USA Today, September 15, 2003
President Bush says he will ask Congress for $87 billion in emergency spending for military and intelligence operations in Iraq and Afghanistan. That's on topof the $79 billion Congress already has approved to pay for the war and its immediate aftermath. Neither of these figures includes an estimated $50 billionmore that will be needed to rebuild Iraq, or any additional expenditures we mayneed for homeland security.How can we afford all this? This coming fiscal year's federal budget deficit already is approaching $500 billion. Add in the extra spending, and it's close to $600 billion. And that's just one year's tab. The total over all the years it will take to stabilize both Iraq and Afghanistan and win the war against terrorism is likely to be far higher.
Bush and the Republican Congress have no real plan to pay for these extra costs. At one time they mentioned Iraqi oil, but the oil won't be flowing in substantial volume until wells and pipelines are rebuilt, which could take years. America's major allies haven't offered to foot the bill. Given that France and Germany are still grumpy about the Iraqi war, and Britain's Prime Minister Tony Blair is taking a great deal of heat about it at home, there's noreason to suppose that they will be offering a lot of financial help.
One thing is certain. Neither the White House nor Congress is considering the best solution: a war tax on the wealthy. Raising taxes is politically unpopular. Bush has wanted only to cut taxes, especially on America's wealthy. Yet, there's a strong history of conservatives and Republicans who have embraced war taxes as the fairest and best way to finance the costs.
Traditionally during wartime, taxes have been raised on top incomes to pay the extra costs of war. The estate tax - overwhelmingly paid by wealthy families - was imposed by wartime Republican presidents Abraham Lincoln and William McKinley. It was maintained through World War I, World War II, the Korean War, Vietnam and the Cold War. Now, the estate tax is being phased out, at least until 2011, as part of the tax cut of 2001.
The top income tax rate rose during World War I to 77%. In World War II, it reached more than 90%. In 1953, with the Cold War raging, Republican President Dwight Eisenhower refused to support a Republican move to reduce it. By 1980, it was still way up there, at 70%. Then Ronald Reagan slashed it to 28%, givingus the lowest top tax rate of all modern industrialized nations. Because Reagankept spending record sums on the military, the federal deficit ballooned. A fewyears after that, the Berlin Wall came down, ending the Cold War. We congratulated ourselves and then faced the largest budget deficit since World War II.
It seems only fair that the rich should pay proportionately more, especially now that the cost of the war against terrorism is rising. They're the only oneswith money to spare. Look at the numbers: In 1979, the top 5% of earners took home 16.4% of total family income, but by 2001, their share had increased to 22.4%. In contrast, in 1979 the bottom 60% of earners took home 31.4% of total income; by 2001 their share had declined to 26.8%.
Besides, the very richest Americans benefit disproportionately from a stable federal government that protects their property and maintains public tranquility.
President Teddy Roosevelt made that case in 1906, arguing that the wartime inheritance tax should continue during peacetime: "The man of great wealthowes a particular obligation to the state because he derives special advantages fromthe mere existence of government."
It is the least the wealthy can do when so many others are sacrificing for the nation. Most wealthy kids never come near a front line. During the first Gulf War, enlistment rates for children of the richest 15% were one-fifth of the national average. Charles Moskos, a sociology professor at Northwestern University and expert on military affairs, notes that in his 1956 Princeton class, 450 of 750 men served in the military. In those days, America still had a draft. Last year, only three of Princeton's 1,000 graduates served.
The Bush administration doesn't seem interested in a war tax on the wealthy. Tothe contrary, the White House has been busily shifting the tax burden away fromthe rich - phasing out the estate tax, cutting taxes on dividends and parcelingout other tax breaks to them. The president says this is the way to stimulate asluggish economy. But the rich aren't going to spend the extra cash. They already spend as much as they want. They're more likely to invest it around theworld, wherever they can get the highest return. Repealing a year's tax cut forthe top 1% would generate almost enough to cover the entire $87 billion of additional spending on Iraq.
A war tax, properly structured, also would prevent the rich from squirreling away their income in foreign tax shelters. An acquaintance from law school, nowa partner in one of Washington's biggest firms, with offices in many countries,recently explained to me one such dodge as we lunched in a swanky restaurant. He and his partners use tax rules to create offsetting taxable gains and losses, then allocate the gains to the firm's foreign partners, who don't pay taxes in the United States. That way, they keep the losses in the United Statesand shelter their income abroad. A war tax, properly structured, would close such foreign loopholes.
I noted he had an American flag lapel pin. "You're supporting ourtroops," I said, referring to it. "Yup," he replied, entirely missing my point."And I can't stand all those naysayers who are knocking America. I mean, we stand or fall together, right?"Exactly. Suggesting that the wealthy should pay more to support the nation in time of war isn't inviting class warfare. It's exploring a deeper meaning of patriotism. The basic question is what we owe one another as citizens. The question seems especially pertinent in a newly dangerous world, in which we stand or fall together.
