Friday, August 7, 2015

The Reverse New Deal: Republicans want to protect illegal tax evasion by the wealthy... and then punch teachers in the face

Above: FDR at Fort Lewis, Washington, 1942. President Roosevelt was not a fan of wealthy Americans trying to evade or avoid taxes: "He thought of taxation in starkly moralistic terms," and "believed deeply that most loopholes were immoral." So, Roosevelt signed several revenue acts that raised taxes on the wealthy and closed loopholes, for example the Revenue Act of 1934 (Joseph J. Thorndike, Their Fair Share: Taxing the Rich in the Age of FDR, Washington, DC, Urban Institute Press, 2013, pp. 103, 142, and 199. Photo courtesy of the FDR Presidential Library and Museum. 

THE NEW DEAL PHILOSOPHY:

"The time has come when we have to fight back, and the only way to fight back is to begin to name names of these very wealthy individuals who have found means of avoiding their taxes both at home and abroad." 
--FDR (Their Fair Share, p. 200)

"The question is whether we are going to have a Fascist government in this country or a government of the people, whether rich men are going to be able to defy Government and refuse to bear their burdens. Are we going to make progress in liberal government or is it going to take a revolution to finally settle the question? The rich are getting richer in this country and the poor poorer. In France they settled this problem by successive revolutions." 
--Henry Morgenthau, Jr., U.S. Secretary of the Treasury and New Deal policymaker (Their Fair Share, p. 200)

THE REPUBLICAN PHILOSOPHY:

Republican Rand Paul blocks treaty to catch tax evaders:

A little over a year ago, it was reported that current Republican presidential candidate Rand Paul "has single-handedly blocked an obscure U.S.-Swiss tax treaty that lawmakers, prosecutors, diplomats and banks say makes the difference between U.S. law enforcement rooting out the names of a few hundred fat-cat tax evaders — and many thousands more." An executive at the financial institution Credit Suisse--after "admitting his institution helped Americans evade taxes"--said "Credit Suisse is ready, at this moment, to provide the additional information about Swiss accounts requested by U.S. authorities but has been unable to do so because the U.S. Senate has not yet ratified the protocol” ("Rand Paul in crosshairs of tax evasion war," Politico, March 2, 2014).

Republicans want to repeal law that catches tax evaders

The Republican National Committee (RNC) has "called for the repeal of a U.S. anti-tax-evasion law, siding with big banks...", leading one financial expert to say, "It is mind-boggling that a major political party would even consider endorsing a resolution to facilitate tax evasion. Repealing the law would cripple the U.S. and global efforts to fight offshore tax evasion." Why do Republicans want to facilitate tax evasion? One RNC official said, "It will attract American overseas donors" (see Reuters articles here and here).

Republicans want to cut funding that goes towards catching tax evaders:

For many years now, Republicans have tried (or succeeded) in cutting IRS funding. For example, just a few days ago it was reported that a "Republican-backed bill would also make deep cuts to tax evasion enforcement at the Internal Revenue Service" ("Obama Administration Rails Against GOP Bill To Deregulate Wall Street," Huffington Post, August 5, 2015).


Republicans want to punch teachers in the face - not wealthy tax evaders, but teachers:

Responding to the question, "At a national level, who deserves a punch in the face?," Republican governor of New Jersey and presidential candidate Chris Christie didn't say "wealthy Americans who engage in illegal tax evasion"... instead, he answered "the national teachers union" ("Teachers to Christie: Apologize to us over ‘punch in the face’ quip," MSNBC, August 6, 2015). This "punch in the face" comment pretty much sums up the philosophy that Republicans have towards our nation's hard-working and tax-abiding teachers.

Republicans all across the country have been bashing, blaming, and scapegoating teachers for our economic problems, attacking their salaries, their benefits, their pensions, and their ability to negotiate for better pay and working conditions. In the state of Kansas, where right-wing extremists govern, teachers have been fleeing to other states for a better life - leaving Kansas with a teacher shortage that they're filling with unlicensed teachers (see, e.g., "Why teachers can’t hotfoot it out of Kansas fast enough," Washington Post, August 2, 2015). 

So, instead of targeting millionaires & billionaires who break the law--depriving our government of trillions of dollars in tax revenue, and forcing the middle-class and poor to make up the difference (see below)--Republicans are angrily going after teachers - teachers who make average salaries ranging from about $40,000 in low cost-of-living states like South Dakota to about $75,000 in high cost-of-living states like New York. To me, that doesn't seem like an exorbitant amount of money for people tasked with educating our nation's youth and dealing with the disciplinary issues of other people's children.
    
Above: Every year, the U.S. loses hundreds of billions of dollars to illegal tax evasion, and hundreds of billions more (not shown in the graphic above) to corporate tax avoidance, sketchy tax havens, legal gimmicks, and more. These tactics, practiced mostly by wealthy Americans, have created a situation where middle-class and poor Americans must pay higher taxes, tolls, fees, and fines, at the state & local level, to make up the difference. For example, America now has a regressive tax structure where "Virtually every state tax system is fundamentally unfair, taking a much greater share of income from low and middle-income families than from wealthy families." To get a flavor of the type of people that Republicans are trying to shield from law enforcement, see the IRS web page "Offshore Tax-Avoidance and IRS Compliance Efforts."

So, to end, a simple question: Why do Republicans treat tax evaders with kid gloves, but want to punch teachers in the face? And why are tens of millions of people still voting for Republicans, thereby endorsing this ideology?

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