Don't look a gift horse in the mouth -- unless it comes in the form of an altruistic effort to fix the government's fiscal problems. That seems to be today's conventional wisdom. While a political battle rages over fixing the federal deficit, simple, but potentially very effective, offers to help solve our problems are going unheeded. People with resources and influence have offered hundreds of billions of dollars to fix the federal deficit, but no one appears to be listening. Why not?
A group of millionaires (the self-proclaimed Patriotic Millionaires for Fiscal Strength) recently sent a letter to President Obama and Congress asking them to raise the taxes on people who earn more than $1 million a year.
One millionaire shared his concern about our fiscal problem and observed that to help solve it, "You've got to go where the money is." What did he mean?
Only 321,000 tax returns (or 0.23 percent of the total returns filed) showed adjusted gross income of $1 million or more. That small percentage of the population reported just over $1 trillion of adjusted gross income, but it paid only $250 billion of income taxes (about 25 percent of their reported income). As a result, only a few hundred thousand people out of more than 300 million share more than $750 billion after they pay taxes (that is a significant portion of the $1.27 trillion deficit the United States faces this year).
The millionaires know that a large amount of money (13 percent of the total income reported) is concentrated among themselves, and they are offering to share that money to help fix the nation's fiscal problem.
Tax lawyers also know where the money is, and the lawyers know the $1 trillion that the millionaires report is only a fraction of what they earn. After all, helping millionaires take advantage of tax loopholes is how tax lawyers make a living. Nonetheless, tax lawyers are willing to make sacrifices to help solve the government's fiscal problems.
Charles H. Egerton, the chair of the Tax Section of the American Bar Association said, "The goal that Congress ought to have is to put as many of us (tax lawyers) out of business as possible." You read that correctly -- a powerful tax lawyer told Congress that they should fix the tax law so attorneys cannot help millionaires report less income.
But Mr. Egerton recognizes that he can offer to sacrifice his livelihood for the greater good because such an offer doesn't affect politicians or the public. Mr. Egerton admitted, "Now I say that with full confidence that it's not going to happen." He realizes that Congress is not going to change the tax law in such a way that wealthy people won't hire tax lawyers. He knows that almost all of the U.S. population cannot afford more than two or three hours of his time (some tax lawyers charge more than $1,000 per hour). But he also knows that those people will never provide the political support needed to change the law.
The Patriotic Millionaires and Mr. Egerton appear to be well-intentioned. They recognize that the country faces perilous economic conditions. The millionaires and their lawyers know that they have more money than they need. They realize that everyone in their social class could do more to help the U.S. fix its deficit problem and help improve the economy.
Why won't politicians and the public take them up on their offers?
Perhaps our society has become so desensitized to outrageous behavior that even well-intentioned acts and comments no longer have effect. The voices for good cannot be loud enough. Instead of accepting offers that will help right the country's economic ship, we read of efforts to reduce tax rates. It's outrageous to think of cutting revenue when deficit spending is at all-time highs, but such talk is common place.
As a country, we should accept the millionaires' offer to pay more taxes and heed the counsel from one of the country's top tax professionals. Doing so would add hundreds of billions of dollars (or maybe even close to $1 trillion) to the government coffers and go a long way to solving our fiscal problems.
Perhaps in this, our time of need, we, as a country, should graciously accept the millionaires' and tax lawyer's offers and raise taxes on the super-wealthy and close the loopholes they enjoy.