Peter Pappas, a blogger who is decidedly on the right in almost any debate about taxes or economics, commented on an earlier post entitled "More on Swiss Banks: Romney's Wife's Trust's Swiss Bank Account (Until 2010), ataxingmatter (Feb. 3, 2012). In that post, I commented on speculation (in a post on Naked Capitalism) about the reasons for the use of a Swiss bank account to hold some of the Romney's assets. I suggested that this was one more item that supports an argument for a more open government. In particular, I called for publication of the names of those who have participated in the voluntary disclosure program, as a way of "shaming" those who failed to comply with reporting requirements.
Pappas' comments miss the mark by so much that I have chosen to respond here. The comments are as follows:
COMMENT ONE [Quoting from my post] "Makes one wonder where this money came from and certainly why it ended up in a Swiss bank."
No, it only makes you wonder. Perhaps because of your assumption that all Republicans are greedy, conniving bastards who are sticking it to the poor? No matter what Romney's tax returns showed, you would have found something to attack. I think it's an unfortunate waste of a fine intellect.
COMMENT TWO Under your "name shaming" rule, perhaps we should publish the names of everyone person of working age in America who receives greater direct government benefits than they pay in taxes? P.S. I find it a tad disturbing that you would suggest that people be punished by the government (via public shaming) without due process of law.
Re Comment 1: Pappas’ ad hominem attack and support of the cult of greed
For some reason, people on the right (who by no means are all Republicans nor by any means all "greedy conniving bastards") tend to include a lot of people who think that accusing other people of name calling is a formidable response to substantive issues raised by uncertain information. As readers know, I don’t describe people as “greedy bastards” or even “bastards”. The colorful phrase describing the rich as “conniving bastards that are sticking it to the poor” Is Pappas’ idea, not mine.
I'll leave it to my readers to decide whether it is an accurate description these days of many of the rich, or not. For my part, I am not pleased with the way so many of those who benefit from extraordinary capital gains preferences and carried interest preferences lobby Congress (with their access greased by the very money Congress helps them keep) to maintain their special privileges.....
Therefore I do extensively discuss the damage done by the cult of greed that has been encouraged by the “unfettered markets” acceptance of brute capitalism put forward by the far right for the last 40 years. This acceptance of greed as the appropriate incentive for the economy and thus the appropriate human drive to be harnessed in policy planning, including tax policy, is, I think, enormously harmful to a democratic society. It engenders the class warfare that has gone on over the last 40 years of reaganomics, in which most of our society's gains have accrued to those already well off, and most of the decline has been forced onto the middle class and especially the most vulnerable at the lower income levels—the poor, the disabled, the sick, the elderly.
The incessant tax cuts favorable to the rich—from the preferential rate on dividends and capital gains to the huge tax expenditures primarily of benefit to the rich—illustrate the problem. The attack on earned benefits by those on the right is another example. Those on the right tend to use the deficit (caused primarily by rightwing reaganomics policies of deregulation, tax cuts, privatization and militarization, with the resulting financialization of the economy and the disaster of the financial crisis and Great Recession) as an excuse to attack earned benefit programs like Social Security and Medicare. The right likes to call these earned benefit programs “entitlements”, in a not-so-veiled attempt to conjure up the notion that the poor do not merit these programs. And whenever those on the right argue for spending cuts, they argue for their preferred so-called “entitlement reform” by which they mean cutting programs like Social Security and Medicare.
But whenever the right discusses deficits and “entitlement reforms” for the poor, they are just as likely to add a new tax cut for the wealthy, thus proliferating the enormous entitlement programs for the wealthy-- such as the preferential rate for capital gains, the extraordinarily low (and, if the right has its way, soon-to-be nonexistent) estate tax, and the carried interest preferential rates on labor income for those few wealthy people who manage private equity funds and similar partnerships. When it comes to protecting the wealthy, worries about the deficit disappear and the right resorts to its unsupportable claim that lower taxes on the wealthy and big corporations ensure economic growth that benefits the entire country and its biased view that considers the wealthy as meritorious deservers of their wealth who should be incentivized because they are purportedly the “job creators” and "innovators" of the economy. Even while the large multinationals make huge profits and pay less in taxes than they have throughout the history of the corporate income tax, the right chatters on about how taxes are making them uncompetitive and thus need to be reduced. This in spite of the fact that corporations have in fact done so well that they are now paying their CEOs and other high level managers obscene amounts that have allowed wealthy managers/owners to garner all of the productivity gains of the last decade while letting workers' wages stagnate or actually cutting them significantly or outright firing them through leveraged buyouts and equity takeovers that leave the workers without the protection of unions. That’s what the cult of greed has led to.
Re Comment 2: Pappas’ suggestions that shaming those who fail to comply with the law through disclosure is a failure of due proces and that we should shame the poor who receive help meeting basic human needs
Pappas has perfectly illustrated the right-wing’s approach to the discussions about the need for government to intervene to blunt the force of brute capitalism’s impact on the huge majority of folks in a society that are disadvantaged by it.
Note that my post is basically a call for greater transparency, using the unknowns about the Swiss bank account as a spur to open the discussion and point out the ways it would benefit Americans, especially in evaluating candidates for governmental offices. What I suggest is that there should be automatic publication of names of those people who participate in programs such as the voluntary disclosure programs carried out by the IRS in connection with the foreign bank account reporting and tax return filing requirements related to hidden offshore bank accounts.
Shaming is a cultural phenomenon. It can obviously be overused, as when rigid majorities attempt to stifle creativity and difference by shaming people into conforming to traditional norms, no matter how silly or outdated or no longer appropriate those norms may be. But shaming can sometimes be a useful impetus to an enhanced sense of community, as when a group gathers to shame a bully who has victimized someone vulnerable to brute force or psychological torture. In terms of complying with the law, shaming is usually a minor tool in society's toolbelt, but can be especially helpful in some situations--in particular those situations where status matters (which tends to be the case for the wealthiest amongst us) or where the object of the shaming wants to win the support of the public at large (which tends to be the case for most politicians, at least around election time).
ASIDE: The revelation that Tim Geithner had failed to report income that was clearly reportable under the law had some shaming impact. Regretably (as I noted at the time), it came after a deluge of such reports and had less of an impact than one might have expected, when considering the appointment of a Treasury Secretary. When all was said and done, Obama didn't feel much pressure to retract his nomination of Geither to a post for which such an "oversight" in one's own tax return seems particularly inappropriate. Similarly (though without information at this point that something was actually awry), the information that Romney assets included a $3 million Swiss bank account would be relevant to considering Romney as a presidential candidate if there were a voluntary disclosure in connection with the account (especially if there were many years in which it went unreported). Hence the inevitable speculation about the duration and source of funds and rationale for the low-yielding account.
When people violate cultural norms, such as compliance with the law, shaming can therefore throw a useful light on behavior that lets people see more clearly hypocrisy (a person who says "I call on everybody to obey the law," but then doesn't comply with laws that inconvenience him) or greed (a person who says "I think the poor shouldn't get help from the government--they should stand on their own and take care of themselves like we rich people do" but then not only takes advantage of every government benefit offered, but even fails to comply with laws that might affect assets) or other human failures. If society responds through shaming to such hypocritical or greedy actions, or other poor conduct, it may have some small impact in reducing such conduct.
People who participate in the voluntary disclosure program have failed to comply with the law. Shaming is an appropriate societal response to such a failure to comply. It is not “punishment” without due process for Congress to decide to disclose their names. They have in fact come forward to admit that they have failed to comply with the law. Note that the names of people arrested, charged in indictments, or even pursued in a civil lawsuit are generally made public. The publicity may not be wanted. It may even carry with it cultural sanctions (shaming). Nonetheless, it is not an official government “punishment” (as Pappas well knows).
Those who receive government benefits in excess of taxes paid, of course, have not failed to comply with the law. They are in fact in many cases receiving earned benefits—they may have, for example, worked for 20 years at a steady job and then were laid off and have been unable to find new work so receive unemployment compensation or other aid. They are disabled or retired and receiving the Social Security benefits that they earned through paying into the system in accordance with the law. Etc. There is no reason whatsoever to use the cultural norm of shaming to cast aspersion on such individuals. They’ve done nothing to be shamed for!
Furthermore, the people who receive government benefits in excess of taxes paid are benefiting from an explicit decision made long ago by our society about what's fair--athe idea that it is only fair that those who have a higher ability to pay contribute more in taxes to help support those who have no ability to pay.
Moreover, Pappas’ proposal suggests that if you pay less in taxes than you receive in government benefits, you are someone that we should look down on. This is the right-wing’s incessant tendency to treat the poor as undeserving of assistance because they don’t “merit” economic gains if they haven’t “earned” them.
At the same time, the right continues to treat the wealthy, who have benefited enormously from government largesse (in ways much harder to quantify, of course, compared to cash benefits, health care, 'food stamps' and other programmatic benefits that make up the safety net) and pay only a small proportion of their wealth in taxes, as having “earned” their wealth purely through their own “merit.” Note that the Stanford fortune was built on the base of enormous government land grants for railroads combined with government subsidized financing of the railroads in the form of cheap bonds plus the outright cheating of laborers. It isn’t so different today. The Romney wealth is built off the foundational advantage of family wealth—aided by the very low estate taxes at the state and federal level, very low state taxes on income (Michigan has a low flat rate), and the extraordinarily preferential treatment of unearned income in today’s warped federal tax code, together with the even more distorted treatment of carried interest compensation income as preferentially treated unearned income.
Further, even if it were reasonable (which it isn’t) to scorn the poor who need government benefits to make it in today’s harsh society, one doesn’t know which taxes he thinks appropriate to measure:
(a) It is true that those in the lowest income distributions don’t pay much in federal income tax. That’s intentional. We have made the decision as a nation that we don’t think that we should prevent our citizens from having a decent subsistence standard of living by imposing a federal income tax burden on those at the bottom. So we have the personal exemptions and the standard deduction and the Earned Income Tax Credit and various special programs that cut the taxes for the low income a little bit. Sounds like a good idea if you want a healthy economy.
(b) But the poor who work do pay a substantial amount in flat-rate payroll taxes—taxes that are inherently regressive and harsh on labor: the Social Security tax is only on EARNED income up to a capped amount that is less than Mitt Romney’s “just a little” earned income (about $375,000) from speeches; and the Medicare tax will only apply to unearned income (at a very low rate) in future years.
(c) And the poor pay substantial amounts of sales tax—a consumption tax that is absolutely regressive, since the poor consume all of their income and almost all of that will be subject to sales take in sales tax states. And the poor pay property taxes—directly as owners of property or indirectly as renters—and those taxes have increased as tax cutting mania has spread from state to state with business cuts (that don’t work to create more business or more jobs in the state) and income tax stagnation or cuts (as states leave flat rates that cost the poor most dearly or leave low rates at the top as a way to encourage purported “job creators”).
(d) Meanwhile, state support continues to be slashed for functions that are most important to those in the bottom half of the economic distribution --from elementary to university education to public transportation to parks. People like Matty Mattoun can run millions of dollars in ads with false information all over Michigan to prevent the construction of a much needed public project (a new bridge to Canada from Detroit) while reaping the benefit of profits from his private bridge that causes enormous traffic problems in the city because he failed to comply with his contractual commitments and the court order mandating his compliance regarding ramp connections. The poor will pay more for use of public parks and public facilities or those public facilities will deteriorate in quality or cease to exist.
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