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Four years ago, then vice presidential candidate Joe Biden was pilloried by Republican politicians and their media water carriers (for example, here and here) for telling wealthier Americans "it's time to be patriotic" by paying the slightly higher tax rates of the Clinton boom years. But with the renewed debate over ending the Bush tax cuts for the rich, the recent departures of former U.S. citizens Eduardo Saverin and Denise Rich and, most of all, Mitt Romney's AWOL tax returns and mysterious foreign shelters, the issue of taxes and patriotism is back on the front-burner. And now, the GOP's best and brightest tell us, stiffing Uncle Sam is as American as apple pie.

That was the conclusion of South Carolina Republican Sen. Lindsey Graham. Last week, Graham explained that Mitt Romney's labyrinthine finances and tax bill shrunken by the notorious carried interest exemption, a $100 million IRA and accounts in Bermuda, Switzerland and the Cayman Islands should not only be expected, but lauded. "It's really American to avoid paying taxes, legally," Graham announced, adding:

"It's a game we play.  Every American tries to find the way to get the most deductions they can. I see nothing wrong with playing the game because we set it up to be a game."
A game, that is, which will be won by the well-to-do, apparently the only ones qualified to play it. In rejecting a small increase in gilded class tax rates, President George W. Bush summed up the rules by explaining that "the really rich people figure out how to dodge taxes anyway." Supply-side snake oil salesman Arthur Laffer agreed:
"You really can't collect much money from upper-income people. They know how to get around taxes."
For some in the Republican amen corner, Uncle Sam shouldn't even try. Defending Mitt Romney's puny 14 percent payment to the U.S. Treasury (a rate lower than many middle class families), James Pethokoukis of the American Enterprise Institute protested that "actually, Mitt Romney's tax rate is too high":
It's real simple: If you think the biggest problem facing the United States today is income inequality, then you should be outraged that Mitt Romney's income tax rate isn't higher. But if you instead think America's biggest problem is high unemployment and a lack of economic growth, then you should be outraged that Romney is paying any income taxes at all. Really.
Of course, to believe that, you have to pretend that today's historically low 15 percent capital gains tax rate and the staggering income inequality it produces also fuels investment in the U.S. economy. And as the data show, that simply is not true. (For more on the "job creators," capital gains and other right-wing myths, see "10 Things the GOP Doesn't Want You to Know about Taxes.")

For others on the right, Mitt Romney's contortionist act on taxes pales in comparison to the real heroes like fleeing Facebook co-founder Eduardo Saverin. As John Tamny explained in his Forbes paean to that American turncoat:

Indeed, Saverin's U.S. "de-friend" is great for economic growth on its face, and then the political implications of his move will hopefully pay future taxation dividends that accrue to entrepreneurialism and advancement... Assuming nosebleed rates of taxation were a driver of Saverin's decision, politicians will hopefully see that if too greedy about collecting the money of others, they'll eventually collect nothing.
If those whose creative accounting has dramatically slashed their tax bills are the heroes, then the people Americans have entrusted to collect those funds must be the villains.  And for the Republicans, that of course is the IRS.

Back in the 1990s, Congressional Republicans successfully used that kind of demagoguery to undermine both the Internal Revenue Service itself and the tax revenue it is supposed to collect. They haven't stopped since.

(Continue reading below the fold.)

As the Los Angeles Times reported in 1998, "Americans are failing to pay $195 billion annually in taxes owed to the federal government, the highest estimate ever of the so-called tax gap." But that was before the full force of the anti-IRS jihad led by Phil Gramm and his Republican allies was brought to bear.

As David Cay Johnston explained in his 2003 classic Perfectly Legal, the GOP during the Clinton administration waged an all-out war on the IRS, turning the priorities for auditing Americans upside-down. Then as now, GOP spinmeister Frank Luntz framed the issue for his Republican allies, "Which would you prefer: having your wallet or purse stolen or being audited by the IRS?" As Sen. William Roth's Finance Committee held hearings in 1997 and 1998, Mississippi's Trent Lott decried the IRS' "Gestapo-like tactics" while Alaska's Frank Murkowski protested, "You don't need to send in armed personnel in flak jackets." Former Sen. Don Nickles of Oklahoma raged, "The IRS is out of control!" Congress went on to pass and Bill Clinton signed the IRS Reform and Restructuring Act in 1998.

Even as then-IRS Director Charles Rossotti warned Congress about an epidemic of tax cheating, Sen. Gramm in May 1998 denounced the agency. Peddling myths of jack-booted IRS agents tormenting American taxpayers, Gramm called on Rossotti to fire his 50 worst employees. Gramm concluded:

"I have no confidence in the Internal Revenue Service of this country. You do not have a good system. This agency has too much unchecked power."
As the New York Times recounted that spring, the plan to gut the IRS advocated by Phil Gramm and his allies was a popular political gambit, but almost certain to create incentives for tax evasion:
Mr. Gramm spoke at length of how he had ''no confidence'' in the I.R.S., remarks that were in sharp contrast to those of every other senator, who emphasized that the majority of I.R.S. workers were honest and most taxpayers law-abiding.

A variety of tax experts have said in recent weeks that attacks on the I.R.S., which polls show are a potent device to win votes and contributions for Republicans, give comfort to tax cheats and discourage honest taxpayers.

Which, of course, is exactly what happened. IRS staffing was slashed and audits of the wealthy dropped precipitously. As Johnston explained:
In 1999, for the first time, the poor were more likely than the rich to have their tax returns audited. The overall rate for people making less than $25,000 a year was 1.36%, compared with 1.15% of returns by those making $100,000 or more...Over the previous 11 years audit rates for the poor had increased by a third, while falling 90 percent for the top tier of Americans.
By 2006, as the New York Times reported, "Over the last five years, officials at both the I.R.S. and the Treasury have told Congress that cheating among the highest-income Americans is a major and growing problem." By 2010, estimates put the tax gap, that is, revenue lost to evasion, fraud and underreporting, as high as $500 billion a year.

To put that number in context, keep in mind that the annual federal budget is about $3.6 trillion dollars and the deficit in the neighborhood on one trillion. Remember, too, that the CBO has concluded that as a share of their income, Americans' effective tax rates are at the lowest in 30 years. As a percentage of the U.S. economy, in 2010 the total federal tax burden hit its lowest level since 1950. For the top one percent of earners, their real tax rate has plummeted over the past two decades.

And still the Republican demonization of the underfunded and understaffed IRS won't stop. In the wake of the U.S. Supreme Court decision ruling that the Affordable Care Act's individual insurance mandate represented a tax, Maine GOP Gov. Paul LePage called the Internal Revenue Service "the new Gestapo" which is "headed in the direction of killing a lot of people." And after Joseph Stack flew his airplane into an Austin, Texas IRS building and killed public servant and Vietnam veteran Vernon Hunter two years ago, it wasn't just right-wing extremists who suggested the murder was somehow justified. As newly minted Massachusetts Sen. Scott Brown put it:

"Well, it's certainly tragic and I feel for the families obviously that are being affected by it. And I don't know if it's related but I can just sense not only in my election but since being here in Washington people are frustrated. They want transparency. They want their elected officials to be accountable and open and talk about the things affecting their daily lives. So I am not sure if there is a connection, I certainly hope not, but we need to do things better."
Iowa Rep. Steve King offered an even darker lesson from Stack's murderous terror attack on a U.S. federal building:
"It's sad the incident in Texas happened, but by the same token, it's an agency that is unnecessary and when the day comes when that is over and we abolish the IRS, it's going to be a happy day for America."
No, it will be a happy day in America when public servants like Vernon Hunter are viewed with respect and gold-plated tax scammers are treated with the derision and scorn they deserve. To borrow from that tribune of Republican wisdom, Barry Goldwater, extremism in the defense of low taxes for the rich is no virtue and the dedicated pursuit of their just payments is no vice. Especially when the United States is fighting a war with an all-volunteer military, the very least Americans can do is vote and pay taxes. For those who want to be real patriots, that's a good place to start.

UPDATE: Charles Krauthammer joins Romney in the bunker, declaring "he should make the case that he represents a future in which your tax returns don’t define you as a person — both because it won’t be driven by class resentment, and because it will feature a reformed and simplified tax code, dramatically reducing the reams of personal minutiae the Leviathan requires to assess your contribution to the Common Defense and the General Welfare."

Originally posted to Jon Perr on Sun Jul 15, 2012 at 12:59 PM PDT.

Also republished by Daily Kos.

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Comment Preferences

  •  Plus tax law favors the rich (2+ / 0-)
    Recommended by:
    hubcap, Candide08

    Add to the conservatives' war against the IRS to their efforts to game the tax code to reduce the taxes of 1%. That's an effective 1-2 punch. From the NYT, For Romneys, Friendly Code Reduces Taxes:

    Mitt Romney and his wife, Ann, made $27 million in 2010. They held millions of dollars in a Swiss bank account and millions more in partnerships in the Cayman Islands. His family’s trusts sold thousands of shares in Goldman Sachs that were offered to favored clients when the storied investment house first went public. The couple’s effective federal tax rate for the year worked out to 13.9 percent, a rate typical of households earning about $80,000 a year...

    What Mr. Romney’s returns illustrated, instead, was the array of perfectly ordinary ways in which the United States tax code confers advantages on the rich, allowing Mr. Romney to amass wealth under rules very different from those faced by most Americans who take home a paycheck.

    For example, payroll is taxed higher than investment income.
    And like most of the wealthy, the Romneys paid only a tiny sliver of their income in payroll taxes, which cut heavily into the weekly paychecks of wage earners but is barely a blip on the returns of the rich. While payroll taxes eat up 6 percent of the income of Americans earning the national median income of $50,221, Mr. Romney and his wife paid just one-tenth of 1 percent of their income in payroll taxes.
    •  Perfectexample of the rich tilting... (1+ / 0-)
      Recommended by:
      Magnifico

      the playing field to their benefit.

      The rich are against redistribution of wealth - but  they do not mind distributing wealth disproportionately their way.

      "The right to be heard does not automatically include the right to be taken seriously." -- Hubert H. Humphrey

      by Candide08 on Mon Jul 16, 2012 at 05:31:20 AM PDT

      [ Parent ]

    •  On that note Romney DOES have a spine: (0+ / 0-)

      Multichoice has shown himself steadfast in one area, and on that one point he has been consistent no matter how much his opponents and allies have tried to move him: Romney can proudly claim he's never been willing to reveal his finances to the people he wants to lead.

  •  A few word from some indisputable patriots (0+ / 0-)

    "And for the support of this Declaration, with a firm reliance on the protection of divine Providence, we mutually pledge to each other our Lives, our Fortunes and our sacred Honor."

    I believe that the above is the ultimate rebuttal to the Republican ant-tax fetish.

    I will follow, and I hope that most of us appreciate and would be willing to follow, the words of the guys (one John Hancock among many of note) who put their names under the above line at the bottom of the notable document containing that line: The Declaration of Independence.

  •  How did that workout for Joe? (0+ / 0-)
  •  Yeah. Using our roads and bridges and ports and (0+ / 0-)

    firefighters and police and libraries and emergency rooms and airports and not paying a dime for them or our armed forces sure is patriotic.

    Selfish, greedy mother f'rs.  F.U.

    Best. President. Ever.

    by Little Lulu on Tue Jul 17, 2012 at 07:35:52 PM PDT

  •  Oh for Ayn Rand's worldview (1+ / 0-)
    Recommended by:
    basket
    Charles Krauthammer joins Romney in the bunker, declaring "he should make the case that he represents a future in which your tax returns don’t define you as a person — both because it won’t be driven by class resentment, and because it will feature a reformed and simplified tax code, dramatically reducing the reams of personal minutiae the Leviathan requires to assess your contribution to the Common Defense and the General Welfare."

    Präsidentenelf-maßschach"Nous sommes un groupuscule" (-9.50; -7.03) "Ensanguining the skies...Falls the remorseful day".政治委员, 政委‽ Warning - some snark above ‽

    by annieli on Tue Jul 17, 2012 at 07:42:48 PM PDT

  •  ' Saverin's U.S. "de-friend" ' (2+ / 0-)
    Recommended by:
    annieli, mmacdDE

    Lovely euphemism now why don't we call it what it is, Defection.

    Not blaming Bush for the mess we're in, is like not blaming a train engineer for a fatal train wreck because he's no longer driving the train.

    by JML9999 on Tue Jul 17, 2012 at 07:43:19 PM PDT

    •  And if he wants to leave (1+ / 0-)
      Recommended by:
      JML9999

      I won't stop him.

      Actually, I think the tax rates on us citizens who live overseas and don't have a us residence should be low, easy to deal with, and not a burden at all.

      They're not here, don't own property here, so they shouldn't have a big hassle.

      Those who do own property should be considered residents, just like anybody else. You want to move, denounce your citizenship and get some somewhere else, that's fine with me. Then you pay their taxes.

      But you should be required to divest of any us property, companies, etc, before you do so.

  •  The problem (1+ / 0-)
    Recommended by:
    annieli

    with Lindsey Graham's philosophy is that, while individually, Americans seeking to claim deductions for whatever they can isn't that bad, the net effect is to bankrupt the US government.

    (Which, of course, is the whole point of the Republican philosophy.)

    28, white male, TX-26 (current), TN-09 (born), TN-08 (where parents live now)

    by TDDVandy on Tue Jul 17, 2012 at 07:43:51 PM PDT

    •  Also...Tax loopholes and exemptions make (2+ / 0-)
      Recommended by:
      TDDVandy, mmacdDE

      it so one can play games to avoid taxes.  While I'm not against all loopholes, I do think greatly reducing them (And taxing capital gains as income), while reducing taxes (At least on the first $100k of income) correspondingly would help fix the situation.

      •  The funny thing (2+ / 0-)
        Recommended by:
        Flying Goat, Russycle

        When Republicans talk about simplifying the tax code, they're always talking about a flat tax, even though the progressive tax rates aren't very difficult to figure out -- it's all the loopholes and deductions that make things so complicated.

        28, white male, TX-26 (current), TN-09 (born), TN-08 (where parents live now)

        by TDDVandy on Tue Jul 17, 2012 at 08:52:44 PM PDT

        [ Parent ]

      •  I'd like to see all cap gains above 20k taxed (1+ / 0-)
        Recommended by:
        Flying Goat

        As regular income. Cap gains less than 20k would be exempt.

        Then you give the small investor a break, while hitting the really wealthy with a much higher rate.

        Most people, even if they have a decent portfolio, will never make 20k in cap gains. But to the truly wealthy, that's nothing.

        •  Actually, with, say, a 10% interest rate and (0+ / 0-)

          a $200k portfolio, you could see 20k capital gains, assuming the whole deferred/long term capital gains was done away with.

          I'm not really sure if having capital gains taxed at a lower rate, even for just the first 20k, does anything worthwhile.  Should someone who earns $50k a year pay more in taxes than someone who earns $40k, but has fairly sizable investments (From, say, an inheritance), and so makes $10k a year off of them?  The second person already has more assets - then they'd be paying less in taxes as well.

          I'm not saying I'm strongly against it - I'm just not sure it would improve things.

  •  Considering making bumper stickers. (0+ / 0-)

    What do you think?

    http://www.cafepress.com/...

  •  Krauthammer could use 1040EZ if he doesn't (0+ / 0-)

    like all the reams of paperwork. . .

  •  The Case with Rich isn't the same (1+ / 0-)
    Recommended by:
    basket

    Her rationale for giving up her US citizenship is actually reasonable: her partner and children live in Europe, she's lived there for years, and she's paid the taxes there because most countries in the world tax residents, regardless of citizenship, but because the US is one of the handful of countries that claims the right to tax citizens, wherever they happen to be, she actually is being unfairly double-taxed. She paying the taxes of the country where she's residing, and using the services of, while also being taxed on her entire income by the US, where she isn't getting services any more.

    If I was living and working in the US but retained my Canadian citizenship--but otherwise wasn't considered a Canadian resident or a Canadian living abroad as a government employee--I'd only be required to pay Canadian taxes on that part of my income which was derived from Canadian sources, say an old home I maintained ownership of and rented out. The rest of my tax bill would come from the US, which is only fair as I would be using American services.

    If an American comes to Canada, however, even if they completely sever their connection to the US (no property, don't send money home to the family, etc), as long as they retain US citizenship they'd be expected to pay US taxes on all their income on top of the taxes they receive as residents of Canada. Americans, mostly ordinary middle-class people, who've been living up here for years have been shocked when the IRS started aggressively going after them relatively recently, which is the main reason for the upswing in people giving up their US citizenship.

    This is a different matter than Saverin explicitly fleeing the US to avoid paying taxes. The case of Rich and people like her is the US government tax system genuinely treating them unfairly. The case of Saverin is just him being a rich douchebag.

  •  Rich's situaiton isn't the same as Saverin's (1+ / 0-)
    Recommended by:
    basket

    Her rationale for giving up her US citizenship is actually reasonable: her partner and children live in Europe, she's lived there for years, and she's paid the taxes there because most countries in the world tax residents, regardless of citizenship, but because the US is one of the handful of countries that claims the right to tax citizens, wherever they happen to be, she actually is being unfairly double-taxed. She paying the taxes of the country where she's residing, and using the services of, while also being taxed on her entire income by the US, where she isn't getting services any more.

    If I was living and working in the US but retained my Canadian citizenship--but otherwise wasn't considered a Canadian resident or a Canadian living abroad as a government employee--I'd only be required to pay Canadian taxes on that part of my income which was derived from Canadian sources, say an old home I maintained ownership of and rented out. The rest of my tax bill would come from the US, which is only fair as I would be using American services.

    If an American comes to Canada, however, even if they completely sever their connection to the US (no property, don't send money home to the family, etc), as long as they retain US citizenship they'd be expected to pay US taxes on all their income on top of the taxes they receive as residents of Canada. Americans, mostly ordinary middle-class people, who've been living up here for years have been shocked when the IRS started aggressively going after them relatively recently, which is the main reason for the upswing in people giving up their US citizenship.

    This is a different matter than Saverin explicitly fleeing the US to avoid paying taxes. The case of Rich and people like her is the US government tax system genuinely treating them unfairly. The case of Saverin is just him being a rich douchebag.

  •  Graham and Romney are no patriots (1+ / 0-)
    Recommended by:
    basket

    both owe their allegiances to foreign powers, one to a dead Southern treason and the other to an alien superstition that bilks billion out of the gullible.  Both of them believe it it wrong to pay taxes to the democratic government and look upon tax avoidance as an upper crust game.  

  •  Dear Lindsey... (0+ / 0-)

    To the rest of us Americans, paying our taxes is definitely NOT a game. It's torture. We don't have numerous tax accountants looking for loopholes to hide our stock portfolios earnings. We just have our hard earned paychecks and a pen and a tax form in hand. We put what we made in one box and calculate how much we owe in another. It's not a game.

    When you start treating paying taxes as a game then it's really time to change the rules you are playing by so that you get the real American experience of paying your taxes.

    Enjoy!

    "I think it's the duty of the comedian to find out where the line is drawn and cross it deliberately." -- George Carlin, Satirical Comic,(1937-2008)

    by Wynter on Wed Jul 18, 2012 at 12:14:47 AM PDT

  •  Krauthammer advocates for a Kinder, Gentler... (0+ / 0-)

    Retroactive IRS to serve the kings and landed gentry.

    It seems curiosity has killed the cat that had my tongue.

    by Murphoney on Wed Jul 18, 2012 at 06:43:20 AM PDT

  •  What is galling... (0+ / 0-)

    What is galling is that while the rich view it all as a game, one in which they pay far less than they should (morally, if not legally) and laugh about it, the poor who inadvertently underpay their obligations due to bad math end up paying far more than they should.  

    I have known several individuals with well under $50,000 who underpaid by, for instance, $75 due to numbers transpositions or other arithmetic errors.  

    When the IRS caught up with them, five or six years later, they were charged not just the $75 amount but about $750, what with late fees accruing interest.  

    If all the wealthy types who made intentional errors by bending the rules and finding loopholes were pursued as vigorously as the poor who make relatively insignificant innocent errors, the whole deficit situation could be resolved immediately, and then some, what with both the actual amounts due plus the excessive late charges.  

    And yes, Serial Liar Tax Cheat Mitt Romney, I'm talking to you.  If you and Senator Lindsey Graham and your other "patrician peers" avoided paying, say, $50 million each in taxes each year by shipping your ill-gotten wealth overseas, by using loopholes and so on, and if the IRS pursued you and you had to pay 10 times the amount of each underpayment,  the playing field would be leveled, and you might find yourselves living the life of luxury the poor have enjoyed for years, whether your entire fortunes would be wiped out or whether you were tossed in jail for tax evasion and didn't have to worry about where your next meal was coming from, knowing the government would be "handing out" your daily crust of bread and cup of water.

    •  I made an (0+ / 0-)

      arithmetic error on a return years ago, in the days before tax software that did your calculations for you. The IRS caught it when I filed, corrected the error, and sent me my refund check for the proper amount, along with a letter advising me to correct my copy of the return, and said if I had a problem with their finding to give them a call.

      Five years to catch an arithmetic error seems... unusual.

      "A lie is not the other side of a story; it's just a lie."

      by happy camper on Wed Jul 18, 2012 at 11:00:10 AM PDT

      [ Parent ]

  •  Krauthammer is full of it (0+ / 0-)

    as usual:

    "...dramatically reducing the reams of personal minutiae the Leviathan requires to assess your contribution to the Common Defense and the General Welfare."
    Reams of personal minutiae? Like what, your street address and your SS#? Or your birthday?

    Meh.

    A few dozen pages (if that) of the tax code covers 90% of US taxpayers. The other thousands of pages are breaks and exemptions for the uber wealthy and huge corporations.

    "A lie is not the other side of a story; it's just a lie."

    by happy camper on Wed Jul 18, 2012 at 10:50:15 AM PDT

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