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Occupy Wall Street Raises Questions About Taxes, Money and Blame

October 18, 2011 · 0 comments

Yesterday marked the month long anniversary of Occupy Wall Street. I realize that there are those that quibble with the dates as the actual protest has been a long time coming but the first organized group of protestors reportedly hit the streets of New York City on September 17, marking the more or less official beginning of the movement.

I’ll admit that I thought it would be short-lived. Folks get angry about lots of things and organize protests (I’ve been to my share) but without a clear leader, as in this case, those movements tend to fizzle and die out. Not so with this one. In fact, it seems to have picked up steam as the days go by – not so much in numbers as in geography. By now, the protests have spread to about 70 cities, including internationally in cities like Rome. There’s even a movement in my city: Occupy Philly. At first, I assumed it would be the usual suspects with a few hand-painted signs. I realized that it had become far more mainstream when a friend posted a map of the layout of the protest around Philly’s City Hall on her Facebook page. Another friend noted, not so off base, that it was so well organized that it “[a]lmost looks like a theme park!”

I wanted to see it for myself. So, while in Center City, I took a little side trip to check it out. I didn’t have long to linger (I’ll admit that I wanted to see the Steve Jobs’ tribute at the Apple store before dashing back) so I did a quick peek. I was surprised to see a rather ordinary group of folks standing – without signs – coffee cups in hand, chatting among themselves but very clearly part of the protest. I caught the eye of one woman, about my age, dressed as though she had just left work. I asked her why she was there. Without pausing, she replied, “I just want everyone to pay their fair share.” I thanked her and moved on.

I just want everyone to pay their fair share.

Me too. I’m all about fairness. Trust me, I’m a middle child. I get it.

But here’s the problem. My version of fair was never the same as my older brother’s. Or my younger brother’s. And not my mom’s. And certainly not my dad’s.

What’s fair is relative. And that is ultimately, I think, why the #Occupy movements might be successful in raising consciousness (good, right?) but not result in quantitative change.

The most noise has been directed to the wealthiest taxpayers: the so-called 1%.

But let’s also remember that we live in a society where the number of non-taxpayers (those paying no tax) is creeping steadily north. For the last recorded tax year, nearly half of all those that filed tax returns paid no tax or received every dollar back which was withheld. That follows the former record-setting 2008 tax year when the statistic was a mere one in three. From 2000 to 2008, the number of non-payers increased by 59% even though the number of filers has only increased by 10%.

And that didn’t happen under some kind of super liberal agenda either… Those are the Bush tax cut years, folks.

And before you take the position that those non-payers are simply the poor, gobbling up the oh-so-misguided EITC and other traditional “welfare” breaks, think again. The poster child for abusive tax breaks, the EITC, cost taxpayers a staggering $42.9 billion in 2008. But that housing tax credit we had to push through (and extend) to “save” the economy? It cost taxpayers one billion dollars per month even though a report by Goldman Sachs economist Alec Phillips reported that, all but about 200,000 of the 1.4 million first-time buyers who claimed the credit in 2009 would have bought a home anyway (in fact, Phillips argued that the real result of the credit was to boost home prices).

And the mortgage interest deduction and real estate tax deductions that you and I love so much? Those home-buyer incentives tally an astonishing $130 billion per year. That’s fair, right?

It depends on who you ask.

See, we like our tax breaks. And we want to keep our tax breaks. And if possible, we want our taxes to drop even more. Cause that’s fair, right? I mean, for us. Not for them. But who, exactly, is the them in all of this? I’m not sure that anyone can really answer that question and find others who would be in complete agreement.

The Occupy movement would have us believe that the them is the so-called 1%. But is that fair?

Buffett notwithstanding, is it really true that the rich pay less in taxes than the middle class? The statistics don’t tend to support that notion. While the über-wealthy like Buffett have been able to pull off ridiculously low tax rates due to a series of tax maneuvers, those at the top still pay an overall higher marginal tax rate than most taxpayers. Those taxpayers making between $200,000 and $109,735,999 pay more – by percentage of adjusted gross income – than every other tax bracket. And the “barely” millionaires (those making between $1 and $10 million) pay the most – nearly three times the marginal tax rate of the middle class (roughly those making between $50,000 and $100,000). Is that fair?

Again, it’s all relative. But while we argue about the numbers, it’s interesting to note that most Americans tend to favor tax breaks that disproportionately benefit the wealthy – all in the name of (gasp) fairness. In fact, survey after survey continues to report that the tax that most taxpayers hate the most is the federal estate tax – even though the tax only affects the top 1-2%. And remember Joe the Plumber? He worried that high wage earners shouldn’t be “penalized for being successful.” And we ate it up. Then.

But now, maybe we’re not so sure.

Our country is not in a sound economic position. Our tax revenues are going down proportionate to spending, not up. It’s frustrating taxpayers who feel increasing pressure – especially in the middle – to absorb the difference. And it’s not sustainable.

However, the discussions around the whole issue have become muddled. We’re so fixated on making this all go away that we’ve put blinders on. Somehow, we’ve come to believe that if we just tax corporations more, they’ll be more conscientious and kind (they won’t, they’ll just pass it on to their customers); if we tax the poor less, they’ll have more money (they won’t, not without more jobs) and if we tax the rich more, those benefits will pass to the poor and middle class (they won’t, have you met our Congress?).

Please don’t misinterpret my position. I don’t for a minute believe that our Tax Code is working as it is. I don’t support additional tax breaks for the wealthy. I don’t buy into trickle down economics. I don’t believe that we chop at the top and hope for the best. But I don’t think we start at the bottom either (we’ve already done that, remember?). It’s not a matter of simply flexing tax rates. We need real reform. And that means that we need to focus less on blame and more on a solution.

That doesn’t mean that I think the protests don’t have a place. I do. I think our country needs to have a dialogue about wealth and poverty and parity and these protests are making that happen. That’s a good thing. But let’s keep the dialogue measured and smart – on both sides. Focusing on the attack – rather than the end – doesn’t make sense to me.

Our attitude towards the whole thing reminds me of the scene in the Princess Bride when Inigo Montoya is climbing the Cliffs of Insanity with the Man in Black. He advises him that he plans to kill him. “But,” he says, “I promise I will not kill you until you reach the top.”

Is that our plan, too?

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