With this week’s Presidential and Congressional elections, you might sometimes get the idea that certain voters line up reliably behind certain policies. In fact, the biggest stereotype has been that people with above-average wealth (i.e., the “one-percenters”) never want to pay any taxes. But in the real world, business leaders are trained to apply business logic to the problems in front of them, and when they look at the challenges facing America’s finances, the conclusions they’re coming to don’t fit neatly along partisan lines.
Recently, a coalition of more than 80 CEOs of major U.S. corporations including GE, Boeing, Verizon, Aetna, Microsoft and Goldman Sachs have joined together to tell Congress that it needs to find a bipartisan solution to the so-called “fiscal cliff” (i.e., the changes in tax law and the federal budget that will take place December 31). Longer term, they have asked Washington to address the deficit in a realistic way. The group has publicly argued that, despite the “no new taxes” pledge that many in Congress have signed, raising taxes in some form is inevitable if we are serious about paying down the federal debt. So far, the coalition has raised $29 million to carry this “raise taxes” message to various Congressional districts.
The One Percent Solution came right out of their respective accounting departments. The CEOs say that it makes no mathematical sense to try to fix the deficit without raising taxes, but they also believe there is a significant amount of waste in current government spending. The group has asked Congress to follow a deficit reduction model which calls for both spending cuts and temporarily higher taxes which fall hardest on persons with the most income and wealth.
Why would the one-percenters lobby for a higher tax bill? Interestingly, their letter makes clear that they are not necessarily putting the good of the country ahead of their own interests, but they are putting the welfare of their companies first. They say that the looming fiscal cliff and uncertainty over the budget is costing their corporations meaningful business.
The Financial Services Forum–which brings together the nation’s largest banking institutions–has sent a letter to the White House and Congress asking them to negotiate a bipartisan deficit agreement as soon as possible–and the term “bipartisan” is clear code for “we will accept Democratic proposals to raise taxes as part of the deal.”
The CEOs of big banks and big businesses would almost certainly benefit personally from lower tax rates. Their respective calls to action suggest that the threat of inaction on the economy has finally become too dire to ignore. America’s one-percenters say they are willing to sacrifice a bit of their own income to help the country climb out of its fiscal woes and restore economic growth and prosperity. It is possible that forecasts delivered by their own accounting departments suggest that higher economic growth will more than pay for the temporary cost of higher taxes in the long run.