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February 17, 2016 10:50 AM Age: 4 yrs
Resolving the Annual Budget Tug of WarCategory: AC - Billboard, AC RSS, A/F Commentary & Opinion, ERM Commentary & Opinion, Larry Checco, GPG Commentary & Opinion, AM Highlighted Commentary, AM Highlights, ESG Highlighted Commentary, ESG Highlights
Source: Larry Checco, featured commentator
Here they go again!
Even before President Barack Obama submitted his final budget proposal to Congress—a whopping $4.15 trillion package that would boost spending in 2017 by 5 percent—it was considered dead on arrival by Congress.
“This isn’t even a budget so much as it is a progressive manual for growing the federal government at the expense of hardworking Americans,” said House Speaker Paul Ryan (R-Wis).
The perennial tug of war between hard-line fiscal conservatives and more social- minded liberals is: Do we implement an austerity budget that cuts into discretionary funds—meaning mostly social programs—to stabilize and eventually reduce the national debt? Or do we continue to overspend what the government takes in to meet what many consider our social obligations?
Fiscal conservatives have a legitimate case. Our national debt just passed the $19 trillion mark and is steadily increasing. According to US Debt Clock.Org each of us—every man, woman and child in America—owes nearly $59,000 to the U.S. Treasury.
In particular, these hard-line conservatives are threatening to reject any budget that adheres to the two-year budget compromise crafted last year by President Obama and former House Speaker John Boehner, which included a $30 billion spending increase.
Well, here’s a thought. Instead of holding the budget process hostage to a piddling $30 billion increase, why can’t it be resolved by tapping into the hundreds of billions of dollars the Internal Revenue Service and U.S. Treasury leave on the table because of current laws and policy shortcomings?
What’s that, you say?
Reform and refund the IRS
A 2015 General Accountability Office (GAO) report found that the IRS lacks adequate internal controls over its largely automated tax collection processes, and that: “Since 2009, the total tax debt inventory (uncollected taxes from individuals and businesses) has increased 23 percent to $380 billion.” this at a time when collection staff declined 23 percent after years of budget cuts.
BTW—there are several presidential candidates threatening to abolish the IRS entirely should they be elected president. Quite frankly, I don’t know of any responsible company that would gut or do away with its billing and collection departments, especially when it’s running large deficits, which is what the IRS essentially is to our nation.
Get corporations to pony up
According to a study conducted by the U.S. Public Interest Research Group and the Citizens for Tax Justice, nearly three out of four companies in the U.S. Fortune 500 operate at least one subsidiary in an offshore tax haven -- and some have registered more than 100 -- allowing them to evade taxes on hundreds of billions of dollars in profits every year. Consequently, the Treasury Department loses an estimated $90 billion in tax revenue annually, revenue that could be used to reduce taxes domestically.
Also, corporate inversions, whereby U.S. companies merge with companies overseas in order to pay a reduced tax—but continue to rely on our U.S. infrastructure to conduct their businesses—is depriving American taxpayers of billions of more dollars.
The same for individuals—pony up!
The U.S. Treasury loses an estimated $100 Billion in tax revenues each year to offshore tax havens. And this most likely is a conservative estimate. The Tax Justice Network, in 2012, reported that there may be as much as $32 trillion of hidden financial assets held offshore by high net worth individuals.”
The report—The Price of Offshore Revisited—added “We consider these numbers to be conservative. This is only financial wealth and excludes a welter of real estate, yachts and other non-financial assets owned via offshore structures."
In the aggregate these loses to the Treasury make the $30 billion being fought over in this year’s budget process look like chicken feed.
We haven’t even brought up the real possibility of increasing revenues by doing away with tax loopholes that only benefit the wealthiest among us through their high-priced accountants and lawyers.
FYI—Presidential candidate Donald Trump already has warned us that we shouldn’t be surprised at how little he pays in taxes when he releases his tax returns. Why? “Because I don’t like the way our government spends,” he says. We should all have that luxury.
But give Mr. Trump credit for wanting to do away with the carried-interest tax loophole that hedge funds, private equity firms and venture capitalists employ to avoid paying billions in taxes. But that’s probably more because he’s a real estate developer than a financial guy.
The reality is our political system doesn’t lack money; it lacks common sense and the political will to make the changes necessary to bring our budgets into balance.
Contents © 2016 by Larry Checco - All Rights Reserved
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