Wednesday, September 19, 2012

The "47%" Are Not Freeloaders, and the Top Bracket Gets a Lot More Tax Breaks

There have been plenty of responses to Mitt Romney pronouncement that half of all Americans are freeloaders.  Just about all have said that Romney is wrong.  (Well, there's Rush Limbaugh.  But as usual, he's the exception that proves the rule.)

I want to publicize one response in particular, because I think it does an outstanding job explaining not only why Romney is way off-base about the "47%," but also why Romney is wrong about the rest of the populace who do pay income taxes.  The content of the response is precise and well documented.  But what's most significant is who's making it:  Loren Steffy, the business columnist for the Houston Chronicle.

What I like about Steffy is that, even though he's unquestionably a business Republican, he's generally quite careful to separate political dogma from economic facts.  In this case, the economic fact is that the "47%" pay no federal income taxes because Congress has created tax breaks that allow low-income households to reduce their taxable income to zero.  This does not mean that these households pay no sales taxes or payroll taxes or, in many cases, real estate taxes.  It simply means that as a matter of national policy we have decided as a country that some incomes are too low to tax without creating economic hardship.

Moreover, Steffy is excellent at pointing out the self-serving hypocrisy of Romney's position.  That is revealed by this contrast:  those in the very bottom tax brackets get to take advantage of only about 20% of the tax breaks available in the Internal Revenue Code; but those in the top tax bracket get to utilize about 60% of the tax breaks.  So if someone wants to say that the poor, the sick, the elderly and the under-employed are coddled by the tax code, how much more is that true for the well-off?  Romney, in short, needs to be candid:  the rich get a lot more government welfare than the "47%" do!

The ultimate point, of course, is that all of us are so under-taxed that the federal budget cannot be balanced, even with draconian cuts to domestic services and defense.  How to fix that without damaging the vulnerable even more is the great moral challenge of this decade.  Here's Steffy's column:

The 47 percent may not be who you think.

A video released Monday shows Republican presidential challenger Mitt Romney, speaking at a private fund raiser in Boca Raton, Fla., citing an often-used statistic that 47 percent of Americans don't pay federal income tax.

Romney went on to imply that all of them are likely to vote for President Barack Obama because they people who "are dependent upon the government, who believe they are victims, who believe the government has a responsibility to care for them ..."

In other words, almost half the American people are freeloaders.

I'll leave it to my colleagues on the Opinion page to assess any political fallout from this statement, but the issue of those who don't pay taxes is an important economic problem that transcends politics.

First, Romney's numbers pertain to 2010. In 2011, the number dipped to 46 percent. Also, he's talking only about those who don't pay income tax; he wasn't saying they pay no taxes at all. Many still pay payroll and excise taxes, sales tax and so forth.

The Tax Policy Center, a joint venture of the Urban Institute and the Brookings Institution, dug into the issue last year.

The center's study found that about 78 million Americans didn't pay federal income taxes, and more than 70 percent of them earn less than $30,000 a year.

Of those who didn't pay, about half simply didn't earn enough to pay income taxes using the standardized deduction. For example, the center found that a couple with two small children earning less than $26,400 paid no income tax last year because they get a standard deduction of $11,600 and four exemptions of $3,700 each.

"The basic structure of the income tax simply exempts subsistence levels of income from tax," the study said.

Seniors and the poor

Of the other half, most took advantage of tax provisions that benefit senior citizens and the working poor, such as child care tax credits, and extra deductions for the elderly. The center found these types of deductions were most widely used among households that earn less than $50,000 a year - the same amount that each plate cost at Romney's fund raiser.

Children and education

The remainder of those who didn't pay taxes include households that earned between $50,000 and $100,000 but reduced their tax bill primarily with credits for children and education.

The problem, then, isn't that almost half of all Americans are deadbeats and freeloaders.

The biggest cause behind the 47 - or 46 - percent that Romney cited is income that is too low and the long-standing practice, favored by both parties, of administering social programs through the tax code.

The tax code is chock-full of benefits such as deductions for mortgages, interest for college loans and contributions to retirement accounts, just to name a few.

Rather than increase federal spending to pay for these benefits, Congress chose to build incentives into the tax code.

Many of these credits provide even bigger benefits to higher-income households, the Tax Policy Center found, measured both by dollar value and share of income.

For example, the few households that earn more than $100,000 a year and don't pay income tax benefit the most from itemized deductions and lower tax rates on capital gains and dividends, the center found.

The rich, of course, have long used tax shelters and loopholes to avoid paying their full amount of taxes.

Benefits at the top

About 60 percent of all tax benefits built into the tax code go to the top income bracket, which isn't a surprise. By comparison, only 20 percent of the tax benefits are enough to zero-out lower-income earners.

All of which makes a strong case for sweeping tax reform.

Romney, of course, wasn't at a political fundraiser to discuss tax policy. But rather than writing off 46 - or 47 - percent of the population as freeloaders, he'd be better off focusing the discussion on tax overhauls that would bring more of them back into the tax-paying fold.

Tuesday, September 18, 2012

U.S. and Egyptian Coptic Officials Repudiate Makers of Anti-Islam Commercial

Citing reports from Religion News Service and Catholic News Service, the National Catholic Reporter says that the Coptic Orthodox Archdiocese of America, the Bishop of the Coptic Orthodox Diocese of Southern California and Hawaii, and Egypt's Roman Catholic Vicar for Latin-Rite Catholics have repudiated the three self-styled Copts who claimed responsibility for the anti-Islam YouTube commercial that has led to violent demonstrations in a score of Islamic countries.

NCR's article follows.

Coptic Christian leaders in the United States distanced themselves from an anti-Muslim film that has sparked protests in more than 20 countries, and denounced the Copts who reportedly produced and promoted the film.

“We reject any allegation that the Coptic Orthodox community has contributed to the production of this film," the Coptic Orthodox Archdiocese of America said in statement Sept. 14. "Indeed, the producers of this film have taken these unwise and offensive actions independently and should be held responsible for their own actions.”

Joseph Nassralla Abdelmasih, Nakoula Basseley Nakoula and Morris Sadek - all Coptic Christians who live in the U.S. - have emerged as the producers and promoters of the anti-Muslim film. Called “Innocence of Muslims,” the crude film depicts Islam’s Prophet Muhammad as a bumbling sexual pervert.
Protests against the film began in Egypt Sept. 11 and have since spread to nearly two dozen countries, including Libya, Yemen, Bangladesh, Sudan, Qatar, Kuwait, Indonesia and Iraq, according to international reports. Four Americans, including Ambassador J. Christopher Stevens, were killed in Libya last Tuesday. The Obama administration is investigating whether that attack was tied to the film.

Joseph Nassralla, as he is known, heads a Christian charity, and Nakoula is a convicted felon. Both live near Los Angeles, according to reports. Sadek is an incendiary activist who lives near Washington. Coptic leaders said they are investigating what ties - if any - the men have to mainstream Copts in the United States.

There are about 300,000 Copts in the United States, most of whom live in California and the Northeast. Copts in Egypt, where the faith was born, regularly face discrimination and violence at the hands of the Muslim majority, according to the State Department.

Since the film is associated with the Christian West, Copts and other Christians in Muslim countries can become possible targets of extremist behavior.

"What happens outside the country is very dangerous for us because it is perceived to be related to us inside," said Bishop Adel Zaki of Alexandria, Egypt's vicar for Latin-rite Catholics.

The film was released in July but went almost completely unnoticed in the Middle East until a preview of it was translated into Arabic.

In an interview at his Cairo residence, Zaki told Catholic News Service that Egypt's Catholics condemned defamation of other religions, in line with what he called "the Vatican decree which commands respect for those of other faiths."

But when products or policies deemed anti-Arab or anti-Muslim surface in the U.S. and in other Western countries, Egypt's Christians, who account for about 8 million of the country's more than 82 million people, often feel the brunt, he said.

People in other countries "should keep in mind that there are repercussions for Christians here. The level of fanaticism grows," he said.

Newly elected Egyptian President Mohammed Morsi, a conservative Muslim, has decried the short film, saying "Egyptians reject any kind of insult against our Prophet," but he also called for restraint and protection of the country's "foreign guests" and embassies.

Despite the tension over the film in Cairo and other parts of the Middle East, Fr. Fady Sady, a Coptic Catholic priest, said he did not expect trouble in Egypt's South, where he lives and serves.

"(Muslims) know those who made the film are not from Egypt, so there will be no problems," he said by cell phone from the city of Nagada. But he added that "when anything contentious" like this film appears abroad, Christians in Egypt go on alert.

"Perhaps someone not very educated could use the event to make an operation," he said, referring to attacks on churches that have occurred in the past.

In Cairo, Mohammed Abdu, a 22-year-old Muslim taxi driver, said he was angered by reports of the film but even more upset by the protests at the U.S. Embassy, saying they would further damage Egypt's already challenged economy, due to dramatic losses in tourism and other business since the 2011 overthrow of former President Hosni Mubarak's authoritarian regime.

"Had (the protesters) been quiet and ignored (the film), it would have disappeared, but now it is famous. When people start climbing walls and attacking embassies, the people who made the film get the attention they wanted," said Abdu, who drives a rented cab 12 hours a day to save enough money to get married.

Internationally, religious leaders from across the spectrum were quick to condemn the hate message of the anti-Islam film and the wave of violent attack it supposedly provoked.

The Vatican condemned the attacks in Libya, saying there was no justification for such violence.

After protests in Pakistan gathered momentum, Catholic leaders in Faisalabad condemned the film. A church official said leaders hoped to avoid possible anti-Christian backlash.

Israeli and Palestinian leaders who work with religious institutions as well as heads of local churches issued a joint statement Sept. 15 deploring "those who abuse free speech to offend the religion and religious beliefs and symbols of others."

The leaders also condemned "those who use violence in reaction instead of peacefully protesting against such abuse."

Israeli Deputy Foreign Ministry spokesman Paul Hirschson told the Hebrew edition of Ha'aretz daily newspaper that the content of the film was "beneath contempt" and "vile."

Bishop Serapion of the Coptic Orthodox Diocese of Los Angeles, Southern California and Hawaii said he “strongly rejects dragging the respectable Copts of the Diaspora" into the controversy.

“The producers of this movie should be responsible for their actions,” Serapion said in a statement. “The name of our blessed parishioners should not be associated with the efforts of individuals who have ulterior motives.”

School Vouchers ≠ Less Government, REPUBLICAN Warns the Radical Right

In an op-ed piece in today's Houston Chronicle Ronald L. Trowbridge warns radical right Texas officials that vouchers for private schools will lead to more government, not less.  And for good measure, he argues that the vouchers will cause private schools, including religious schools, to lose some of the freedom they now enjoy.

The radical right will, no doubt, dismiss his advice.  But what is remarkable is that Trowbridge is what was formerly known as a conservative Republican, having worked for President Ronald Reagan and served as Chief of Staff to Chief Justice Warren Burger.  So when Trowbridge urges these Tea Party darlings to reject school vouchers, you know they've really deluded themselves.  Maybe at least Trowbridge can keep them from deluding the rest of us.  Here's his op-ed column (along with the links in the Chronicle's web posting):

As one who worked for President Ronald Reagan, then later was chief of staff to Chief Justice of the United States Warren Burger, I wish to explain why I believe that Gov. Rick Perry, Lt. Gov. David Dewhurst, Education Commissioner Michael Williams and state Sen. Dan Patrick are misguided on public vouchers for private schools.

Giving government money to private schools would inevitably make them government schools, as political strings always come attached with government money.

It defies history and logic to assert that a permanent firewall can be built between government grant givers and private grant recipients. Moreover, such a wall would be a bad idea because state legislators have a fiduciary responsibility to require accountability for public funds given to the private sector.

It is in this area of accountability that political interventions can be mandated. Whether one favors it or not, the "10 percent rule," mandating college admission to all students who graduate in the top 10 percent of any Texas high school, is an example of political intervention. I can easily envision that the Texas Legislature will one day mandate that private schools receiving public vouchers must make demonstrable efforts toward diversity. Republicans focus on efficiency and productivity; Democrats on diversity and social justice.

Many argue that government grants and loans should be directed to parents or to students themselves and that therefore schools would not be recipients of government money.

Not so. In l984, the Supreme Court ruled in Grove City v. Bell that federal aid directed to students or parents, then passed on to a schools, made that school "a recipient of federal financial assistance" and therefore required to comply with certain government regulations.

In l988, Congress, under the Civil Rights Restoration Act, broadened the term "recipient" to include an entire school. This rule would apply to any "local educational agency, system of vocational education or other school system." Note that this would include elementary and secondary schools.

The same applies to state financial assistance, making a school subject to state regulations - which can indeed be political.

To be sure, private schools do not have to take public vouchers. But we know through research that most private schools would take the money. Under a present plan recommended in Texas, a government/taxpayer stipend of $5,143 per year would be given to each student attending a private school.

Private schools will become heavily reliant upon these large government stipends and will not be able to do without them, making them government schools.

Many object to government money going to the private sector, that is to the private schools. Many also object to government money going to religious schools; 80 percent of private schools are religious.

My larger objection is that throughout the history of this country, there has been a slow expansion of government power and control, as it reaches and grabs control in every nook and cranny. There is now less freedom, especially freedom for the talents and creativity of the individual, than ever before in the history of this country.

The supreme irony here is that government vouchers to private schools will expand that government power and control.

If private schools take government vouchers, they will have to trade their souls in the bargain.