Passing the tax burden to the next generation
Shortly after President George W. Bush signed the Economic Growth and Tax Relief Reconciliation Act of 2001, just as the “Bush tax cuts” were kicking in for many Americans, I took a trip to a hardware store in Brunswick. What I remember — like it was yesterday — is the conversation I had with the clerk who rang me up.
I asked him, “What do you think of the Bush tax cuts?” I was quite surprised by his response. “There haven’t been any Bush tax cuts,” he said. Perplexed, I pressed on. This proposal had been on the front page of every paper and discussed on every news broadcast for weeks now. What did he mean there were no tax cuts?
He proceeded to make a fascinating, and convincing, argument: If you’re already in a deficit situation, and you reduce tax revenue, you’re not just cutting taxes. What you’re actually doing is reducing your generation’s tax burden by borrowing more money to cover your current expenses, leaving extra debt for future generations. Put more simply, it’s as if you charged an expensive vacation to your American Express and handed your kids the bill on your deathbed — not exactly the most thoughtful parting gift.
This gentleman’s point has stuck with me, and the memory was especially vivid as the U.S. Senate pushed through its budget resolution this month — a bill, which despite my best efforts to find common ground and make modifications, I ultimately could not support.
You don’t have to be an accountant to understand that raising the rate for the taxpayers in the lowest tax bracket and cutting the rate for the taxpayers in the highest tax bracket will disproportionately benefit the wealthy. You don’t have to be a census expert to deduce that cutting billions from Medicare and Medicaid will directly and severely harm seniors. You don’t have to be an economist to know that ballooning the national debt threatens our economic growth and even our national security. And you don’t have to be a financial planner — or a hardware store clerk — to know that deciding to spend the same amount but paying less of the costs you incur will mean more debt for future generations.
While I do not support the Senate’s present approach, I do believe there are areas where Congress can implement bipartisan reforms to the tax code in order to increase American competitiveness in the global marketplace and improve our national economy. However, the problem is that while this discussion has been framed as ‘tax reform’ or ‘tax cuts,’ the current proposal is in fact neither of those things. In reality, this plan is shift and shaft – we’d be shifting the burden from ourselves and shafting our kids. This is not the legacy I want to leave to my children and grandchildren; surely, we can do better.