For years CT has been dealing with a budget crisis. Spending is greater than revenue, and revenue is down as a result of the recession. In terms of poverty this is dangerous because government spending cuts need to be made and are being made, and that means many of the government sponsored-programs that are struggling to keep this state’s poor afloat are are a risk of being cut away leaving the people to sink into poverty.
Worse yet, the alternative–increasing taxes–can be just as harmful. One new tax attempt severely hurts local online retailers many of which are small businesses including many financially struggling entrepreneurs. Here’s the issue: States cannot collect sales taxes from out-of-state businesses. By absurdly claiming online referrers, who independently contract as advertisers for companies like Amazon and happen to live in-state, are a physical presence of the business in the state. In other words, the state intends to claim that paying an independent contractor a commission for advertising is tantamount to opening up shop in the state, even though neither the advertising nor the sales resulting from the advertising are actually happening in the state. If that sounds complicated it’s because it is so absurd a rationalization for collecting an illegal tax. Being such an absurd rationalization, there is a good a chance of the new tax attempt not bringing any new tax revenue. But what is simple is that this tax hurts CT businesses and struggling entrepreneurs.
This new tax means companies like Amazon will end their affiliate programs with any and all CT businesses and entrepreneurs. This is a painful loss of revenue for many of these CT businesses. Ironically, that means the state will be collecting less income taxes from these local businesses and yet will still not be collecting taxes from the out-of-state Amazon. I know this first-hand because I was an affiliate with Amazon until June 10th when they terminated me and all other CT affiliate advertisers. Now my income has gone down as a result of a failed attempt by the CT government to collect sales taxes on a Seattle-based company.
A well-written July 1st editorial from Investors Business Daily explains the way history repeats in regards to this failed tax attempt:
There’s a bigger issue at stake here, though. Ever since the catalog was invented, states have tried to force out-of-state retailers to pay their sales taxes. The matter went all the way to the Supreme Court, which in 1992 ruled that doing so violated the interstate commerce clause.
Now states think they’ve found a way around this restriction by vastly expanding the definition of “presence” in a state to include online marketing affiliates.
Also a New Haven Register editorial from May 27th summarizes the issue well in my opinion:
The budget counts on this new tax raising $9.4 million in the next year, although those following the battle over the tax, which is strongly opposed by online retailers, donâ€™t expect it to yield any revenue next year[...] The likely loss of $9.4 million in tax revenue next year is minor in comparison to a state budget of $19 billion. Its impact, however, will be far larger on the small Connecticut companies that counted on the referral fees from Internet sales.
To balance the budget spending cuts and new taxes may both be needed. But we cannot let most of the burden of these spending cuts and taxes fall on small businesses, the poor and the struggling, who are already unfairly burdened, especially if the burden is from an ill-conceived tax or cut that doesn’t even work and won’t even provide the claimed balance to the budget.
Like many states and like the nation, my home state of CT is facing massive budget deficits that require significant budget changes to avoid bankruptcy and crisis.
I believe there are large amounts of wasteful spending that could be cut from the budget that would close most if not all of the deficit. Unfortunately, what is wasteful for taxpayers is often considered a sacred cow by special interest groups, lobbyists and and the politicians collecting the campaign contributions and other kickbacks from the ones receiving government handouts that they do not need. The regular folks and the poor would be much better off if this type of spending was cut regardless of whether we had a deficit or surplus, but it won’t be cut because of undemocratic, bipartisan corruption and cronyism.
So when cuts are made, they are made on the services that are needed most by the taxpayers, particularly the poor. Shelters are closed. School programs are cut. Emergency services like ambulances and fire departments are cut back. Social workers are let go. Poverty is increased. The poor are told to make sacrifices so the rich don’t have to make the sacrifices.
The alternative to these cuts is more taxes. Politicians may try to increase taxes on the non-rich, again telling us we all need to make sacrifices but really expecting the regular folks and the poor to make all the sacrifices so the rich do not have to. But on this blog I have often pointed out that the rich already pay less in taxes than the rest of us as a percentage of income. Even worse yet, today I read an excellent but upsetting article in the Hartford Current by Jon Green about how big corporations in this state use tax loopholes and avoidance schemes to swindle millions of dollars from the state and thus make the struggling working people and the poor to pick up the tab.
For instance, he explains how AT&T pays itself to use its own logo to avoid paying taxes. Jon Green writes, “Over a period of 2.5 years, AT&T shifted about $145 million in Connecticut earnings to a subsidiary in Nevada, ostensibly paying licensing fees for the right to use the company’s own name and logo. Nevada has no corporate income tax, so the shifted earnings went untaxed and Connecticut lost out. If it sounds fishy, that’s because it is. AT&T is not alone. Many large corporations use sham transactions designed to move profits generated in Connecticut to a different state where they won’t be taxed.”
There has been a lot of frustration over the massive amount of pay, bonuses and luxuries given to the executives at failing banks which together received hundreds of billions of dollars from the U.S. government. Indeed, it leaves us asking why rich people get bailout money to pay for private jets and unnecessarily lavish Superbowl parties when working class people need bailout money just to pay for food, clothes, shelter and health care. In response, some people including President Obama have called for capping the pay of executives at banks that receive bailout money.
But the highly paid chief executive of Netflix, Reed Hastings, has asked for the taxes of executives like himself to be raised. In his op-ed entitled Please Raise My Taxes, Hastings writes, “Instead of trying to shame companies and executives, the president should take advantage of our success by using our outsized earnings to pay for the needs of our nation.”
That idea interests me. And I like when one of the very rich suggests it. At the very least, we could raise the richest people’s taxes enough so that they are no longer paying a smaller percentage of their income in taxes than the rest of us.
Anyway, stopping and undoing the recent economic crisis will cost a lot, but we do need to do it. The recent economic crisis has pushed many people deeper into poverty, many people into poverty and still pushes many people closer and closer to poverty. Raising the taxes of the extremely rich can help fund the costs of reversing the recent economic crisis.
However, poverty is not a new problem. Even before the economic recession, millions of Americans and billions of people worldwide lived in poverty. Even then, working class people still worked too hard for too little pay in a society riddled with corruption and social, political and economic unfairness. Even then, a lot of people were poor who would not have been poor and a lot of people were very rich who would not have been so rich had it not been for the corruption and unfairness.
I believe we can not only reverse the recent recession but also eradicate poverty completely. Just like reversing the recession, eradicating poverty will require an investment that costs a lot upfront. But that investment can permanently solve a very costly problem. In analogy, we can spend $1,000 once to fix the hole in a boat today rather than spend $10 a day to desperately scoop water out of the sinking boat.
Ideally speaking, I see a society in which nobody suffers from poverty, where people don’t go hungry and homeless down the street from an overstocked grocery store and a vacant house. In that ideal society, neither taxes nor government spending would be needed. So one could say I ideally want taxes to be reduced and even eliminated if possible. But noting the difference between theoretical ideals and practical steps, increasing taxes on the richest of the rich in our current messed up society seems like an effective and appropriate way to raise funds to make the investment to push us closer to that ideal society.
What do you think? Do you support raising the taxes of the very rich? Why or why not? Join the discussion and tell us your thoughts in this thread at the Philosophy Forum.
Forbes named Warren Buffett as the richest person in the world as of March 5, 2008. Personally, I admire Warren Buffet for a variety of reasons. Namely, he behaves in a down-to-earth way, and he has earned the title of philanthropist. Last year, he pointed out that he pays a smaller percentage in taxes than his secretary. He also has pointed out that he believes the CEOs of all the top companies pay less in taxes than their secretaries.
Mainly, the rich people do it because they get to just pay a smaller “capital gains tax” rather than the regular income tax that most workers pay.
Ironically, workers are not really making an income if you ask me. Out of desperation, the typical working person has to sell his or her labor at extremely low prices. The typical working person is not profiting, but just desperately trading his or her labor away for whatever low amount he or she can get from the powers that be.
The lazy usurers who actually profit pay a smaller tax rate!
I think many working-class people believe taxes can help them regain some political standing. But I believe the rich can always manipulate the government to use it in their favor. As a result, in theory, I oppose taxation.
I recommend that the working-class demand tax relief.
Additionally, for people who feel some taxes remain necessary, I suggest taxing property ownership rather than income paid for labor. Let me explain why.
Unfair economies mainly oppress the working-class by letting the upper-class monopolize control over the natural resources. By claiming to own more than their fair share of the natural resources, the upper-class can make money by making the working-class pay them for permission to use the natural resources.
Taxing property ownership instead of income paid for labor would possibly help hinder the monopolization of natural resources by the upper-class. It would work most effectively if the tax only existed for people who “owned” an excessive amount of property, but not those who only “own” less than their fair share. For example, let’s not let the government tax the average working person who may purchase a cramped house on a small plot of land with a mortgage.
In theory, I do not support any form of taxation because I do not trust government with that power. However, as a matter of practical reform, I much prefer taxing property ownership and usury than taxing income paid for labor.
Remember, I think we could end poverty by giving all people fair access to natural resources. Poverty exists, in part, because working class people have to pay just to use natural resources to get the fruits of their labor. And that money flows to an unproductive ruling class. In other words, the so-called “owners” of the land, machines, oil, and other natural resources demand a huge cut from the workers’ production. And that is, I believe, the main reason why wages are so low. (Lack of education is the next reason, but working-class families could afford more education if they had higher wages.)
Whatever we do, we need to alleviate the unfair economic burden put on the working-class. As I have said before, that unfair economic burden causes poverty in the so-called first-world.
What do you think? Do you agree that it would help to tax property ownership and usury instead of income paid for labor? Post your responses to this blog post and those questions in this thread at the World Hunger and Poverty Forums.
Posted by Scott Hughes
Categories: American Poverty
Catholic Online reports on criticism of the contrast between President Bushes cuts to social spending and his increases in military spending:
The proposed $2.9 billion U.S. government budget proposed by the Bush Administration is a moral document that misses the mark in reducing poverty, with draconic cuts that will hurt America’s poor families, said the president of the nation’s largest Catholic social service networks.
“The president’s budget misses the mark on reducing poverty in America,” said Father Larry Snyder, president of Catholic Charities USA, the day after the fiscal year 2008 budget proposal was released Feb. 5.
“In fact, with cuts to key programs such as Medicaid and Medicare, the president’s budget will only serve to exacerbate the problems facing millions of our nation’s poor families,” Father Snyder said, noting that there are “drastic cuts and changes” to a range of programs that address the health and well-being of low-income families and individuals.
President George W. Bush is seeking to rein in domestic spending as part of a plan to balance the budget in five years without raising taxes while increasing funding for the Iraq war and permanently expanding the military.
The $2.9 trillion budget attempts to tighten spending on health care, education, housing and other domestic programs during the last two years of the Bush Administration. The new budget seeks to reduce the rate of growth in Medicare and Medicaid, cutting $101 billion from both over the next five years.
Read entire Catholic Online article.
Yet, Bush’s budget can afford unnecessary trillion dollar oil wars!? Instead of taking care of the hungry, poor, and sick at home, the Bush Administration and neo-conservatives throw trillions of dollars at the type of militarism that makes the world hate the United States, and makes the United States the target of deranged terrorists.
Poor hungry kids go hungry on the streets and senior citizens can’t afford their medication, while the military industry, Big Oil, and Halliburton cash their billion dollar paychecks.
This just goes to show why we cannot trust the government with our money. We cannot rely on the government to solve our problems. If we want to get such necessities as food, clothes, shelter, education, healthcare, safety, and security, we need to do it ourselves. Stop letting this negligent and corrupt government steal our money through taxation! On our own, let’s put our labor and our money towards providing food, clothes, shelter, education, and healthcare to ourselves, our friends, our families, and our communities.
In Civil Disobedience, Henry David Thoreau said:
“Cast your whole vote, not a strip of paper merely, but your whole influence. A minority is powerless while it conforms to the majority; it is not even a minority then; but it is irresistible when it clogs by its whole weight. If the alternative is to keep all just men in prison, or give up war and slavery, the State will not hesitate which to choose. If a thousand men were not to pay their tax-bills this year, that would not be a violent and bloody measure, as it would be to pay them, and enable the State to commit violence and shed innocent blood. This is, in fact, the definition of a peaceable revolution, if any such is possible.”
What do you think?
It’s very easy to confuse philanthropy with ‘giving away stuff you don’t want.’ This is so much the case that it’s become something of a comedy staple. There’s an early South Park episode called ‘Starvin’ Marvin’ where the boys have to donate to a pledge drive for starving children in Africa, the whole enterprise fails pretty quickly as the only thing that arrives at school to be air freighted over is a small stack of creamed corn, a food that pretty much no-one in their right mind would want to eat and so processed and nutritionally bereft that it would almost certainly do as least as much harm as good. This type of thinking is present when you robotically dump your change into whatever charity coinbox is present at the counter, without checking to see which cause you’re donating to. This isn’t the worst crime in the world but it is a particular symptom of Western privilege – that compassion is only afforded when it is eminently affordable, when it is in fact costs the giver nothing at all. You might argue that “at least I’m giving something. Every little donation helps, right?” Well, yes and no. Sure the small change unthinkingly given by one hundred people will help a cancer charity, but it depends entirely on the quality of their annual reporting and accounts management as to specifically where that money goes. If a charity is poor at handling its accounts, your donation could be paying for stationary. Or somebody’s bonus. And that’s fine, but don’t expect to be called a philanthropist because of it. This is the moment where your money becomes creamed corn – it exists but it is utterly insubstantial, it feeds but it cannot sustain. And with just a little forethought, we can all do better.
So how do you give mindfully?
Giving meaningfully to charitable causes boils down to three key principles:
The first step is to give up mindless giving. Pledge that you will not reach into your pocket or dusty food cupboard purely in order to dispel guilt. Instead, know that you’re going to give something, be it money, time or goods to a charity which you believe in and concentrate your resources on finding the causes that you’re passionate about. This is an ideal opportunity to support smaller charities who don’t have the promotional resources of behemoths like Amnesty International or Oxfam. An important part of identifying need is also to evaluate what kind of help would most benefit your chosen cause.
It might be the case that you don’t have a lot of money to spare, but consider the other ways in which you can give. Perhaps you have professional expertise that would prove useful in a volunteer capacity – you might be a skilled events organiser, a gifted web developer, a facility with a white van or just have an excellent soup ladling arm. Smaller non-profits and charities are often crying out for the kind of skills you take for granted and if you are able to donate even a small but consistent amount of your time, the value of your work will be so much higher than emptying your pocket change into a plastic bucket. It can also help you gain valuable experience and even lead to an opportunity to explore charity jobs as a paid career option. Equally, if you’re time poor but cash rich, you can source the most deserving charity by looking at a site like New Philanthropy Capital in order to analyse which place your money would be best utilised. If you earn enough to pay taxes, make sure to declare your charitable gift on your tax return so that the charity can reclaim the basic tax rate.
This applies to situations where you are donating goods rather than cash or services. When it comes to donating items like food, toiletries and clothing, it’s important to take a step back and evaluate what would be most useful to your given charity rather than just ridding yourself of useless tat. For instance, a lot of food shelters have websites where they list the food and personal items that are running particularly short. Always make sure to research a particular organisation so that you’re offering the most relevant help. It often surprises people that camping equipment is in high demand – unwanted tents and sleeping bags can make a real and tangible difference to a homeless person’s quality of life.
So there you have it. Go forth and give, but give mindfully. Leave the creamed corn in the cupboard, the world will thank you for it.
Neil Golman writes about Third Sector jobs, philanthropy and working for not-for-profits.
Posted by Guest Blogger
Categories: Ways To Help