Sometimes Sen. John Boozman talks like the reasonable and sensible man that he seems to be in manner and personal conversation. Take his remarks this week about taxes and deficits.
Boozman acknowledged that the massive U. S. budget deficits cannot be closed by cutting spending alone but that the solution must include some revenues. That is what President Obama has insisted all along, but except for a few meek senators Republicans have said the budget had to be balanced entirely by cutting spending, including Social Security, Medicare and Medicaid. The proof is in the numbers. Go to the Treasury or Office of Management and Budget websites, try your hand at eliminating $1.5 trillion from the fiscal 2011 budgets and see what you have left.
It is heartening to hear our newest senator show some flexibility, if only a little, when that has been so sorely missing in Washington. He said Congress needed to close some tax loopholes, which would bring some fairness to the tax code and bring many billions of dollars into the treasury to close the deficit.
“It shouldn’t be that a company like GE makes billions of dollars in profit and doesn’t pay anything (in taxes),” Boozman said, reciting a familiar refrain of the president. Let us be specific where he was not. General Electric made $26 billion in profits over the past five years but claimed a negative tax liability of $4.1 billion. In other words, the government was paying GE to operate.
But the Republicans in the debt-ceiling negotiations unanimously refused to consider eliminating the loopholes that allowed such travesties. A few more: Exxon Mobil made $19 billion in profits in 2009, but got a $156 million credit from the government against future taxes. Bank of America made $4.4 billion last year and got a refund and a bailout. Chevron made $10 billion in profits and Citigroup $4 billion, but they paid no taxes. Goldman Sachs in 2008 paid only 1.1 percent of its net income in taxes, though it earned a profit of $2.3 billion and received $800 million from the Federal Reserve and Treasury Department.
All the major oil companies made spectacular profits the past three or four years but paid little or no taxes owing to the many special tax breaks they receive. When it comes down to that, we doubt that Sen. Boozman will vote to eliminate any of the oil industry’s special tax privileges, but we perhaps should take him at his word that he is serious about ending the tax breaks. He said that eliminating tax loopholes is not raising taxes, a no-no for Republicans. Everyone should grant him and any other member of Congress the privilege of rebranding such measures as “not tax increases.”
A reporter asked Boozman about an essay in The New York Times by Warren Buffett, the multibillionaire investor, who said America’s richest people were escaping taxes and leaving all the sacrifice to the middle class and the country’s workers. A significant raise in income tax rates for the richest people ought to be a big part of the formula for closing the deficits, he said.
Boozman did not answer yes or no, but said you couldn’t raise much money by raising taxes on the “super wealthy.” He did not want to see taxes raised even slightly for small businessmen who were in the category of those making more than $250,000 a year, which is the threshold for higher taxes mentioned repeatedly by Obama.
But Boozman is wrong about there being no significant money from taxing very, very rich people. Buffett said income taxes should be raised immediately and significantly for him and the other 236,882 people who had net incomes last year greater than $1 million and still higher rates on people like him who earned more than $10 million a year, most often by not working but merely investing. Most of those people do not pay payroll taxes like working people, so they pay a smaller percentage of their incomes in federal taxes than nearly all working people in the country. Buffett said his salaried employees paid a greater share of their incomes to Washington than he does.
“My friends and I have been coddled long enough by a billionaire-friendly Congress,” Buffett wrote. “It’s time for our government to get serious about shared sacrifice.” In 2007, Buffett said millionaires like him paid a smaller share of their incomes in taxes than their secretaries, and he offered $1 million to anyone who could prove him wrong. He went unchallenged.
One proposal, which is less than what Buffett suggests, is to impose a flat 5.4 percent surtax on the current taxes of people with net incomes greater than $1 million a year — a class that surely is not hurting. That would raise in excess of $50 billion next year, which would do more to close the deficit that year than anything the budget-cutting Republicans have proposed.
What we started out to say is that Sen. Boozman shows promise of being a player in the big debt struggle and he ought to be encouraged. Sen. Mark Pryor has said a little more, that there needed to be a real balance between spending cuts and revenue increases. As for the Arkansas delegation in the House of Representatives, it is rather hopeless.
