PAUL SCHWIETERING
Representative Ryan, Medicare and taxes

May 19th, 2011    Author: Paul Schwietering    Filed Under: Opinion

Paul Schwietering

The budget passed by the Republican-controlled U.S. House of Representatives just four weeks ago is reported to be “dead on arrival” in the U.S. Senate. Representative Paul Ryan’s (R – Wisconsin) scheme to privatize Medicare by giving the elderly a voucher and telling them to go buy insurance from private insurance companies with the voucher is apparently unpopular even with Senate Republicans.

Evidently, Senators and Congressmen went home during the Easter recess and got an earful from their constituents. The congressional budget office had estimated that Representative Ryan’s proposed voucher plan would increase medical expenses by an average of $6,400 per year for each senior citizen by 2018. Expenses for the elderly would continue to rise sharply after that due to caps on adjustments for inflation. Medical inflation has been rising much faster than the overall rate of inflation.

Although Representative Ryan touted his budget plan as a “deficit reduction” plan, the most interesting fact about it is that it does almost nothing to reduce the deficit. Nearly all of the “savings” that Ryan would cut from Medicare and other programs would go to tax cuts for corporations and the wealthiest Americans.

Although I am sure that this would be very satisfactory to the main sources of Republican campaign cash, there is no data to indicate that either the wealthy or corporations are in need of a tax cut.

In fact, the percentage of gross domestic product that goes to taxes is at its lowest rate since 1950. Because the tax code was much more progressive in 1950 than it is today, I would venture to say that taxes on the wealthy and corporations are near historic lows.

The effective tax rate on the very wealthy is as low as it’s been in my lifetime. Multi-billionaire Warren Buffet famously claimed a few years ago that he pays a lower percentage of his income in taxes than his secretary. While corporations theoretically pay a fixed percentage of their profits in taxes, two-thirds of the Fortune 500 companies paid no taxes last year, and some of the largest and most profitable corporations, such as General Electric, actually received billions in rebates.

The last time Congress reformed the tax code was 1987. In the years since then lobbyists have done what lobbyists do, and, unfortunately, Congressmen and Senators have done what they too frequently do, and the result is a corporate tax code riddled with loopholes.

In addition to the various loopholes, corporations have managed to get away with outright tax avoidance through such schemes as claiming a post office box in the Cayman Islands as the corporate address. Further compounding the problem, large corporations have armies of tax lawyers and accountants, and usually submit many thousands of pages when they file their taxes.

The IRS simply doesn’t have the manpower to give the tax documents of large corporations the time necessary to review them thoroughly, and the corporations know it.

Furthermore, when the IRS requests more auditors, the Republicans in Congress invariably block the funding for them. Also, the Republicans try to cut the funding for the IRS in nearly every fiscal year.

Although I am sure that there are some senior citizens who are wealthy, the ones whom I know personally are not. Some are very old, and physically frail, and can barely walk. For most of them Social Security is their largest source of income, inadequate though it is. They live on a very modest budget, and things that you or I would do without a second thought might be something that they would have to plan for, and would consider a real treat. Medicare gives them the assurance that a medical emergency won’t take away what little they have left and leave them destitute. When representatives such as Ryan attack Medicare so some corporate executive can buy a fifth vacation home in the Caribbean, I am forced to reflect on what kind of nation this has become. It’s not the one I grew up in.

Paul Schwietering lives in Union Township.

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