Relieving Taxpayers From Crisis Costs

Ireland’s new leadership does not believe that either companies that operate within its borders or its citizens should carry the entire cost of pulling the nation out of debt. That supposes that the EU and IMF should take part of the burden as if the Irish were not at fault for their own problems.

The push to get taxpayers off the hook has gained momentum in Greece, Spain and Portugal. The movement in Greece is driven by the nation’s citizens and not the government. The administration and legislature there have made it clear that taxes paid by businesses and individuals are part of the nation’s austerity program. The Greeks have responded with a tax strike. Many people have refused to pay he higher taxes, an easy path for some who have not paid taxes in the past because of lax enforcement by the government.

Irish leadership refuses to raise corporate taxes despite pressure from the EU, led by Germany. There is probably no other way to close the budget gap, according to those nations who aided Ireland by setting new financing. Ireland’s recently elected rulers were put in office because they said they would resist efforts to balance their budget on the the backs of their people and firms that do business there.

The no tax movement has subtly made its way to the US. Congress kept the Bush tax cuts in place although there is a powerful economic argument that higher taxes would help close the budget gap. That is not the end of it. Nearly every poll taken about the attitude of Americans about cuts to Social Security and other entitlements show people are against such actions. Members of Congress and even the President understand that their jobs are at stake if they push for changes to entitlement payouts or higher taxes on individuals to pay the future costs of them. The “kick the can down the road”  has become part of the resistance of new taxes in the US and much of Europe.

There is an important distinction between Ireland and the US. Ireland needs money now to close its deficit and stop the rise in its national debt. Americans can argue, perhaps with reason, that the trouble with the national debt and the increased cost of entitlements will not become acute for another five to ten years. In the meantime, as taxpayers, they insist that they can buy time. Perhaps a future improved rate of GDP growth will help fund the deficit and make higher taxes unnecessary.

Death and taxes. Perhaps the tax part can be avoided.

Douglas A. McIntyre