Letter to President Obama

Everyone needs to pay their taxes. I agree with President Obama that our current financial crisis requires that we restore liquidity, stabilize housing prices, and create jobs. The costs will be staggering, but not fixing the problem will be far more costly. There are many other costly, critical needs… education, affordable healthcare, etc. The challenge is unprecedented, because the Bush Administration and Republican Party neglected the needs of the country. Even worse, their “unfettered free market” policies resulted in this financial crisis.

So now we need to find ways to pay for fixing the crisis, such as raising the tax rate from 35% to39% on citizens making over $250 thousand annually. Republicans claim that will hurt owners of small businesses, and therefore, hurt the economy. The Obama administration needs to debunk this argument factually with real examples. For example, what is the median income of small business owners? Let’s say they pay themselves $500 thousand, many times more than the average American worker and many times more than their own employees. The additional 4% tax increase is $20,000., leaving $480,000 …. still many times more than the average American worker and many times more than their own employees. How will that hurt the company and the economy?

But there is also a dirty little secret. Many small business owners claim personal expenses (vacations, private school tuition, cars, restaurants, theater tickets, and much, much more) as deductions because IRS rarely audits small business returns. These are not legitimate deductions and is simply tax cheating. Whether intentional or not, the IRS had been badly understaffed under the Bush administration and IRS did not make small business returns a priority. Under Obama, IRS not only needs to go after offshore tax cheats, but also small business cheats. There’s a lot of uncollected tax revenue out there!

The Republicans talk about taxes as though they were the Bubonic Plague or the Ebola Virus. Democrats need to take a more aggressive response. Yes, talking about why we should all pay our fair share may be politically risky. But, the public may respond more favorable by showing how much cheating has gone on. After all, when your neighbor cheats, you wind up paying some his/her share of the costs of government. We can restore the economic health of the country if every one is a responsible citizen. Yes we can!