Taxes and the future

This will probably be my last entry before Christmas, as I'm about to fly home for the holidays. Yesterday, P and I went to the mall to do a little Christmas shopping, and it wasn't nearly as packed as I expected. I hope that doesn't bode ill for retailers this season, but then times are still rough for a lot of people. We went to a Purdue Alumni event last week at which the speaker claimed 70% of Americans will be self-employed in 25 years if current trends continue.

If he's right, I wonder if that will be the logical conclusion to (almost) unbridled capitalism. Will we become a nation of salesmen, everyone trying to hustle everbody else? Maybe that's too harsh a word, but once we all find out what it's like to try to sell our services/products to those who want/need them, I wonder if we'll also learn how to see through everybody else's sales pitch. There's a lot of faith put in "market forces", but the fact is the best guy for the job doesn't always get the business, money corrupts, and if everybody's worried about their next sale, the culture of this country's going to change-and probably not for the better.

Michael Moore makes the point in Downsize This that if it was true that corporations' only responsibility was to their shareholders, every corporation would sell crack cocaine-huge profits, loyal customers, low overhead. But the fact is, they also have a responsibility to many other groups (the government, the community that supports them, their employees); they just don't like to admit it, maybe not even to themselves. I've never attended business school, but I've seen enough on the subject to have an idea of what those people are being taught. The inevitable result was visible to everyone over the last few years.

I don't see anything wrong with being rewarded for doing a good job, but what message is sent when executives are rewarded for doing a bad job? The example that comes to mind is when millions of dollars in bonuses are awarded despite plant closings and layoffs. I don't think it would mean the downfall of these companies if these executives would forfeit their bonuses-not their salaries, people-to keep these people employed through a downturn (and in fact, this has happened, rarely). The employees would undoubtedly be that much more loyal and appreciative, maybe even more productive. I imagine the reply is, a company that expected such a good turn would not be able to attract high quality applicants for those executive positions. I guess it depends on your definition of "high quality".

In the last couple of years, the big automakers have come around to supporting government-run health care. The reason? The benefits they pay current and retired employees (won through decades of union bargaining) are believed to be more than the raise in taxes they're likely to face under a government health system. And in the current tax climate, they're probably right. After all, if the Republicans can just continue borrowing to avoid raising taxes long enough, they won't have to worry about the consequences.

Taxation should not be a dirty word. If the country decides it is worthwhile to have national health care, or more homeland security, or a trip to Mars, we must be willing to pay more for it. If recent history is any indication, raising taxes does more for the economy than lowering them (see Clinton vs. Bush II). This may be counterintuitive, but there it is. When business grads decide priority number one is to pay as little tax as possible, they sometimes make decisions that are morally compromised from the start. I know accounting rules are complicated (I was an accountant for several years), and interpretation matters, but if you're always trying to tiptoe the line, sooner or later you're going to step over it. I wish everyone would take a little step back to find surer footing.