Sunday, August 15, 2010

King James and His Dentist


The civil engineering profession, especially the large portion engaged in the public infrastructure segment, needs tax revenue to survive and grow. Our projects are funded from tax revenues - - income tax, gas tax, property tax, sales tax - - we should be as interested in tax policy as the accountants. In fact, when you call the main number at the national American Society of Civil Engineers offices and get put on hold, you should hear the Beatles Taxman.

This is why the fight on Capital Hill over whether to extend the Bush tax cuts is about many things - - one of the things it is about is revenue that supports the design and construction of public infrastructure. Our debates seem to overlook this fact. We also overlook that between 2002 and 2007, for instance, the bottom 99% of incomes grew 1.3 % a year in real terms - - while the incomes of the top 1% grew 10% a year. That 1% percent accounted for 2/3 of all income growth in those years. Yet our current tax bracketology has not kept up with this inequality. Our current system sets the top bracket at $375,000, with a tax rate of 35%. The second bracket starts at $175,000 for individuals - - they pay 33%. What this means, the current issue of The New Yorker magazine says it best:

This means that someone making two hundred thousand dollars a year and someone making two hundred million dollars a year pay at similar tax rates. LeBron James and LeBron James's dentist: same difference.

We need higher individual tax brackets - - something in the 50% range at the upper levels. We can call it the "Elin Nordegren" tax strategy or policy - - named after the future former wife of golfer Tiger Woods. Once she gets her 50% cut of the Woods Empire, and takes up residency in her native Sweden, she will be subject to an upper bracket of 59.09%. So a billion dollar empire, taxed at two wildly different rates - - the Swedes enjoying the opportunity for much greater levels of public financing and public improvements.

I guess there could be a risk, that if King James is in a 50% tax bracket, he and others would just depart for greener pastures ("I'm going to take my talents to Bologna") - - but moving to the Italian basketball league would result in a 47% tax bracket. And if he just stays and is in a 50% bracket and still wants his current cut? $1,000 seats and $20 beers - - you end up effectively taxing the upper 1% anyways.

Let's be smart - - we need additional revenue for bridges, dams, and water plants. And taking it from the likes of Mr. James and Mr. Woods should not be a moral or political dilemma for anyone - - especially a civil engineer.


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