In his State of the Union address on Tuesday night, US President Barack Obama denounced that country’s bottom heavy tax system, among other things, as well the fact that in many parts of America women still do not receive equal pay for equal work done and pledged to do all he could to change both situations.
Proposing that millionaires (persons whose annual income is a million and more) should pay at least 30% tax, Mr Obama pitched several other changes aimed at narrowing the chasm between the super wealthy 1% and the other 99% of Americans struggling with finances in a country whose economy has taken more than a few hard knocks over the past several years.
It was clear that the American President was responding to the grouse that spawned last year’s ‘Occupy’ protests that took first Wall Street by storm before quickly spreading to major US cities and then several others around the world.
Political analysts, responding particularly to Obama’s tax reform proposal on Tuesday night, examined the positive impact it could have on his bid for a second term in the White House. However, effectively making Obama’s point even before he uttered a word, one of his would-be opponents for that post, billed as one of the wealthiest presidential candidates in the history of the US, Mitt Romney, had earlier on Tuesday released his tax returns, which revealed that he and his wife paid a tax rate of 13.9 per cent in 2010, which may go up to about 15.4 per cent for last year.
That the wealthy could afford to pay more taxes and still remain wealthy is a no-brainer. As economist and philanthropist American Professor Jeffrey Sachs is fond of saying, there are enough resources in the world to afford all of its citizens, reasonably comfortable lives; they just need to be more equitably distributed. Sachs does not advocate that wealthy people don sackcloth and ashes, but that they consume only what they need, waste less food, money, energy and other resources and give more to the less fortunate. In other words, live well, but with a conscience; a maxim that is apolitical and not difficult to assimilate. In fact, those who seek to perpetuate vast financial inequality are nothing but greedy.
Tax reform is always a hot campaign issue. Lower taxes could mean the difference between a rock bottom, down-and-out life and getting by; or between getting by and comfortable for some people. In the run up to last November’s general and regional elections here, the two opposition groups made a point of promising tax reform if either of them was elected.
The Alliance For Change promised to lower the 16% value added tax (VAT) to 12%. It also promised to raise the income tax threshold to at least $50,000 in order to offer more relief to Guyana’s poorest and to reduce income tax – PAYE – which currently stands at 33.3% to 25%.
A Partnership for National Unity (APNU) had gone even further, promising to raise the income-tax threshold to $100,000 and reduce VAT from 16 per cent to 10 per cent.
Neither party won at the polls, but in an unprecedented and unexpected turn of events, the two combined have the majority in the Parliament. The opportunity to prove the veracity of their promises remains in reach. Of course, they would be expected to negotiate with the government and to reach a compromise that would make a difference in the lives of their political base. It was US Ambassador to Guyana Brent Hardt who said, after the results of the elections were announced, that Guyana had won. What happens in the National Assembly, particularly with regard to the upcoming national budget will prove or disprove the prophecy of his words.
