It seems like we are in an endless cycle of fiscal emergencies in the United States.
To be clear, much of this fiscal nightmare is the fault of a Congress where the right-wing thinks the sequester and cutting government blindly is a good idea, and are unwilling to find any new money, even by asking the wealthy and large corporations to pay their fair share.
We could eliminate much of our fiscal mess by simply eliminating tax loopholes that allow corporations like GE and Apple to avoid paying taxes.
But we cannot do both. We can’t let big business use off-shore tax shelters and reward them for shipping jobs overseas and have a thriving education system. That choice seems like an easy one to me. It is time to ask the better-off and business community to pay their fair share and to invest in education.
It’s wrong to reduce the deficit on the backs of the middle class by cutting vital programs such as education. Instead of taking away access to Head Start, we should ask millionaires to pay at least as high a tax rate as their secretaries.
There are plenty of special tax breaks and loopholes for the richest Americans. The richest 1 percent get more than $270,000 in tax breaks a year. We can’t afford to keep giving special tax breaks to those who need them the least. If we are serious about reducing the deficit, we should eliminate the loopholes and tax breaks that allow the wealthy to pay a lower tax rate than average families. And that, economists say, could raise hundreds of billions of dollars over 10 years.
That means we need corporate tax reform —but the kind that moves us forward, not back. A bad idea is a so-called “territorial” tax system. It would exempt all overseas corporate profits of U.S. companies from federal taxes. That will cost us huge amounts of lost revenue as companies use all sorts of loopholes to shift their profits to tax havens with little or no taxes. It will also cost us jobs, as corporations will have even more incentive to shift operations offshore.
Thankfully, there’s other proposed federal legislation that would actually end the incentives to use accounting tricks to stash profits offshore, encouraging companies to keep jobs stateside while raising $600 billion over the next decade to improve education, higher education access and other needed investments like infrastructure.
Education in Michigan has suffered enough due to years of both tax and budget cuts that have diminished support for K-12 and higher education. Tuition has doubled at our public universities. Schools around our state are already operating at their lowest levels of funding in decades. Districts are being dissolved and are declaring financial emergencies more than ever. Now is the time truly invest in education by making sure big business pays its fair share.
John Austin is president of the Michigan Board of Education.