Taxes and Obama’s Deficit Reduction Plan (15/04/2011)

We know that the only two definite things in life are death and taxes. The first is perhaps easier to avoid than the second. For most Americans, April 15 is the day of doom, the day that tax returns must be filed and payments started. Even Americans living abroad must file and those earning above a certain amount must pay as well. The United States is the only industrialized country in the world with a system of double taxation; possess an American passport and you are liable for taxes.

President Obama went before the American public on Wednesday to lay out his plan for reducing the spiraling U.S. deficit. While partisan politics had almost shut down the government the week before, he called for bipartisan cooperation to stop the rapid growth of the national debt. He soberly described his proposals for long-term spending cuts, tax increases and some changes to the social welfare programs that make up a large percentage of government spending.

Having recently announced his plans for running for re-election, the President clearly targeted middle class families in his warnings about wealthy individuals benefitting from tax cuts and corporations having little or no capital gains taxes. We have been shown over and over again that the wealthy have benefitted from tax a cut, something that Obama promised to stop but hasn’t yet changed. A front page NY Times article on March 25 asserting that General Electric, which made $5.1 billion last year, did not pay any income tax set off a national debate and outcry. Whether or not the story was entirely accurate is beside the point; it merely pointed to two fundamentally different positions on economic growth.

By and large, the Republicans are arguing that cutting taxes will increase private spending and hence stimulate growth and job creation, even with the social programs. As a result, they claim, more money will come back to the government through taxes after the initial cuts. Democrats are arguing for greater redistribution and trying to keep government spending for social welfare programs as government guarantees. President Obama continually referred to the elderly and handicapped as his responsibility as well as the comparatively low investment in infrastructure in the U.S. compared to China, India and Brazil. He made several moral claims about the injustice of the growing wealth distribution curve in the United States, harkening back to core Democratic values and distancing himself from a Republican proposal to privatize basic social programs. He even went so far as to quote a high-ranking military officer saying that the national debt is the greatest threat to American security.

I am neither a tax expert nor an economist. I am merely a dual citizen who just sent off his U.S. tax return and began payments. Despite the Obama rhetoric of shared sacrifice, I still don’t see why I should pay taxes to Washington when I earn my living in Switzerland; I still don’t see why I should pay more taxes than wealthy individuals or corporations who have tax shelters; and I certainly don’t see why the U.S. military budget is so out of proportion compared to all other countries in the world. I thought President Obama was trying to speak to me, but then again I have no direct representation in Washington to defend me and resent the unfairness of the “taxation without representation” situation for overseas Americans.

As I said, April 15 is a gloomy day for most Americans.

April 14, 2011



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