President Obama’s budget document includes tax hikes for the richest among us to go with the tax increases resulting from the implementation of the Chained CPI. Obama claims that this is the bipartisan, reasonable solution to whatever budget problem he is worried about. P. 36. He admits that if he doesn’t raise taxes, he is endangering Social Security and Medicare, but he deliberately hides the real connection between Social Security and Medicare and the absurdly low taxes on the rich.
The whole point of increase in FICA in 1983 was to conceal the impact on the budget of the Reagan tax cuts for the rich. It worked perfectly. The Democratic-controlled congress increased the regressive FICA tax and cut the progressive income tax on the feral rich. At the time, the grandfatherly Reagan assured his children that the FICA increase would insure that Social Security would be here when we were old and sick, and the money flowing to the rich would trickle down to benefit all of us. Now that the bill has come due, and it turns out the oligarchs don’t like this end of the deal. President Obama agrees. He thinks old people should live badly, and in some kind of incomprehensible balance, the leech class will pay a few dollars more, at least until their lobbyists and legislators can get things back to normal. Ronald Reagan would be so sad.
Obama proposes that millionaires have to pay at least 30% of their income in taxes, and people in the highest brackets can’t use deductions to reduce their tax rate below 28%. P. 36. These two changes produce $53.4 and $528.3 billion respectively over the 10 years covered by the budget. P. 201. That $582 billion dwarfs the savings from cutting Social Security, which President Bipartisan estimates at $130 billion.
Here’s my idea. Let’s make it so that no millionaire pays less than 31%, and no one can reduce their tax rate below 29%. Then we’ll direct that money into the Social Security Trust Fund. Problem solved, and correctly, because with my plan the rich pay for their tax cuts, and the Middle Class doesn’t have to eat catfood. Ronald Reagan would be proud of President Obama. And it’s so bipartisan it just sends my animal spirits soaring.
Well. Now that I’ve fixed Social Security, lets look at Medicare with fresh eyes. President Bipartisan budgets an increase in Medicare premiums on a huge but undefined number of Medicare beneficiaries, charges a co-pay for home health care, increases deductibles on Part B, and charges a premium on people who buy near first dollar medigap coverage, all beginning in 2017. That medigap thing is to stop the olds from going to the doctor for funsies. He predicts these will raise about $57 billion over 10 years. So we need to raise $57 billion from someone to make up for whatever balance Obama in his infinite wisdom has settled upon as your fair share of the misery.
Let’s take a look at Tenet Healthcare Corporation. According to its most recent annual report to the SEC on Form 10-K, it had net income of $334 million. What did it pay in taxes? Nothing. P. 29. And they don’t plan to pay income taxes for the foreseeable future. See Note 16 at 116, where we learn that Tenet has about $1.5 billion in Net Operating Loss Carryforwards expiring over the next 12 years. At current rates of profitability, we won’t see a dime out of these toads.
So, let’s take rich human persons as a model for rich corporate persons, and install the rules suggested by Obama: your deductions cannot reduce your income tax rate below let’s say 10% of your profits as reported to the SEC, and every corporation that has more than $1 billion in profits as reported to the SEC must pay a minimum tax rate of 15%. Problem solved. Why bother changing the stupid income tax code? Let the corporate wealth defense industry (H/T Jeffrey Winters) play its merry games. At the end, we just grab the 10-K and do some fifth grade arithmetic to calculate the income tax of corporate persons.
See how easy this stuff is? But apparently it’s just too hard for the political clownshow and their champions in the media, the think tanks and veal-pen organizations that supposedly represent the average citizen, and our economic theory elites at Florida Gulf Coast University, the University of Chicago and the rest.
President Bipartisan thinks he can lead us all to drink from the fountain of wisdom he found between the Crazy Party and the Spineless Party, that gap so beloved of the pundit class. He can’t see beyond that tiny window to a land of political possibility that doesn’t involve protecting the oligarchs from any potential loss to their wealth and power. That too would make Ronald Reagan so proud.