Class warfare: By whom?And against whom? |

Class warfare: By whom?And against whom?

Fred Kalhammer

I’ve noticed that certain presidential candidates, declared and undeclared alike, have been using the term “class warfare” recently. It usually comes up when someone suggests in debate that the Bush tax cuts should be rescinded in order to restore equity to the federal tax system because those who have benefitted most from the cuts are those who need them the least. The question that comes to mind in this debate is: In this alleged war between classes, who, in fact, are the warriors and who are the victims?

Progressives (frequently referred to derisively as “liberals” by those on the right) argue that the Bush tax cuts have disproportionately benefitted the rich, citing the fact that 50 percent of tax cut benefits are enjoyed by the wealthiest 10 percent of the population. Those in favor of extending the cuts, of course, can hardly deny that this has been the case; instead, they accuse those who would roll the cuts back of “waging class warfare.”

On the related matter of Social Security, it has been pointed out that at least 9 out of every 10 wage earners pay FICA (Federal Insurance Contributions Act) taxes on 100 percent of their incomes. That’s because most workers earn less than the amount subject to this tax (7.65 percent of salaries, currently capped at $97,500 for 2007). Those who argue that this is unfair because those most able to contribute to the Social Security Trust Fund are taxed on only a portion of their earnings. They go on to note that if all wage earners were taxed equally, say on 90 percent of their incomes, then the solvency of the trust fund – currently estimated to be unable to pay out scheduled benefits in about 35 years – would be assured indefinitely, simply by adopting this measure alone. Those opposed to raising/eliminating FICA income caps tend to lump this idea together with their general opposition to raising taxes, asserting that the people, not the government, are best able to manage their own money.

No doubt those earning over $97,500 are likely to better manage their money (or pay someone else to do so) than those earning less. But what about fairness in the application of our tax laws and assuring a dignified retirement for all Americans, a principal purpose of this piece of New Deal legislation?

And then there’s the matter of the complexity of the federal tax code, consisting of thousands upon thousands of pages couched in prose so arcane as to leave an ordinary reader bewildered. Its language is deliberately obscure, of course, because much of it camouflages a myriad of tax shelters, loopholes, credits, corporate subsidies, and other handouts that benefit those in a position to influence tax legislation.

As a result, only seasoned tax attorneys, specialized CPAs and their ilk can actually understand what the tax code means and how to turn it to their clients’ financial advantage. But how many taxpayers are even aware of this state of affairs, much less capable of paying for the services of these expensive professionals?

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From all the above it seems clear that class warfare is indeed taking place. Ironically, however, the warriors are not those who seek fairness in the application of our tax laws, but rather those persons and entities who stand to gain the most from extending the Bush tax cuts indefinitely and preserving the complexity of our current federal tax code. So the next time you hear a politician accuse an opponent of waging “class warfare,” ask yourself if the accuser and those he or she represents are not themselves the warriors and the rest of us the victims in a struggle for social justice that has been going on for quite some time now, but has greatly intensified since the election of George W. Bush.

– Fred Kalhammer is a retired Foreign Service officer and Stateline resident.