A pressing and continual issue during the midterm election season was tax policy — a controversial issue on which people often fundamentally disagree. Although tempers sometime flare over proposed fiscal policy changes, we should all be concerned about tax reform and the implications even small changes in policy can have on the average person.
One of the platforms Democratic Sen. Al Franken ran on was that the wealthiest Americans enjoy historically low federal income tax. This means that the tax burden has fallen on the middle class and has exacerbated income inequality, a phenomenon commonly recognized as the 99 percent versus the 1 percent.
To address this situation, it might help to think historically. Think back to history class, when we studied the fall of the Roman Empire. One speculation of the fall’s cause is that badly instated economic policies exacerbated existing political conflicts of the time.
In the third century, when Emperor Diocletian was in power, tax collection policies were so disproportionately strict that they drove people to starvation — as even women and children of the lowest classes were pressed for tax money if their husbands weren’t able to pay.
By the fifth century, violent revolts had erupted, as farmers were pressed with heavy taxes during a depressed economy in which they couldn’t make sufficient profits from the products they sold on the market, so it was easier to rely on government entitlements.
To ease this disproportionate tax burden on the middle class and lower classes to avoid a fate similar to Rome’s, tax reform needs to occur.
There are a number of approaches government officials can take to address this problem. One thing that needs to be addressed is loopholes in the tax system.
Multibillion-dollar corporations should not be able to get away with weaseling out of money they owe the government through offshore “tax havens.” A recent study showed that 362 of America’s largest companies that use these types of loopholes avoided paying about $90 billion in taxes each year, using mostly offshore subsidiaries as fronts.
In Rome, through a combination of bribery, corruption and impunity, the Roman elite were able to escape paying taxes as well, which contributed to its downfall. The point is, history repeats itself, and we have not learned from our past mistakes.
Targeting these companies that evade taxes would be a good start, but there is more to be done. Supporting the Buffett Rule — in which anyone making more than $1 million would not be able to pay a smaller share of their income in taxes than a middle-class family — would help reduce the rampant income inequality the United States has become notorious for.
These are only a few solutions to what is a complicated, systemic economic issue. In the end, nobody likes paying taxes. But with proposed reforms, everyone should at least pay their fair share. There may be hope for us yet.