits and begin to restore its credit.
Sociologists who have studied the Greek tax situation say that rampant evasion by the rich has trickled down to infect the rest of society, ruining the “tax morale” of wage earners and small business owners. As James Surowiecki explained in The New Yorker, people here and elsewhere don’t pay taxes simply because they fear prosecution; they pay because they are “social taxpayers” who “feel a responsibility to contribute to the common good.” But that sense of shared obligation gradually dissipates when taxpayers suspect that many others, especially the rich, are not participating fairly and fully.
Despite growing debt and deficits, we are not on the road to Greece. With investors around the world rushing to purchase U.S. Treasury bonds and driving rates to historic lows, this country is far from the plight of the homeland of democracy. For now, it is safe to ignore right-wing rhetoric that shrieks the fiscal sky is falling.
But if such troubles lie ahead, the real cause will not be spending on income security, health care, infrastructure, education or any of the other programs that have made America a great nation. If we are driven toward national bankruptcy someday, the likeliest cause will be our failure to raise and enforce taxes on those who can afford to pay – because we too have encouraged a culture of evasion rather than responsibility.