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Froma Harrop
NationofChange / Op-Ed
Published: Sunday 17 June 2012
“The state is flush right now with gas and oil money, but energy-based economies can go bust as well as boom.”

Why the U.S. is not Greece

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America is not going the way of Greece, and North Dakota has shown us why. Residents were given the opportunity Tuesday to vote their property taxes out of existence, and they chose not to take it.

Why? Property taxes fund local government. Without it, communities would lose power to set their spending priorities. Lawmakers in Bismarck would have had to come up with over $800 million to replace the property tax revenue lost in 2012. The state is flush right now with gas and oil money, but energy-based economies can go bust as well as boom. Anyway, serious tax reform should be done in a comprehensive fashion, with personal income taxes, corporate incomes taxes and sales taxes also taken into account.

North Dakota's voters snubbed a ploy by anti-tax forces to grab a tax cut with little thought for the immediate consequences or the future. Let's be clear: Accepting taxation as a reality of modern civilization in no way implies that we like paying taxes or think they're fair or approve of everything they support.

If only self-described conservatives in Washington were so grown-up. Leading Republican voices blame only spending for our debt. They warn that if America follows the Democrats' vision, it will end up broke like Greece.

But spending does not cause debt if enough revenues are raised to cover it. During the George W. Bush era, Republicans engaged in the double insanity of manic spending and reckless tax cuts. By demonizing the surplus left by Bill Clinton as over taxation, they fed an anti-tax culture that has also made us more like Greece.

Greece's economic crisis stems both from heedless spending and a proud tradition of tax evasion. For example, when a tax collector on the island of Naxos recently went looking for cheats, a radio station reportedly broadcast his car's plate number.

Italy is also plagued by a culture of tax dodging.

"Only fools pay," goes an Italian saying. The well to do escape taxation through loopholes, deductions, cash payments and various havens. Italians driving Ferraris to their villas claim near poverty. Newspapers have labeled this behavior "evasion total." Much of the money that government does collect comes from the workers, whose taxes are subtracted from their paychecks — sort of like here.

Many Italians now want to stigmatize tax cheating. An Italian Facebook page called Friends of the Receipts is reporting restaurants and other small businesses that refuse to give invoices or receipts. Italian Prime Minister Mario Monti, an economist, has vowed to go after tax evaders.

Republicans don't publicly support tax evasion, but they do support legal avoidance through the complex tax code. And their rhetoric often stands in the way of sensible dialogue. To call nearly every tax a "burden" and any tax cut, however ill advised, "relief" — or say that raising taxes on high-income people amounts to "punishing success" — transforms taxpaying from an unpleasant duty to an injustice or a sucker's deal. When a debate moderator famously asked GOP presidential candidates whether they'd turn down $10 of spending cuts for $1 dollar of new tax revenues, all eight raised their hands.

A few Republicans have improved the conversation. South Carolina ;Sen. Lindsey Graham broke with party orthodoxy by expressing interest in at least closing some loopholes. And former Florida Gov. Jeb Bush has defended the tax hike endorsed by his father, President George H.W. Bush — a brave effort that may have cost the elder Bush a second term.

One can only hope that softer talk and the vote in North Dakota point to a more mature debate. It would be one that goes: If you want less government, fine, but except during recessions, you must pay for the government you have.

Copyright Creators.com


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ABOUT Froma Harrop
Froma Harrop’s nationally syndicated column appears in over 150 newspapers, including The Dallas Morning News, Houston Chronicle, Seattle Times, Denver Post and Newsday. The twice-a-week column is distributed by Creators Syndicate, in Los Angeles. Harrop has written for numerous other publications, ranging from The New York Times and Institutional Investor, to Harper’s Bazaar and Metropolitan Home. Previously, she covered business for Reuters Ltd., in New York, and was a financial editor for The New York Times News Service. A Loeb Award finalist for economic commentary, Harrop was also honored by the National Society of Newspaper Columnists. Over the years, the New England Associated Press News Executives Association has named her for five awards.

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5 comments on "Why the U.S. is not Greece"

mike morell

June 18, 2012 11:35am

If Romney wins, we could become Greece: Wise that the 1% and corporations vote Repub; congrats! But how dumb for a 99%er vying for the GOP. All these guys want is shafting the 99% to enrich the 1%. They want to wreck the Recovery by imposing deep tax cuts to corporations. That’s how Bush maxed out the credit cards and destroyed the economy and left a huge balance for the next guy, Obama, to pay. No national salvation without Revenue: There aren’t enough funds in Social Security, Medicare, Medicaid, food stamps, school breakfast, Education, the EPA, the Post Office. You can eliminate them all and still have big deficits. Two out of three Americans agree: tax the rich. But Romney’s not happy: He wants deeper cuts for the 1% even if they’re taxed 2.5 times lower than the majority.

gmkuhn

June 17, 2012 5:11pm

Already in May 2010, statistics suggested that the U.S. has 27 times
more people than Greece, 24% more national debt on average per person,
and 34 times more national debt in total.[1] Froma Harrop is right,
the US is not Greece. It's arguably worse.
[1]
http://www.stmartinsystems.com/100506_is_the_US_just_as_indebted_as_Gree...

Clarence Swinney

June 17, 2012 1:30pm

No. We have income 14000 tax 2300 borrow 2200 since 1980 added 9000 under three conservatives'--Their record
600 to 3500 budget
1000 to 10,000 debt
surplus to 1400 deficit
carter 218,000 jobs to 99,000
two dumb wars
Great Recession
Murdered financial markets
alientated 1500 million muslims

Please vote democrats into congress--our hope

bladtheimpailer

June 17, 2012 12:51pm

"Why the U.S. is not like Greece"is simplistic in approach. The two are only comparable on a superficial basis. The U.S. has several enormous advantages or otherwise the U.S. might be much more like Greece. The biggest difference I can think of is that the U.S.$ is used as the world's reserve currency. This entitles the dollar to be propped up by other nations, basically artificially devaluing against the USD. This is done in order to maintain financial and trade cohesion in the global economy. Otherwise many of these coerced nations would absolutely love to abandon the dollar, but in a slow move so there's not a rush for the exit, the loser getting stuck with a lot of devaluing USD's. A replacement currency may be appearing, which could be another currency chosen by a group of nations with much interlocking business or the Special Drawing Rights currency being used by nations to settle trade balances and issued by the international bankers. Eventually the USD will fall and then the comparison with Greece may look a lot more similar.

jeltez42

June 17, 2012 10:54am

Strange that you should base your argument on a very small state with a population of less than 685,000. To their credit, North Dakotans are not stupid. They know that tax revenue has to come from somewhere. They can be anti-tax as much as they want to be, but they do love their government services and again, to their credit, will pay for them. The vote was 75% in favor of keeping property taxes. I very much doubt that you will find that type of response any place else in America, except for other very sparsely populated states like Montana, South Dakota, and maybe Wyoming.

It is also interesting that you bring up the age old Evading the Tax Man game. The US is very much like Greece and Italy in this regard. Those who are rich enough get to legally skip out on paying their full share. The people who end up paying are those who don't make enough money get into the game.

I would even go so far as to say that the US is worse off than Greece, Spain, and Italy combined. We refuse to prioritize spending, start wars of choice and then don't budget for them, we give welfare checks in the millions to companies making billions and we pay people to like us. We also have sold off our seats in government to the highest bidder.

So yes, Ms Harrop, not only is the US not Greece, we are worse than Greece.