Talk about predictable! President George W. Bush unveils a plan to eliminate the taxation of corporate dividends and it is, within minutes, assailed as too little, too late, and too Republican. Then, when the details come out, everyone adds, “…and too complicated.”
Well, I’d like to add a really serious charge.
It’s fiscal child abuse. Remember that phrase, please, because it’s important. It’s an idea that goes well beyond this particular tax proposal.
Fiscal-Child-Abuse.
You’ll understand what it is and why we have to stop it if you bear with me for a few moments.
All of us have been raised on the traditional debates between Democrats and Republicans. The Republicans represent the Haves. The Democrats represent the Have-Nots. Roles in both parties are fixed. They are as immutable as those in Kabuki Theater. Lead roles tend to go to those with a flair for the dramatic, such as Senator Tom Daschle for the Have-Nots and, of course, President George W. Bush for the Haves.
Heated but comforting debates ensue. The debates are tranquilizing because they are always about us, always about now, and always about how much of a break we’ll get and how soon we will get it.
The argument between the Haves and the Have-Nots is so intense that it completely obscures an important division in the political map.
There are people who are Nows. And there are people who are Laters. The Nows, whether they are Haves or Have-Nots, are well represented because they are voters.
The Laters are unheard. They aren’t heard because they don’t vote. They don’t vote because they are our children and our children’s children. They are too young to vote. Many of them haven’t been born yet. Even so, decisions we make about taxes and spending will have a profound effect on their lives.
The Four Quadrants of Political Discourse
| Have | ||||||
| Republicans | xxxxxxxx | No party | ||||
| xxxxxxxx | ||||||
| Now | xxxxxxxx | xxxxxxxx | xxxxxxxx | xxxxxxxx | xxxxxxxx | Later |
| xxxxxxxx | ||||||
| Democrats | xxxxxxxx | No party | ||||
| Have-Not | ||||||
The first Bush tax cut was for the Haves. It took hundreds of billions in tax revenue and returned it to high income tax payers. As many argued at the time, they were getting their own money back, so why sweat it? Seldom mentioned, however, was the notion that the same money might have paid down federal debt and made the future financing of Social Security and Medicare a bit easier.
Instead, today’s tax burden was reduced.
Unfortunately, there was no comparable reduction in the benefits promised to people in the future. So we reduced taxes now and left a gigantic obligation to future taxpayers who weren’t there to vote. ‘Let the Laters take care of it,’ we said.
If you work, you got a letter about that obligation sometime in the last 12 months. The letter was “Your Social Security Statement”, a record of your FICA contributions and an estimate of your future Social Security benefits. Jo Anne B. Barnhart, the Commissioner of Social Security, signed it.
In case you just jumped ahead to your benefits estimate, here’s what she wrote on the first page.
“Social Security now takes in more in taxes than it pays out in benefits. The excess funds are credited to Social Security’s trust funds, which are expected to grow to over $4 trillion before we need to use them to pay benefits. In 2017, we’ll begin paying more in benefits than we collect in taxes. By 2041, the trust funds will be exhausted and the payroll taxes collected will be enough to pay only about 73 percent of benefits owed. We’ll need to resolve long-range financial issues to make sure Social Security will provide a foundation of protection for future generations as it has done in the past.”
In other words, we’ve made promises that will require future taxpayers to pay higher taxes than we currently pay— and we’re talking, yet again, about cutting our taxes now.
That’s fiscal child abuse. Every time we talk about cutting taxes—whether for the haves or have-nots— we’re contemplating fiscal child abuse.
Tuesday: Another candidate for a tax cut
Earlier columns on generational equity:
April 19, 1998: Politics, Footnotes, and Your Children
http://www.dallasnews.com/business/scottburns/columns/archives/1998/980419SU.htm
October 22, 2000: Truth, the Third Rail of American Politics
http://www.dallasnews.com/business/scottburns/columns/archives/2000/001022SU.htm
December 3, 2002: Sending Our Kids the Tax Bill
http://www.dallasnews.com/business/scottburns/columns/2002/stories/120802dnbusburns.b550f.html
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(c) Scott Burns, 2022