President Obama's "millionaire tax" has generated two sound-bite replies. Not only is he engaging in "class warfare," but he is indulging in sheer political posturing -- there simply isn't a lot of money to be raised by targeting the super-rich. Both charges are mistaken.
Taxation aimed at the rich doesn't create class division -- it responds to the rise of a winner-take-all economy. Conservatives are right to point out that the super-rich pay a big share of federal taxes. According to the Congressional Budget Office, the top 1% paid 28.3% of all federal taxes in 2006, up from 15% in 1979. But the CBO also found that the elite's share of the nation's income more than doubled, growing from 9% to 19% in that same period. Their surge in taxes tracked their increasing command over the nation's resources.
The problem is getting worse, not better. During the boom between 1993 and 2008, the top one percent took more than half of the total increase in national income, as economists Thomas Piketty and Emmanuel Saez have established in path-breaking work. They also show that that the top one-tenth of one percent is doing even better. The elite's share of the national wealth has quadrupled over the past forty years -- growing from 1.28% in 1979 to 5% in 2008.
The rise of the winner-take-all economy has lots of causes -- ranging from the increasing export of high-wage jobs to the remarkable success of top executives in winning mega-million-dollar pay packages. These deep-seated problems require long-term responses. But in the meantime, it's right for the tax code to require the super-rich to share their winnings with the rest of us.
Up to now, President Obama hasn't made out this moral case to the American people. He's chosen a more technocratic message. His tax plan, he has insisted , "is not class warfare. It's math." The issue, the Administration insists, is the deficit, and it is merely asking the rich to contribute their fair share.
But deficit worries aren't enough to counter the charge of class warfare. After all, there are lots of ways to reduce the deficit without focusing on the super-rich. At the bottom of the Republicans' complaint is a moral claim: that citizens should coalesce on the basis of competing views of the public good, not on the size of their bank accounts. The only way to beat this claim is with a competing, and deeper, moral account: it's a mistake to suppose that taxing the super-rich is tainting our otherwise clean society with the stain of class division. To the contrary, a millionaire tax is an appropriate response to the rise of the winner-take-all economy and its extreme concentration of ecomonic power at the top. At the end of the day, the super-rich benefit greatly from the on-going exercise in social cooperation that is American society; it's only fair for the tax system to focus on their great wealth, especially when so many Americans are overwhelmed by economic forces beyond their control.
Which leads us to the second complaint -- that Obama's "class war" won't solve our fiscal problems. Critics charge that there simply isn't much revenue to be gained from millionaire taxes, and so the focus on the super-rich merely diverts attention from the need for more drastic measures.
It's true, of course, that a millionaire's tax is no panacea. But it can and should play an important part of a sensible solution to our long-term problems. To make serious progress, though, President Obama must raise his sights. He has thus far embraced the "Buffett Rule," requiring millionaires to pay an income tax rate no lower than their secretaries. But this focus on high incomes disguises a second, and more fundamental, feature of the winner-take-all economy. Our national wealth is even more concentrated than our national income. According to data compiled by the Federal Reserve, the top 1% owned a 35% of the wealth, as opposed to 21% of the income, in 2006-2007. Imposing a special tax on high wealth can generate very substantial sums. Suppose, for example, that we levied a two percent annual wealth tax on households owning at least $7.2 million -- a sum that puts them in the top one-half of one percent of American households. On very conservative assumptions, this tax would yield at least 70 billion dollars a year -- even after adjusting the most recent Fed data to 2009 to take into account the large losses suffered after the 2008 crisis. This means that, over the coming decade, a wealth tax on the super-rich would yield at least half the $1.5 trillion dollar deficit-reduction target set for the Congressional super-committee.
Wealth taxation is a part of many systems in Europe, and Spain recently embraced it in responding to its budgetary crisis. While it's perfectly appropriate for critics to oppose such a tax on the merits, it's wrong to suggest that a focus on the super-rich can't raise very substantial revenues. Not only is the "class warfare" charge misconceived; so is the notion that it is a cynical effort to disguise the seriousness of our budgetary problems.
More and more citizens believe -- and rightly so -- that we aren't all in this together, and that there isn't a level playing field. After all, the wealthy transmit their privileges to their children, creating, de facto, an American aristocracy. Intergenerational income mobility is lower in the United States than in many European countries. College graduation is highly correlated with family wealth, and it is elite college graduates who earn most and have suffered least from unemployment in the current recession. The rich get richer, and so do their children, while the great majority struggles.
It is the winner-take-all economy, not taxation, that is the moral problem threatening our democracy. Taxes on the rich don't create class division -- they attack it.
Bruce Ackerman and Anne Alstott are law professors at Yale and co-authors of THE STAKEHOLDER SOCIETY.
About our $70 billion/year estimate:
The Fed publishes comprehensive data on wealth distribution. The most recent full survey is from 2007. In preparing a second edition of our 1999 book, The Stakeholder Society (which advocates a wealth tax), we hired Ed Wolff, professor of economics at NYU and the leading expert in the field, to analyze and update the 2007 data to 2009 to reflect the onset of the recession. We base our $70 billion revenue estimate on his analysis. Wolff's static estimate (i.e., one that does not take into account evasion or behavioral reactions) suggests that our proposed wealth tax would raise $140 billion. But we have adjusted this estimate downward to $70 billion to leave a big cushion for behavioral adjustments, evasion, coordination with the income tax, and administrative costs. Better not to over-claim, but there is every reason to think that the yield will be significantly larger than our estimate.
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Millionaire tax sought by Obama is panned by GOP as 'class warfare'
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| Obama | Romney | |
|---|---|---|
| Electoral Votes (270 to win) |
332 | 206 |
| Obama | Romney | |
|---|---|---|
| Total | 65,899,660 | 60,932,152 |
| Percent | 51.1% | 47.2% |
| Democrats* | Republicans | |
|---|---|---|
| Current Senate | 53 | 47 |
| Seats gained or lost | +2 | -2 |
| New Total | 55 | 45 |
| Democrats | Republicans | |
|---|---|---|
| Seats won | 201 | 234 |
Ask them about it.
I was in court this morning as a character witness for Myron, my hotheaded, wealthy and brilliant cousin. Myron was in court because of one of the super-rich, our cousin Alvin. Alvin likes to parade his great wealth and, by default, his great intelligence before us at our monthly cousin’s club.
It started as a simple discussion about taxes. Myron feels that taxing the rich through income, capital gains, and percent of wealth is reasonable, particularly during an economic downturn. Alvin thinks that paying taxes is for saps like Myron. The reasonable part of the discussion was short-lived and consisted mostly of Alvin screaming “class warfare” and Myron trying to explain that avoiding “class warfare” was, if for no better reason, why the super-rich should pay taxes. When Alvin started screaming “dope,” Myron ended the discussion with jab to Alvin’s mouth.
Later, in court, Myron was given a stiff fine. Fortunately, for both of them, Alvin could neither smile nor laugh without some pain and simply stormed off.
On the way home, an angry Myron said, “They scream class-warfare and have the masses imagine communists or militant socialists manning the barricades in Moscow or Paris.” “Class warfare is always initiated by the rich,” he said. “Things have to be awfully bad for people to man-the-figurative-barricades.” “If the super-rich can’t be fair,” he continued, “They should at least see to their own self-interest.” “Dopes,” he concluded.
This really amounts to smoke and mirrors. Obama plans to raise taxes on the wealthy, while leaving the loopholes in place that allow people to reduce their actual rate.
And how will this new revenue help the average person? Will it create jobs? Will it put people back to work? Will it help congress control their spending? Nope, it is just another way for our federal government to redistribute wealth.
If you want a smaller percentage on the entitlement side, you have to allow them to skill up, so the foreign illegal labor is not needed to fill American jobs because of NO training and education cuts.
Or else start speaking Chinese or Mexican.
But Dems and their Unions fight school reform tooth and nail - and its always give us more $$$ - a strategy that has FAILED time and again.....
Social programs have never worked and will never work, they only create dependency and stifle motivation. We have effectively created a class of people who rely completely on the government for survival. Can you show me any examples of how entitlements have helped people rise up from poverty?
I'm glad you can throw a few talking points out here, but exactly what republican polices are you talking about? I will agree that there are corrupt wealthy, but it sounds almost like you believe all wealthy are evil people. It is both Dems and Repubs who have allowed this to happen. Both parties knew what was going, this is not about left and right. They are all corrupt and greedy.
And if you want to stop illegal immigration you go after the employers who hire illegals. With no jobs, they will return home because the only thing most of them want is work. You will not solve the problem by taxing the wealthy to pay for programs to have Americans "skill up."
Tax the one percent at 1950 levels and put America back to work.
I DARE you to ask Obama to put in WRITING a return to the more fiscally conservative 1950's. The right would go back there in a nanosecond.
Get a life and get off the American teet with your company. Pay your taxes you deadbeat so education can remove the people off the poverty roles.
Fanned
http://www.nytimes.com/2011/09/24/your-money/taxes/buffett-rule-is-more-complicated-than-politics-suggest.html?_r=1
It means there are some very poor people in this country THAT is what it means when you say 50% don't pay income tax. A majority of those are working couples with kids making less than 26k a year. The working poor the elderly.. students. Keep in mind that high-income households pay a lot less tax than they would without tax expenditures.
If it is "class warfare" as you so say.. It's quite obvious who is winning. Quit posting before you trip over your own nonsense.
the reality is there is no great static "poor" in America outside illegal aliens perhaps. we have all been "poor"...
http://www.heritage.org/research/taxes/bg2001.cfm
“In comparing the high-income tax cuts to the Social Security shortfall, we wanted to illustrate the hypocrisy of Members of Congress who argue that the tax cuts are affordable but Social Security is not, even though their cost is the same.
http://www.offthechartsblog.org/mcardle
Loophole here, loophole there, special favors given, special favors taken.
Armies of tax lawyers and accountants.
The rest of us were never granted those privileges.
Getting rich based on your merits is a good thing.
Not playing by or changing the rules that everyone else has to play by is not.
This act like I bought a car and pay taxes until it breaks down, they might as well have driven or lived in the property.