Why we must raise taxes on the rich

[Deathravin]

http://www.salon.com/news/politics/war_room/2011/04/04/tax_disparity_income_2012_robert_reich


It's tax time. It's also a time when right-wing Republicans are setting the agenda for massive spending cuts that will hurt most Americans.

Here's the truth: The only way America can reduce the long-term budget deficit, maintain vital services, protect Social Security and Medicare, invest more in education and infrastructure, and not raise taxes on the working middle class is by raising taxes on the super rich.

Even if we got rid of corporate welfare subsidies for big oil, big agriculture, and big Pharma -- even if we cut back on our bloated defense budget -- it wouldn't be nearly enough.

The vast majority of Americans can't afford to pay more. Despite an economy that's twice as large as it was thirty years ago, the bottom 90 percent are still stuck in the mud. If they're employed they're earning on average only about $280 more a year than thirty years ago, adjusted for inflation. That's less than a 1 percent gain over more than a third of a century. (Families are doing somewhat better but that's only because so many families now have to rely on two incomes.)

Yet even as their share of the nation's total income has withered, the tax burden on the middle has grown. Today's working and middle-class taxpayers are shelling out a bigger chunk of income in payroll taxes, sales taxes, and property taxes than thirty years ago.

It's just the opposite for super rich.

The top 1 percent's share of national income has doubled over the past three decades (from 10 percent in 1981 to well over 20 percent now). The richest one-tenth of 1 percent's share has tripled. And they're doing better than ever. According to a new analysis by the Wall Street Journal, total compensation and benefits at publicly-traded Wall Street banks and securities firms hit a record in 2010 -- $135 billion. That's up 5.7 percent from 2009.

Yet, remarkably, taxes on the top have plummeted. From the 1940s until 1980, the top tax income tax rate on the highest earners in America was at least 70 percent. In the 1950s, it was 91 percent. Now it's 35 percent. Even if you include deductions and credits, the rich are now paying a far lower share of their incomes in taxes than at any time since World War II.

The estate tax (which only hits the top 2 percent) has also been slashed. In 2000 it was 55 percent and kicked in after $1 million. Today it's 35 percent and kicks in at $5 million. Capital gains – comprising most of the income of the super-rich – were taxed at 35 percent in the late 1980s. They're now taxed at 15 percent.

If the rich were taxed at the same rates they were half a century ago, they'd be paying in over $350 billion more this year alone, which translates into trillions over the next decade. That's enough to accomplish everything the nation needs while also reducing future deficits.

If we also cut what we don't need (corporate welfare and bloated defense), taxes could be reduced for everyone earning under $80,000, too. And with a single payer health-care system – Medicare for all – instead of a gaggle of for-profit providers, the nation could save billions more.

Yes, the rich will find ways to avoid paying more taxes courtesy of clever accountants and tax attorneys. But this has always been the case regardless of where the tax rate is set. That's why the government should aim high. (During the 1950s, when the top rate was 91 percent, the rich exploited loopholes and deductions that as a practical matter reduced the effective top rate 50 to 60 percent -- still substantial by today's standards.)

And yes, some of the super rich will move their money to the Cayman Islands and other tax shelters. But paying taxes is a central obligation of citizenship, and those who take their money abroad in an effort to avoid paying American taxes should lose their American citizenship.

But don't the super-rich have enough political power to kill any attempt to get them to pay their fair share? Only if we let them. Here's the issue around which Progressives, populists on the right and left, unionized workers, and all other working people who are just plain fed up ought to be able to unite.

Besides, the reason we have a Democrat in the White House -- indeed, the reason we have a Democratic Party at all -- is to try to rebalance the economy exactly this way.

All the President has to do is connect the dots -- the explosion of income and wealth among America's super-rich, the dramatic drop in their tax rates, the consequential devastating budget squeezes in Washington and in state capitals, and the slashing of vital public services for the middle class and the poor.

This shouldn't be difficult. Most Americans are on the receiving end. By now they know trickle-down economics is a lie. And they sense the dice are loaded in favor of the multi-millionaires and billionaires, and their corporations, now paying a relative pittance in taxes.

Besides, the President has the bully pulpit. But will he use it?

[Tgo01]

The rich need to pay more so I can retire at the age of 40, am I right?

[Drew]

So much FUD.

[Warriorbird]

Obama won't do any of that... but neither did Clinton, oh tiny angry pundit guy.

[~Rocktar~]

HUmmmmm, Regan lowered the tax rate on the rich and increased tax revenues as well as the ever slow and sure shift from the late 50s or so moving the tax burden from the lower and middle class to the middle and upper class. Now, we have nearly 50% of the people not paying any income tax on the bottom in yet consuming the majority of the tax expenditures.

Just more of the same dumb wealth redistribution tactics that have continued to fail.

[Clove]

Now, we have nearly 50% of the people not paying any income tax on the bottom in yet consuming the majority of the tax expenditures.

Just more of the same dumb wealth redistribution tactics that have continued to fail.A.I.G.

[~Rocktar~]

A.I.G.

Has no relevance.

[Cephalopod]

HUmmmmm, Regan lowered the tax rate on the rich and increased tax revenues

Correlation does not prove causation. (see also: Reagan's subsequent and repeated tax increases)


Now, we have nearly 50% of the people not paying any income tax on the bottom in yet consuming the majority of the tax expenditures.


When you're going to parrot these things, at least get them right and don't be so hyperbolic. (For example, you're referencing [wrongly, it's not 0] a statistic about income taxes while referring to expenditures that are drawn from payroll taxes.)

[~Rocktar~]

Correlation does not prove causation. (see also: Reagan's subsequent and repeated tax increases)


Lowering tax rate while reducing exclusions and loopholes increased tax revenue. Causation is and was clearly cited both then and now by most learned people.



When you're going to parrot these things, at least get them right and don't be so hyperbolic. (For example, you're referencing [wrongly, it's not 0] a statistic about income taxes while referring to expenditures that are drawn from payroll taxes.)

http://finance.yahoo.com/news/Nearly-half-of-US-households-apf-1105567323.html?x=0&.v=1

No, I was clear, about half of Americans don't pay income tax and those are in the low and middle income brackets. Meanwhile low and middle income people receive the majority of entitlement benefits, significantly greater benefit from public transport than those of higher income classes and greater benefits from social support systems than other income brackets. Since these categories make up the majority of the budget other than defense and debt service, both of which can be argued to be about equal value to everyone, the lower income brackets are clearly consuming the majority of tax revenue while adding the least if any at all. And the numbers continue to get worse and worse while entitlements grow and the number of tax payers fall. This is further exacerbated by adding in large numbers of people outside the tax system consuming public resources e.g. Illegal Aliens.

Have a good night.

[Gan]

With money comes power. Especially political power.

You will have a better chance getting the deadbeats off of welfare then you will have of stiffing the rich to pay for said deadbeats by raising taxes anytime soon.

[Tilnam]

normally i would be inclined to debate on this. However, anything that comes from the salon is a big piece of horse shit. Every single article written there is written with an unfair bias, and always presents only one side. It is crap, pure and simple.

[Parkbandit]

normally i would be inclined to debate on this. However, anything that comes from the salon is a big piece of horse shit. Every single article written there is written with an unfair bias, and always presents only one side. It is crap, pure and simple.

Robert Reich is an award winning, dwarven journalist. How dare you.

[Keller]

HUmmmmm, Regan lowered the tax rate on the rich and increased tax revenues as well as the ever slow and sure shift from the late 50s or so moving the tax burden from the lower and middle class to the middle and upper class. Now, we have nearly 50% of the people not paying any income tax on the bottom in yet consuming the majority of the tax expenditures.

Just more of the same dumb wealth redistribution tactics that have continued to fail.

The United States Congress writes laws, not the President.

The United States Congress lowered the tax rates for everyone in 1986. The United States Congress also removed a host of commonly exploited tax shelters. In effect, the United States Congress ensured that rich people paid even more tax than they did before. Hence, ergo, you know, the increased tax revenues.

[~Rocktar~]

Thank you Captain Superfluous.

Just like Congress enacted the massive piece of shit called Obamacare, Congress enacted the tax code changes under Regan. In both cases, they carry the sitting President's stamp of approval.

It is also true that under the changes in the tax code and the changes in the economic culture, the economy recovered from the "malaise" and grew quite well. So, maybe, lowering the tax rate, clearing up loopholes and stopping letting nearly 1/2 of the population have a pass on income tax might be a good thing.

[Back]

We need to “equalize” the taxes on the rich because giving them a break is letting them float on the back of the middle class. The system is built for the rich.

[Delias]

Causation is and was clearly cited both then and now by most learned people.



"Most learned people"? Save your weasel words for wikipedia. Also willing to bet that "most" is a far from accurate term...

[Back]

Its not every day I close all political threads. Cheers!

[Jarvan]

Can anyone honestly think someone should pay 70+ % of their earnings in taxes to the government every year?

What reason would anyone have to strive to be one of those "wealthy". Not to mention I always laugh when someone starts using the term "Super Rich". How about we make a new tax bracket then, those that earn 1 billion a year can pay 70% of their income. Or would the ideological think 100 million, or 10, or 1? Hey you know what, we could get ALLOT more done if we just taxed everyone at 70%.

Mathematically, if you really want to get rid of the deficit and the debt, you would increase taxes on the middle class. Personally I am not for this really either. Just saying. People were bitching about the fairly small supposed increase in deficit to keep the tax levels on the rich the same, but ignored the HUGE increase keeping the middle class ones caused.

I say we just adopt a national sales tax, say 10% or maybe 15. Everyone pays it, period. Stop income taxes, get rid of the IRS.

[crb]

If 70% was the FEDERAL income tax rate the actual rate someone living in say... New York City, would pay in total taxes (state, local, property, sales) etc would approach what? 90%?

Anyways... I find it interesting this editorial mentions how tax rates have changed since the 1940s. Fun facts for you to mull over.

1. Since the end of WW2 the highest EVER amount of taxes collected was something like 20.6% of GDP. Republican President, Democratic President. 70% rate on rich, 35% rate on rich. The higher the tax rates, the more it depresses GDP, it is a complete dynamic system. And no matter what anyone has ever done, the taxes collected as a percentage of GDP has never exceeded 20.6%

2. Obama's budget is 25% of GDP.

3. In order to balance the budget with taxes, Obama would need to raise taxes enough to collect 25% more revenue than any President has ever been able to do.

Obviously we do not have a tax problem, we have a spending problem. Spending more than 20% of GDP is fiscal insanity.

http://www.project.org/images/graphs/Receipts-by-Percentage-of-GDP.jpg

Also, since the end of WWII, no President, Republican, or Democrat, has EVER put forth a budget that spends as much as Obama as a percentage of GDP. He even puts Reagan to shame. The last time we spent more than Obama wants to spend as a percentage of GDP, we were fighting the Nazi's and Japanese.

[crb]

The thing I find offensive about the whole argument in the original post is that it centers on pretty much on some government enforced fairness. I find it offensive, as I find communism and socialism offensive.

To me, equality is not everyone being rich, equality is everyone having freedom to pursue wealth. To force equality of outcome over equality of opportunity you are by necessity removing freedoms from one group to favor another group. That is wrong.

The standard of living for the average US citizen is higher today than at any point in history, shouldn't that be a good thing? Instead the author focuses on the wealth of the extreme top and thinks it has too high a multiple on it, saying it isn't fair that these people are that much more rich.

So it isn't, in the end, about improving quality of life for the poor, that isn't where he is coming from, he is obsessed with the scoreboard he keeps in his head, and it boils down to plain green eyed envy. They have more than I have and I don't like it.

[Clove]

Has no relevance.Corporate welfare to the tune of several hundred billion dollars certainly does in light of your statement.

[Latrinsorm]

What reason would anyone have to strive to be one of those "wealthy".Because the way our tax system works, people wouldn't pay 70% on everything, they would pay 70% of every dollar over a billion. The reason they have is to get more money, which they always would.
Mathematically, if you really want to get rid of the deficit and the debt, you would increase taxes on the middle class.Do you have figures for this assertion?

[crb]

It has to do with a broad base Latrin. You'll even see people like Austin I'm-a-Ghoulish-Bee poopooing the idea of like a millionaire's tax (new tax rate on 1m+) because there simply aren't enough millionaires to make a sizable dent in our trillion dollar budget deficit.

[Kembal]

Robert Reich is an award winning, dwarven journalist. How dare you.

Um....Reich's a economist and the former Secretary of Labor under Clinton. Not seeing how anyone could accuse him of being a journalist.

[Latrinsorm]

I can certainly understand that a thousand and one nickels beats ten fives, I would just like to see specifics.

[~Rocktar~]

Corporate welfare to the tune of several hundred billion dollars certainly does in light of your statement.

And how, in your fevered microscopic cell structure loosely classified as a brain did you figure that it applied to a discussion about the irrational and failed policy about raising taxes on the rich?

[Parkbandit]

Um....Reich's a economist and the former Secretary of Labor under Clinton. Not seeing how anyone could accuse him of being a journalist.

Is it the word "journalist" that is confusing you so? Here, let me help:

Journalist - One whose occupation is to write for any of the public news media, such as newspapers, magazines, radio, television, or internet; also, an editorial or other professional writer for a periodical.

Here is a list of works.. it's quite extensive.

http://robertreich.blogspot.com/

[Parkbandit]

I can certainly understand that a thousand and one nickels beats ten fives, I would just like to see specifics.

Google it.. shouldn't be too difficult. I would look at the wealth/population statistics.

[Bobmuhthol]

<<Can anyone honestly think someone should pay 70+ % of their earnings in taxes to the government every year?>>

The United States thought it in the past. European countries think it today.

[Latrinsorm]

Google it.. shouldn't be too difficult. I would look at the wealth/population statistics.You want me to google Jarvan's proposed tax system?

[Bobmuhthol]

You want me to google Jarvan's proposed tax system?

lol

[Parkbandit]

You want me to google Jarvan's proposed tax system?

I was talking more about your response to crb:


It has to do with a broad base Latrin. You'll even see people like Austin I'm-a-Ghoulish-Bee poopooing the idea of like a millionaire's tax (new tax rate on 1m+) because there simply aren't enough millionaires to make a sizable dent in our trillion dollar budget deficit.

[crb]

Another argument in favor of a broad base is there is less volatility. Rich people tend to have far greater variation in their income. A small business owner, or someone who primarily has investment income, can see their income swing wildly depending on the economy. It is hard to balance a budget when your tax base can have income swings of 50%.

Wages are far more stable. Even if unemployment goes up 10% in real terms, thats just a 10% move.

This is why reason why California is such a basket case. They relied far too much on transient stock market income from all the tech companies.

[Bobmuhthol]

Are you really going to argue that people don't make stupid amounts of money every year regardless of economic conditions? Look at that guy, whatever his name was, that made those investments with GS to benefit from Greenspan's prediction that housing markets were going to collapse. He should be taxed pretty fucking highly, IMHO, compared to someone who makes $25,000/yr.

[Parkbandit]

Are you really going to argue that people don't make stupid amounts of money every year regardless of economic conditions? Look at that guy, whatever his name was, that made those investments with GS to benefit from Greenspan's prediction that housing markets were going to collapse. He should be taxed pretty fucking highly, IMHO, compared to someone who makes $25,000/yr.

Isn't he already being taxed pretty fucking highly compared to someone who makes 25K?

[Bobmuhthol]

I don't know if he is or not. He could be super clever at exploiting the tax code. My point is that it's an example of why it makes no sense to argue that we should focus on taxing people who make less money because people like him exist.

[Warriorbird]

Another argument in favor of a broad base is there is less volatility. Rich people tend to have far greater variation in their income. A small business owner, or someone who primarily has investment income, can see their income swing wildly depending on the economy. It is hard to balance a budget when your tax base can have income swings of 50%.

Wages are far more stable. Even if unemployment goes up 10% in real terms, thats just a 10% move.

This is why reason why California is such a basket case. They relied far too much on transient stock market income from all the tech companies.

Conveniently leaving out the bit where they paralyzed their revenue stream.

[~Rocktar~]

<<Can anyone honestly think someone should pay 70+ % of their earnings in taxes to the government every year?>>

The United States thought it in the past. European countries think it today.

By that rationale we should have all black people enslaved because the U.S. thought that it was ok in the past and I am sure that some Europeans think it is ok today.

Oh, and looking to the intervening posts, are you really arguing that we should ignore a much more reliable and quantitatively larger tax revenue stream simply because some individual was super smart in his contrarian investing strategy? If 50 million people make 20K or less and all contribute 10% of their income, that is going to be a lot more reliable and steady income stream than taxing a few thousand millionaires or even a few dozen billionaires 50% of their income.

[~Rocktar~]

Conveniently leaving out the bit where they paralyzed their revenue stream.

And support a metric shit ton of socialist, echo-whacko, extremist and just plain pork barrel bullshit along with paying for welfare, medical care, education, college and incarceration of a massive number of tax dodging illegal aliens.

[Bobmuhthol]

Uh, what rationale? When the fuck did you see me supporting a 70% tax rate? I just pointed out that it's pretty naive to question it as a possibility, since it both has happened before and still happens now. Jesus Christ.

I still don't understand this ridiculous "reliability" argument. The same millionaire (btw, millionaire does not refer to annual income, so what the fuck?) might not earn a million dollars every year, but SOMEONE ELSE will when he doesn't. There will always be a sufficient number of sufficiently rich people to tax them a lot and have the tax revenue be much larger than taxing the poor.

[Warriorbird]

And support a metric shit ton of socialist, echo-whacko, extremist and just plain pork barrel bullshit along with paying for welfare, medical care, education, college and incarceration of a massive number of tax dodging illegal aliens.

None of what you just brought up justifies tax cutting and the decimation of their property tax system.

[~Rocktar~]

None of what you just brought up justifies tax cutting and the decimation of their property tax system.

In case you misread what I posted, I was agreeing with what you said and adding too it dumbass. For fucks sake you can't even manage to leave a post of mine alone that supports your comment without adding some fucknuttery to a reply. What the fuck is the matter with you and is it contagious?

[Kembal]

Is it the word "journalist" that is confusing you so? Here, let me help:

Journalist - One whose occupation is to write for any of the public news media, such as newspapers, magazines, radio, television, or internet; also, an editorial or other professional writer for a periodical.

Here is a list of works.. it's quite extensive.

http://robertreich.blogspot.com/

Yeah, that's not his occupation. He's a professor of public policy at Berkeley.

[Kembal]

Isn't he already being taxed pretty fucking highly compared to someone who makes 25K?

His tax rate is 15%, if I remember correctly, since he did those investments via his hedge fund. (assuming we're talking about John Paulson here)

[Bobmuhthol]

Yeah, John Paulson.

[Parkbandit]

Yeah, that's not his occupation. He's a professor of public policy at Berkeley.

So he doesn't get paid to do a daily blog at HuffPo?

[Latrinsorm]

If 50 million people make 20K or less and all contribute 10% of their income, that is going to be a lot more reliable and steady income stream than taxing a few thousand millionaires or even a few dozen billionaires 50% of their income.You think we should tax people who are below the poverty line?

[crb]

Conveniently leaving out the bit where they paralyzed their revenue stream.

Hmmm? Who is "they" in your retort?

[crb]

Uh, what rationale? When the fuck did you see me supporting a 70% tax rate? I just pointed out that it's pretty naive to question it as a possibility, since it both has happened before and still happens now. Jesus Christ.

I still don't understand this ridiculous "reliability" argument. The same millionaire (btw, millionaire does not refer to annual income, so what the fuck?) might not earn a million dollars every year, but SOMEONE ELSE will when he doesn't. There will always be a sufficient number of sufficiently rich people to tax them a lot and have the tax revenue be much larger than taxing the poor.

No they won't Bob.

There is no economic rule that says if Bill's business does bad, John's business has to do good.

A narrow base is a voltatile base by definition, it is not some made up economic principle, economics on the left and right will tell you this.

Look at Calfornia, in certain periods of time California derived a disproportionate amount of their income from stock market gains via employees cashing in stock options and then paying taxes. This worked when the market was going up, but when the market was going down that went from a shit ton of cash, to near 0.

There was not a magic fairy who then provided California replacement income from some other industry. The money was gone.

Rich people tend to make a disproportionate amount of their income from business pass through income or investments. When markets go down, investment income vanishes almost entirely. When the economy goes into recession, business profits drop dramatically. These swings are far far far more dramatic than swings in the employment rate. In fact, some businesses may even be unprofitable for a few year stretch, producing NO corporate tax income and no business pass through income from the owner.

So, relying on such a narrow group for your tax base will expose your government budget to wide swings in revenue where you could have a balanced budget one year, and without changing spending at all, have a couple trillion dollar deficit the next.

This isn't really that complex a concept.

[crb]

You think we should tax people who are below the poverty line?

I think so. I think the AMT should apply to all Americans and be a minimum of 1%. Or, we change our voting laws so that only people who have made a net payment to help support the federal budget can vote.

Everyone should have at least a little skin in the game, or else they have no incentive to elect fiscally responsible politicians.

[Bobmuhthol]

What's that statistic everyone's always clamoring about? The top 1% pay 90% of the taxes?

So yeah, trust me, there are always sufficiently rich people to pay taxes that it makes more sense to tax them more instead of taxing literally tens of thousands as many people the same amount.

[Warriorbird]

Hmmm? Who is "they" in your retort?

Investigate California's property/corporate property tax system. You'll see something that may SOUND awesome but actually seriously messed them up, given some of their property values.

[Clove]

And how, in your fevered microscopic cell structure loosely classified as a brain did you figure that it applied to a discussion about the irrational and failed policy about raising taxes on the rich?It applies to your statement that the non-contributors spend most of our taxes.

Hey fuckface just because you don't UNDERSTAND the connection doesn't mean there isn't one.

[Bobmuhthol]

http://upload.wikimedia.org/wikipedia/en/thumb/a/a7/United_States_Income_Distribution_1967-2003.svg/800px-United_States_Income_Distribution_1967-2003.svg.png

What was that about SO MUCH VOLATILITY, MUST TAX ONLY THE POOR?

[Firestorm Killa]

It applies to your statement that the non-contributors spend most of our taxes.

Hey fuckface just because you don't UNDERSTAND the connection doesn't mean there isn't one.

Umm yes non-contributors do spend most of the taxes. You do know that most people who make under 250k a year don't pay taxes right? If they did they wouldn't get credits and refunds. But then again GE apparently doesn't pay taxes either. Must be nice to be the presidential ass wiper.

[Bobmuhthol]

You do know that most people who make under 250k a year don't pay taxes right?

Are you fucking retarded?


If they did they wouldn't get credits and refunds.

... are you fucking retarded?

[Warriorbird]

I think you have your answer.

[Latrinsorm]

I think so. I think the AMT should apply to all Americans and be a minimum of 1%. Or, we change our voting laws so that only people who have made a net payment to help support the federal budget can vote.

Everyone should have at least a little skin in the game, or else they have no incentive to elect fiscally responsible politicians.They have multiple incentives, chief among them that poor people aren't necessarily myopic assholes. Let's put that aside for a moment, though. In American history, we have experimented with the broad disenfranchisement of groups of people. In your opinion, have any of these stood the test of time, or do they all stand out as embarrassing relics of ignorance, prejudice, etc.?

[~Rocktar~]

It applies to your statement that the non-contributors spend most of our taxes.

Hey fuckface just because you don't UNDERSTAND the connection doesn't mean there isn't one.

Just because you think there is a connection micro-brain, doesn't mean there is one or that anything you post is relevant. Keep up the poor work, we all need a good laugh.

[~Rocktar~]

What's that statistic everyone's always clamoring about? The top 1% pay 90% of the taxes?

So yeah, trust me, there are always sufficiently rich people to pay taxes that it makes more sense to tax them more instead of taxing literally tens of thousands as many people the same amount.

No. As I have said before and continue to say, everyone should pay something even if it is 1 dollar. They may yet get a refund but at the very least, they should have to pay in 1 dollar and the refund or whatever is kept separate. People who don't file, don't pay and just get paid by the government at tax time are generally seriously disconnected from the realities of responsible citizenship and voting. Is every poor schmuck a dumb lout that has no clue, no, is the majority looking to get more with less and less put in and willing to sell out to the best sounding promise of more money, yes.