Afghanistan,  Iraq,  Stateside

Wars, wealth, taxes and sacrifice

Back in 2003, after President Bush called for “sacrifice” and an additional $87 billion for the war and reconstruction in Iraq and Afghanistan, Washington Post columnist E.J. Dionne wrote:

The fiscal burden for this war does not have to be piled onto future generations. And it should not be borne by Americans most in need, the ones who would suffer from the budget cuts that bigger deficits would inevitably bring on. It’s now obvious that the country cannot afford huge expenditures for war and reconstruction along with continued outsized tax cuts for the wealthiest among us.

If Bush wants us to believe that this war is as important as he says it is, he needs to ask something from himself and something from Americans who can most afford it. That means rescinding some of his tax cuts for the most well-off even if his campaign contributors squawk. If Bush and his friends aren’t willing to sacrifice anything for this cause, they abandon the right to ask sacrifices from of the rest of us.

Of course Bush did not take heed, his tax cuts (which are skewed heavily in favor of the wealthiest Americans) remained in place and federal deficits continued to mushroom.

Now, with those tax cuts set to expire at the end of 2010, Dionne writes:

The simple truth is that the wealthy in the United States — the people who have made almost all the income gains in recent years — are undertaxed compared with everyone else.

Consider two reports from the Center on Budget and Policy Priorities. One, issued last month, highlighted findings from the Congressional Budget Office showing that “the gaps in after-tax income between the richest 1 percent of Americans and the middle and poorest fifths of the country more than tripled between 1979 and 2007.”

The other, from February, used Internal Revenue Service data to show that the effective federal income tax rate for the 400 taxpayers with the very highest incomes declined by nearly half in just over a decade, even as their pre-tax incomes have grown five times larger.

The study found that the top 400 households “paid 16.6 percent of their income in federal individual income taxes in 2007, down from 30 percent in 1995.” We are talking here about truly rich people. Using 2007 dollars, it took an adjusted gross income of at least $35 million to make the top 400 in 1992, and $139 million in 2007.

The notion that when we are fighting two wars, we’re not supposed to consider raising taxes on such Americans is one sign of a country that’s no longer serious. Why do so few foreign policy hawks acknowledge that if they lack the gumption to ask taxpayers to finance the projection of American military power, we won’t be able to project it in the long run?

And if we are unwilling to have a full-scale debate over whether nation-building abroad is getting in the way of nation-building at home, we will accomplish neither.

As someone who believes in nation-building both abroad and at home, I agree. And Dionne is correct when he writes:

[D]emocrats will be fools if they don’t try to turn the Republicans’ refusal to raise taxes on families earning more than $250,000 a year into an election issue. If Democrats go into a headlong retreat on this, they will have no standing to govern.

As I’ve argued before, the only Americans who have really had to make sacrifices for the wars in Iraq and Afghanistan are the small minority who have actually served there, as well as their families. And those sacrifices have been enormous. Is it too much to expect the richest Americans to make, by comparison, an infinitesimal sacrifice of their own?