By State Representative, Leon D. Young
Leon D. Young
We should all we remember the debacle surrounding the debt ceiling debate. (The debt ceiling is the amount the government is allowed to borrow and it gives the government the authority to pay bills.) Congress can within an eye lash of defaulting on its federal obligation and displayed a real inability to fashion a compromise early on — that has since caused the nation’s triple A credit rating to suffer.
Part of the compromise included $1.5 trillion in deficit cutting, and the creation of a new “super committee.” The committee, made up of 12 lawmakers, will have the ability to circumvent the normal legislative process and produce a bill that cannot be amended. Moreover, it will have to work quickly, coming up with a massive cutting plan by Thanksgiving.
During the course of the political debate on the debt ceiling, there was considerable lip service paid to this nebulous notion of shared sacrifice. However, when the rubber met the road and the deal was struck, the only thing being cut was government spending. This to the delight of Tea Party members.
President Obama and Democrats had suggested that everything be put on the table: entitlement programs, government spending cuts as well as increasing taxes on the wealthy. But, at the end of the day, government spending is the only thing under attack.
I recently read an intriguing editorial in The New York Times, by Warren E. Buffet, entitled, “Stop Coddling the Super-Rich.” Mr. Buffet makes some very salient points. First, the mega-rich continue to get extraordinary tax breaks. Last year, Mr. Buffet paid $6,938,744 in federal taxes, which was 17.4 percent of his taxable income. Whereas, the average American pays 36 percent of his income to the feds. Second, 80 percent of last year’s government revenue came from personal income taxes and payroll taxes. The mega-rich pay income taxes at a rate of 15 percent on most of their earnings but pay practically nothing in payroll taxes. The middle class, on the other hand, fall into the 15 percent and 25 percent income tax brackets, and then are hit with heavy payroll taxes to boot. Third, tax rates for rich were far higher back in the 1980s and 1990s. Capital gains rates were 39.9 percent in 1976-77 but, according to Mr. Buffet, this in no way discouraged an investor from making a sensible investment because of the tax rate on the potential gain. Lastly, Mr. Buffet asserts that arresting the federal debt should be a shared sacrifice by ALL Americans and the super-rich should be called on to do more.
Sure, reducing the level of government spending should a part of the political debate, but not its lone focus. Moreover, we should pay great heed to the sage insights of Warren Buffet. Oh, by the way, Mr. Buffet’s net worth is estimated to be $50 billion – (that’s with a “B”).