THE BLOG
09/23/2010 06:33 pm ET | Updated May 25, 2011

A Good Cigar and a Good Conversation About Tax Cuts

I spent last week in Washington, D.C. Whenever I travel, I seek out one of the local cigar establishments.

As I've written before, there is something about tobacconists that creates an atmosphere for honest and respectful dialogue, in which longevity of the relationship is not a prerequisite.

My travels took me to Draper Tobacconist, where I happened upon a wonderful couple who embrace most of what I oppose politically. They found it difficult to believe that the U.S. federal budget deficit in the first half of fiscal 2010 was down 8 percent from the same period a year ago. Moreover, it mattered little that my sources for this data included the U.S. Treasury Department, Reuters and the Washington Post.

But where our philosophical differences were most glaring was on the issue of tax cuts. They held steadfast in the belief that tax cuts instituted by President George W. Bush should remain for everyone, and not the just 97 percent, supported by President Barack Obama and most of the Democrats on Capitol Hill.

I suspect they were not part of the 3 percent of the wealthiest Americans who would be left out of the president's tax cut extension.

They were most likely engaging in what I define as middle-class economic forecasting -- the belief that one will someday be part of the 3 percent and do not wish to support policies that could hurt their future economic self-interest, regardless of their present condition.

They were also quick to cite the conservative talking point of basic fairness. According to a 2009 report by the bipartisan Tax Policy Center, 47 percent of Americans have no federal income tax liability.

But to focus solely on income tax is misleading because it ignores that most Americans pay more in payroll taxes than they do in federal income tax.

Only a very small percentage of Americans pay no federal taxes -- and most of those folks are paying at least some state taxes.

Therefore, the issue of tax fairness should be based on the percentage of total taxes that each income group pays, and the percentage of total income that group receives.
By this standard, despite what angry, frothing talk show hosts may claim to the contrary, there is relative fairness across the board.

But this is not the conversation that we're collectively having. The popular right-wing discourse is to suggest the rich should not be taxed because they are responsible for job creation, and the middle class (however broadly defined) should not pay because they are the workers; how about the 47 percent who pay no federal income tax?

This vaunted 47 percent of tax dodgers are a cabal of single mothers working minimum-wage jobs, seniors on fixed income, along with those working in the fast-food industry and the like. They pay no federal income tax because their incomes are so low or they have credits and deductions that eliminate their liability.

They are the standard by which those who valiantly stand up for tax fairness for the wealthiest Americans base the legitimacy of their claim.

Without the benefit of K Street lobbyists, the 47 percent who pay no federal income tax is so effective that others, formerly part of the middle class, are involuntarily racing to join them.
According the Census Bureau, the number of the working-age poor increased to the highest level since the 1960s. The bureau's finding state that one in seven Americans now live in poverty. The overall poverty rate climbed to 14.3 percent, or 43.6 million people.

In addition, the percentage of Americans without health coverage rose from 15.4 percent to 16.7 percent -- or 50.7 million people -- mostly because of the loss of employer-provided health insurance during the recession.

With lightning speed, America has gone from what former President George W. Bush coined as the "ownership society" to an increasingly impoverished one.

The impact poverty has on every aspect of life, from education to health to mortality, is staggering. Under the current recession, more Americans are headed toward the impoverished side of the economic meter than those stumbling to become part of the illustrious 3 percent.

This isn't class warfare; just a sobering analysis of where the country is headed. If we continue to believe America can sustain its greatness while increasing the number of impoverished families, then we're smoking something a lot stronger than anything sold at Draper.

Byron Williams is an Oakland pastor and syndicated columnist. He is the author of Strip Mall Patriotism: Moral Reflections of the Iraq War. E-mail him at byron@byronspeaks.com or visit his Web site byronspeaks.com

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