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COUNTERPOINT Response to Spruiell By KEVIN BECK 04.04.04 3:09PM CDT Stephen is right; John Kerry has correctly identified enormous problems in the U.S. tax code. However, reform shouldn't focus on the seemingly unfair tax burden the U.S. places on companies (at the time of its merger with Daimler, Chrysler was only paying a real tax of 18 percent, barely half of the 35 percent corporate tax rate). Instead, the most glaring problem, as Senator Kerry has rightly pointed out, is the increasing difficulty Americans are having moving into, and staying in, the middle class. The Bush years have been rough for middle class Americans. The President's tax cuts, aimed disproportionately at the wealthy, have left the federal government with huge deficits. (People with annual salaries over $1 million get a 5.7 percent increase in their take-home pay; filers with salaries below $50,000 only get a 2.2 percent increase.) These deficits, coupled with unfunded education and security mandates to state and local governments, have left the middle class with increasing property, sales, and state income taxes. All the while, health care costs are continuing to rise, forcing more and more employed Americans to become uninsured. While the costs of the American Dream are rising, the jobs that made access to that dream possible are vanishing. Since 2000, 2.8 million manufacturing jobs have disappeared from the U.S. economy. Further, those jobs have not been replaced by ones in the technological sector, which continues to be sluggish following the dot-com collapse. Firms have been reluctant to hire new workers, preferring instead to enjoy the gains in productivity and the increasing ease of outsourcing brought by the technological boom of the 1990s. It's not American companies that need help-it's American workers. Regardless of anyone's feelings, globalization has become fact. American firms have benefited tremendously from this new order, finding markets and cheap labor overseas. Globalization has also sped the change of the U.S. economy from manufacturing to service, leaving million of workers unable to compete in an evolving labor force. Any change in tax policy will have to make American workers more competitive in the global market. To do this, Kerry supports the Crane-Rangel-Hollings legislation, which would provide tax incentive for companies that manufacture goods in the U.S. Such a plan has the benefit of helping businesses by lowering their tax burden while at the same time making American labor more attractive to manufacturers. The wage discrepancy that makes it difficult for American workers to compete against those in the developing world would be offset by the tax advantages companies would enjoy by manufacturing in the U.S. Making American labor more competitive in the global market does nothing to address the changing American economy, of course. (This is not to endorse a knee-jerk protectionist policy, which doesn't help either.) A place in the middle class, once attainable with a high school degree, is becoming accessible only to those with college education. Kerry wants to address this with increased tax cuts that will help make education affordable for all Americans, but more needs to be done. Serious resources need to be devoted to bridging the gap-financially, culturally, and scholastically-between high school and college. Too many families are financially unprepared to send their children to college and unaware of the opportunities for financial aid, and too many families don't understand the benefits that higher education bestows. Likewise, too many children leave high schools without the academic skills to succeed in college or never make it to graduation in the first place. Helping the American workforce adapt to the needs of the new American economy will require changes in tax law-both corporate and individual-as well as a restructuring of health care and education to make them both affordable and universal. For American democracy to function, we need a vibrant middle class, and more than that, we need that middle class to be accessible to all Americans. Whoever the country elects in November, corporate tax reform will have to be part of a larger plan to help current and hopeful middle class Americans adapt to a changing global economy. Kevin Beck is a first-year graduate student at the LBJ School of Public Affairs. |
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