Lincoln said it concisely; we’ve constituted a government “of the people, by the people, and for the people.” We need to reaffirm our commitment to representative self-governance by taking a greater and more informed interest in both how we fund our government and how those funds are spent. Our representatives in Congress are supposed to be the conduit for two-way information flow on these matters; acting as our voice to express our concerns and desires, and to explain to us why or how the final result may or may not be in our interest, as Coloradans or Americans.
To date, our federal tax code has been a complicated patchwork of competing carve-outs, creative interpretations, and targeted provisions and deductions that in effect raise the cost of government for the rest of us who cannot be so creative. Most agree the tax code needs to be reformed and simplified, especially in the face of the massive tax shortfalls we’ve allowed ourselves to accumulate since the mid-’80s. One of the primary arguments for those now in power was to do just this, simplify and reform the tax code. But now that they’ve had their chance, accepting no input or consultation with those across the aisle in Congress, it is evident that what they truly intended was an even more skewed code benefiting those who least need help. Plus, this latest partisan effort did nothing to simplify or reform the code, but made it even more of a maze whose nooks and crannies will cause tax preparers and accountants to pull their hair out. But the worst aspect of this non-reform reform is that it worsens the shortfall in revenue, thus causing our long-term budgetary outlook to be even more dismal than before.
One particular pernicious argument of the Republicans is that business will flourish and expand causing more funds to the employed and more jobs as a result of the lower statutory tax rate. There are two flaws in this line of reasoning. Firstly is that the actual corporate/business rate was nowhere near the stated statuary rate. Just as do the wealthy, corporations have numerous exemptions and deductions to lower their tax liability; deductions for which they’ve paid good money to lobbyists and politicians to put in the tax code over the years. No high wealth individual, or corporation, pays anywhere near the tax rate their income would suggest. So lowering the rate without addressing the carve outs and tax “expenditures” makes a bad system worse and is fiscally irresponsible.
Secondly the tax rate of a particular locale is only one factor on where to locate a business. As important is the business environment of the location. Does the area have an educated and healthy populace nearby? Are the roads adequate? Is the water clean? Is other infrastructure sufficient and serviceable? Are there parks or open space for recreation? In other words, are the local, state, and federal governments doing their job and investing in their population and protecting the environment — all things government needs tax revenue to provide and ensure? Starving our government from needed revenue to do these necessary tasks will make it more likely corporations will look for more favorable conditions in which to build or relocate. Granted, businesses may negotiate for a reduced tax rate, but the initial environmental conditions must be satisfied first.
Sen. Gardner has recently argued otherwise. He seems to think business will pay their workers more if the business has more money in their coffers. When in history, absent a strong union or employee ownership, has a business acted such?
Our country does indeed need tax reform. The convoluted code we have to deal with today is a drag on the economy, a burden to the taxpayer, and does not address the structural federal deficit. The Republicans had their chance, and made the situation worse. We can do better. We must do better.
Karen McCormick, DVM, is a Longmont resident and a candidate for Colorado’s 4th Congressional District seat.