Barefoot Accountant: Let go on to discussing the equity of the tax laws. Warren Buffett’s effective tax rate has been reported to be 11%. In comparison, that of the average American is approximately 18%, without including payroll taxes, which would bring it in total to 25% for those employed, and up to 33% for those self-employed.
What do you think needs to be done to create tax equity in America. Do you think that the highest marginal tax rate should be increased on the wealthy? Presently, it’s 35%. As you know, last December President Obama agreed to extend the Bush tax cuts for another two years. As you recall, under President Clinton, the highest marginal tax rate was 39.6%.
The Progressive Democratic Caucus has proposed a dramatic increase in the highest marginal tax rate to 49%. I can recall the highest marginal tax rate in the 1950s being 91% under President Eisenhower. And I do not think that it was below 75% until 1980 when Ronald Reagan took office.
What do you think should be done to create tax equity in America?
Susan Bysiewicz: First of all there is a very large gap between the richest and the poorest in our country, and this gap has never been so large in our nation’s history. Here’s why we are where we are.
We are in a situation where we have a huge deficit and that deficit is with us for two main reasons:
First, because we had two wars in Iraq and Afghanistan that cost us $1.26 trillion, and I opposed both of those wars from the start. But we put $1.26 trillion on our national credit card for those wars.
And in addition we have the costs of the Bush tax cuts that you mentioned, the largest in the history of our country. And those tax cuts have cost almost $3 trillion. So those tax cuts cost more than two and one-half times what the wars in Iraq and Afghanistan cost. And I don’t think many Americans are aware how expensive those tax cuts were.
So you take those two things and you have $4 trillion of debt that they brought us. And the question is how do we get out of that very large hole. And cuts alone in spending are not going to get us there.
And what we will have to do is have shared sacrifice, and we will have to raise revenue. And I think first and foremost we should end the Bush tax cuts for the wealthiest among us. I think that is something that is very important to do.
We had the opportunity to do that last year before the election; unfortunately, there wasn’t the political will to do that. And we really need to address that sooner rather than later because if we don’t, those inequities are going to continue. And I say that because with the raising of the debt ceiling, we see even more burden being put on the most vulnerable of our citizens: you know, children, the elderly, the sick.
We really need to rearrange our national priorities if we are to address these issues that you are talking about.
Barefoot Accountant: I don’t know if this is a fair question, but I was disappointed to see that in the negotiations involving the deficit and the debt ceiling there would be no tax increases but they are expected to cut $2.1 trillion, including cuts in social security, medicare, and medicaid.
Would you have voted for that bill?
Susan Bysiewicz: No. Adamantly no. I will say this. We had an opportunity when this debt ceiling debate began to address two really important issues. And one of those issues was to address job creation. And I don’t see anything in that legislation that helps grows jobs.
And the second part of the issue that didn’t get addressed for the long term is putting our country on strong fiscal footing. There was an opportunity to do both of those things. Unfortunately we really didn’t do either. We did enough to make sure there wasn’t a financial collapse.
So I understand why some members of Congress voted for the raising of the debt ceiling. It’s something that we had to do, I believe. But the opportunity was lost to make some long term structural changes to reduce our debt and to create jobs in our country.
Transcribed by William Brighenti, Certified Public Accountant, Certified QuickBooks ProAdvisor