On Wednesday in Washington, D.C., a group of 200 people staged a protest outside the Hyatt Regency, the venue of a meeting hosted by the Campaign to Fix the Debt. The meeting's aim was to "open dialogue on the best path forward on America's growing debt problems," according to a press release from the Fix the Debt organization.
So why would a group of protestors object to such a noble cause? Most people would like to fix the debt. I know I certainly would. These protestors carried placards saying, "Fix the Greed. Save Medicare, Medicaid and Social Security."
Fix the greed?
The protestors, members of various organizations such as Center for Media and Democracy, Our DC and the AFL-CIO, call the Campaign to Fix the Debt a "corporate front group" which is planning to "gut Social Security, Medicare and Medicaid while preserving their own corporate tax loopholes." Indeed, more than 90 CEOs are members of the Fix the Debt campaign's Fiscal Leadership Council. Some of these CEOs also serve on the Business Roundtable, which recently announced fixes to the entitlement programs such as raising the Social Security retirement age to 70 and the Medicare eligibility age to 70.
The protestors find it repugnant that corporate CEOs are involved in these efforts to fix the debt by tampering with social programs. "There has to be a refocusing of the discussion on corporate welfare and corporate tax loopholes before we can begin having a discussion about cutting the social safety net," says James Adams, a spokesperson for Our DC, a nonprofit whose mission is to bring good jobs to the District of Columbia. "America ain't broke. It's just that many of these corporations aren't paying their fair share."
Phone calls and emails to Campaign to Fix the Debt were not returned. I looked at the FixTheDebt.org website, and couldn't find any concrete solutions to fix the debt. But among the organization's core principles is to "reform Medicare and Medicaid," and "strengthen Social Security." The plan to fix the debt should "include comprehensive and pro-growth tax reform, which broadens the base, lowers rates, raises revenues and reduces the deficit."
Lowering tax rates and raising revenues seem to be at odds. I asked my colleague Kay Bell about the paradox, and she replied: "Deficit hawks love to use the personal budget analogy: 'When you, meaning average American families, have to deal with your budgets, you know that some expenses have to go.'"
But folks in lower tax rates find their budgets are already squeezed. Adams of Our DC says the protesters at Wednesday's summit notice when a medication increases $5 or when there's a decrease in reimbursements. "They look at the $23 million salary that the CEO of Verizon is making and say, 'Come on, who can bear the brunt of this?'"
"Meanwhile, the high earners," says Kay Bell, "don't usually pinpoint which tax breaks they would be willing to forgo."
Higher tax rates is a touchy subject, especially among the wealthy. This is true even though our highest tax rates are among the lowest that the richest taxpayers have had to pay over the past century. The table below shows that the highest tax rates are near their lows relative to earlier decades.
The other day I received notification that an increasing number of America's wealthy individuals are thinking about moving abroad to escape taxation here. "When high-net-worth individuals are taxed to perceived excessive levels, they simply move to lower tax jurisdictions -- because they have the resources to do so," according to Nigel Green, CEO of the deVere Group, an international financial advisory firm with offices in roughly three dozen countries that cater to expatriates.
Where are the tax-haven hot spots, I asked? "If they give up their passports -- as an increasing number are doing, official figures show -- then it would be anywhere with tax less than 30 percent: The Cayman Islands, Hong Kong, Thailand, Malaysia and the Philippines are amongst the popular destinations," was the reply.
What do you think about Americans who make their money here and then renounce their citizenship and leave the country to avoid paying taxes here?
Follow me on Twitter @BWhelehan.
Barbara Whelehan is a co-author of "Future Millionaires' Guidebook," an e-book written by Bankrate editors and reporters. It is available at Amazon, Barnes & Noble, iBookstore and other e-book retailers.