The current economic meltdown — frozen credit, big banks needing bailouts, people losing their homes, mounting unemployment — should offer proof positive that giving tax breaks to the wealthy and to corporations because they “create jobs” is a bunch of hooey.
For the last generation or so, the political right has spoon fed the American public a bunch of economic gobbledygook, starting with the aforementioned theory. If it really worked, we’d have more jobs than ever.
Another fable concerns how the CEOs and top brass making ultra-big bucks — including obscene bonuses — deserve that compensation because their astute business acumen keeps their companies afloat.
As I watched seven or so bank bigwigs testify before a congressional committee this week, two things became readily apparent: First, they don’t live in anything resembling the real world; and second, if they were that good at what they do, their companies wouldn’t have screwed up so badly.
Don’t buy the bunk that all kinds of outside factors created this huge financial crisis, that it was beyond anyone’s control. If that were so, wouldn’t all banks be affected?
My bank, Centra in Uniontown, isn’t lining up for a federal handout. In fact, here’s what Douglas J. Leach, chairman, president and CEO, said regarding Centra’s performance for the third quarter of 2008: “We reached our highest level of profits since opening our doors in 2000. Year-to-date earnings for the first nine months of 2008 were $5.78 million, a 23 percent increase over the first nine months of 2007, and a record level for the company. For the quarter, net income was $2.03 million, representing a 22 percent increase over the same period last year, also a record level of earnings.”
That performance coming from a bank that has branches in Fayette County, Pa., Morgantown and Martinsburg, W.Va.; and Hagerstown, Md. Those places aren’t exactly Manhattan or southern Florida when it comes to aggregate wealth. Maybe Leach should be running Citibank or Merrill Lynch. He seems to know more about what he’s doing than the folks currently at the helm.
And I bet his bank doesn’t even hand out billions of dollars in bonuses, which makes its profitability even more amazing. After all, you’ve got to pay huge sums to attract and retain all that top talent, right?
Tax calculations
My federal income tax bracket is 25 percent. According to Forbes.com, in 2007 Bill Gates was the U.S.’s richest person, worth $56 billion. According to the IRS tax calculator, anyone earning more than $357,000 is in the 35 percent tax bracket.
Thus, in broad terms Gates should be paying $17.85 billion per year in federal income tax. I wonder who gets more tax deductions and has more shelters for income, guys like Gates, or people like you and me? Oh, wait, I almost forgot … Gates is one of those rich people who create jobs for the rest of us, so he’s supposed to get the most preferential treatment.
Keep the money at home
Much of Pennsylvania is sitting atop the Marcellus Shale, a lucrative vein of natural gas estimated to be worth in the billions of dollars.
Gov. Ed Rendell wants to create a natural gas extraction tax, projected to bring in $632 million, that would go to the state’s general fund. State Rep. Bill DeWeese, D-Waynesburg, is reintroducing legislation that would permit the value of oil and natural gas to be assessed for taxation purposes.
But DeWeese wants to ensure that additional tax revenue stays in the local area, meaning school districts, counties and municipalities should get a cut of the booty.
DeWeese’s approach makes sense. After all, the host counties for slots parlors get big bucks each year just because they have those facilities. In fact, Washington County is getting about $12 million dollars this year from gambling at The Meadows Racetrack and Casino.
Paul Sunyak is editorial page editor of the Herald-Standard. You can reach him at 724-439-7577 or psunyak@heraldstandard.com
