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Robert Reich

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Thoughts on Tax Day 2012

Posted: 04/17/2012 9:54 am

As Justice Oliver Wendell Holmes, Jr., wrote in 1904, "taxes are the price we pay for a civilized society."

But the wealthiest Americans, who haven't raked in as much of America's income and wealth since the 1920s, are today paying a lower tax rate than they have in over 30 years. Even though America faces a mammoth federal budget deficit. Even though public services at all levels of government continue to be slashed. Even though the median wage is still dropping, adjusted for inflation. Even though the typical American is paying more of his or her earnings in taxes -- including payroll taxes, sales taxes, and property taxes -- than ever before.

I'm not a class warrior. I'm a class worrier. And my worries go to why all this has happened.

I worry about the political power that comes with great wealth -- such as the power of the wealthy to reduce their taxes, cut the public services most other Americans depend on, while at the same time garnering special subsidies and tax breaks for their businesses -- big oil, big pharma, big agriculture, military contractors, big insurance, Wall Street.

I worry about the well-financed big lies that the very rich are the nation's "job creators," that the benefits from tax cuts on the rich "trickle down" to everyone else, that American corporations will create more jobs if only their taxes are lowered and if regulations protecting health, safety, and the environment were jettisoned.

I worry about the increasing dominance of Wall Street over our economy and democracy, and the near political impossibilities of closing the "carried interest" loophole that allows private-equity and hedge-fund managers to treat their income as capital gains subject to only 15 percent tax; of resurrecting the Glass-Steagall Act separating investment from commercial banking, and of breaking up the big banks to protect against another financial crash and bailout of the Street.

You and I have every right to be class worriers -- and to be outraged at what has occurred. But we must get beyond worry and outrage, and do everything in our power to take back our economy and reclaim our democracy.

It was another justice of the Supreme Court, Louis Brandeis, who wrote in 1897, "we may have a democracy or we may have great wealth concentrated in the hands of a few, but we cannot have both."

Robert Reich, Chancellor's Professor of Public Policy at Berkeley and former
Secretary of Labor, is the author of "Beyond Outrage." His widely-read blog can be found at www.robertreich.org.

 
 
 

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As Justice Oliver Wendell Holmes, Jr., wrote in 1904, "taxes are the price we pay for a civilized society." But the wealthiest Americans, who haven't raked in as much of America's income and wealth s...
As Justice Oliver Wendell Holmes, Jr., wrote in 1904, "taxes are the price we pay for a civilized society." But the wealthiest Americans, who haven't raked in as much of America's income and wealth s...
 
 
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HUFFPOST SUPER USER
PotomacOracle
The Solution:debt free credit clearing systems
10:05 PM on 04/21/2012
Prof. is so full of shittake mushrooms he no longer knows who's glutimous maximus to kiss. Let's all ask him why we have to pay taxes to raise revenue for a government which issues its own currency and can issue as much or as little of it as it wants?

If he knows the answer then you know he's a shill for the 1%. If he doesn't know the answer then you know he's a shill for the 1%.;-) He really has no more credibility. Sometimes I think he's the original "Exasketch Guy"
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HUFFPOST SUPER USER
aacme
My micro-bio is on a strict need-to-know basis.
07:52 AM on 04/18/2012
"As Justice Oliver Wendell Holmes, Jr., wrote in 1904, "taxes are the price we pay for a civilized society."
But the wealthiest Americans, who haven't raked in as much of America's income and wealth since the 1920s, are today paying a lower tax rate than they have in over 30 years. "

And lo and behold, our society is less civilized today than it's been since at least the 1920s , if not ever. You don't even have to do the math to know the truth of Justice Holmes' words.
01:41 PM on 04/18/2012
By what objective measure are we less civilized?
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HUFFPOST SUPER USER
aacme
My micro-bio is on a strict need-to-know basis.
07:55 AM on 04/22/2012
By what objective standards AREN'T we less civilized?
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HUFFPOST SUPER USER
TrollDiddy
I like you, Betty
04:15 AM on 04/18/2012
It all seems like a smoke screen to me. I cannot be convinced that we live under the rule of a corporate tyranny or under the heel of CEOs and are the mercy of "the rich." I worry about big government. Apple, for all its might and size and power and cash and technology, cannot extract ONE DIME of money from me unless I willingly, voluntarily surrender it to them in return for products and services. I can decide not to buy their products. So can you. If we all decided to do that, the company would vanish in weeks.

Then there's the federal government. This is an institution which, under force and law and threat of imprisonement, can confiscate wealth from you in a thousand different ways. Income taxes, gas taxes, and a zillion other things. And if you don't pay, you are an outlaw. We have very little say over how this money is spent. Sure, we have elections, but then the hooligans that go into office do whatever they want and "moderate" their way into whatever the media is cheering for them to do.

A lot of HPers sure didn't want us to go to Iraq and spend money on weapons. I don't like spending money on SNAP, the Department of Energy, and a host of other things. Can we, as with Apple, stop contributing to these organizations and watch them disappear? Nope!
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Swegin
the "collective" is part of our human nature
07:06 AM on 04/18/2012
LOL anyone who remains unconvinced about the fact that the wealthy have access to and control the Government, which is the only thing with the power to regulate their activities, is too blinded by their own ideological views to ever see reality.
07:15 AM on 04/18/2012
You are in such control that you can't even buy American anymore. You will take the pay Walmart offers. You will vote for corporate chosen, corporate financed candidates. And you will be a good little victim and cheerleader for your own demise. Congratulations!
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HUFFPOST SUPER USER
Susan Aker
08:06 AM on 04/18/2012
Exactly right - why do people choose an entity in which you can have no say (a corporation), that you can't really eliminate by not buying their products (because there is little to no competition) and that is a vast redistribution machine to take wealth from the masses and give it to the few.

At least with government - if people like TrollDiddy would realize where their interests lie - you can vote the guys sucking up to the corporate world out of office. Try voting out the board and CEO of these corporations that are misbehaving and financing candidates who will legalize it.
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02:41 PM on 04/18/2012
Americans voted for Wal-Marrt jobs a LONG time ago, when they shopped at Wal-Mart to he extent that Wal-Mart expanded to the size it is. Do you think that Wal-Mart somehow LEGISLATED themselves into all those chain stores? The rise of Wal-Mart was by Consumer Demand, that destroyed the Mom and Pop stores, and that destroyed a not insiginificant portion of the middle class (every decent storefront in the downtown of the small town I came from).

But.....everybody got their stuff cheaper. Oh, and by the way, the 1% doesn't shop at Wal-Mart, but the 1% owns Wal-Mart, its a publicly traded company. When you shop there, that is who you are enriching.
01:55 AM on 04/18/2012
Let's be honest here. We live under the rule of a corporate tyranny. It is allegedly a democracy. But democracy hasn't really shown up for so long that tyranny has taken over. I could write a dissertation on this idea, but the simple fact is that the people have been asleep and are just now waking up to the nightmare that happened in their slumber. It will be interesting to see how that progresses.
02:06 PM on 04/18/2012
How about just the abstract of your dissertation? How is my life being controlled by a corporation more than it is by the government?
11:40 PM on 04/18/2012
My point is that the corporations own government. We're in a bit of a corporate tyrrany, in case no one's noticed.
12:22 AM on 04/18/2012
Certainly most middle class citizens are angrier today than at any time in recent history. The choices seem pretty simple but get obscured by constant untruthful advertising done by those that have the most money, the very same ones that get the most bang for money by not paying their fair share of taxes. Confusing the public always worked in the past but with the internet being used so much today, the public is waking up and see that it is the great society of the rich that are running the country. Corporate American is buying an election if the people really don't act before it is too late. Save the nation and vote a STRAIGHT Democratic ticket in November. It is the only way to stop the takeover by the "fascist far right Republicans".
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HUFFPOST SUPER USER
Susan Aker
08:14 AM on 04/18/2012
The problem is - those people who are waking up don't always choose the right sources for information. If they choose HuffPost, they might be okay because, while it does MOSTLY represent liberal thinking, they do have conservative thought here as well. But what if they choose FOX News or one of the Right Wing websites? The disinformation they will get there pushes them toward Republican candidates and the thinking that the government is the problem.

You can find websites ad infinitum that will declare the FOX News views. Liberal views are harder to find.
09:30 PM on 04/18/2012
My personal observations:

You have about as much conservative thought on HuffPost as there is liberal thought on FoxNews--next to none.

People on "right-wing" sites are just as convinced that the disinformation is on the "left-wing" sites.

Finding liberal or conservative views expressed on the internet is not hard.

Other than that, you are right.
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SitandStay
Lorenzo&BushH8ter
12:00 AM on 04/18/2012
...cont...Eastern Airlines, the banks and the Bushs......
The transfer of assets was never investigated by the SEC. In fact, bills passed the House and Senate calling for a Blue Ribbon investigation of Eastern based on the evidence produced of violations of the SEC, FAA and OSHA. It arrived at GHW Bushs' desk. BUSH 41 VETOED IT. (Just as he pushed for the PATCO employees to be without jobs under the pretend-President Reagan)
The airline was never investigated and Bushs' son went on to loot the entire country.
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SitandStay
Lorenzo&BushH8ter
11:59 PM on 04/17/2012
...cont..from a previous comment....
So......under Frank Lorenz0, the state of the art computer system was sold off for a fraction of it's value and then leased back to our carrier for an ungawdly amount. An Atlanta based air carrier that had already gone bankrupt had their psgr records mysteriously appear in our reservation offices in corrugated boxes and the President of that bankrupt carrier began to call and be booked for travel on our secret P3 desk using coupons he was given. The records had no ticket numbers, nothing to indicate if the reservation holder had a ticket, yet we were made to call these people and offer them free travel on Eastern "as a courtesy'. Some argued with the agents saying they didn't have tickets, but we were instructed to book them positive space (meaning it was not a standby status) that could not be sold and was in fact preventing us from selling the seat for revenue. This was also the case with travel agent tickets that would have been on a standby status too. We, the employees, were literally made to GIVE our airline away as we were stockholders and profitsharing employees. It was in our interest to have an excellent and honest product. That ended under Frank L0renz0.
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SitandStay
Lorenzo&BushH8ter
11:38 PM on 04/17/2012
When Eastern Airlines was supposed to be in contract talks (the unions had been taking cuts in pay for years and years), it was well known what the end game was set up to be.
The IAM, International Association of Machinists, had a contract that was in effect. The organized workers gave up pay for a profit sharing program. The union had PARITY written in for all the non-organized workers (reservationists, ticket counter agents, etc) , so that all work groups would be able to share in their productivity that was goal oriented and determined by management. It was very, very modest amounts awarded once a month. $40 if you were a top performer. In that contract it also allowed the IAM union representative of EAL to have a seat on the board and the ability to examine the carriers financial books. When fraud and unexplainable figures began to be discovered, the management closed the books, stopping the audit. (The contract had failed to stipulate the amount of time the books could be audited. Plus the President of Eastern Airlines, Frank L0renz0 was married to a family member of the Rockefeller banking dynasty and he sat on the board of a major competitor airline. The computer system was solf off at a fraction of it's value and then leased back at a cost intended to drive EAL into bankruptcy......cont.
11:36 PM on 04/17/2012
Dr. Reich, who are the job creators?
01:12 AM on 04/18/2012
Why, our government of course.
10:18 AM on 04/18/2012
If you really hate the "government" so much, work for secession. I'd love to see you righties back in the feudalistic confederacy.
martman1
retired business owner
03:10 AM on 04/18/2012
Demand (willingness and ability to purchase a good or service) is the only job creator.
07:18 AM on 04/18/2012
Thank you. The only way out of this mess is to create demand, and only we - in the form of our own elected government - can do that.
09:36 PM on 04/18/2012
Demand will always exist if for no other reason than we have to eat. We could start over and demand for the essentials of life would exist, barter would begin, and eventually you bootstrap up to goods and services not essential, but that improve the quality of life. All this can and did start without a powerful central government making it happen.
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SitandStay
Lorenzo&BushH8ter
11:25 PM on 04/17/2012
The system is corrupt and the Republicans will do anything to keep it from being fixed.
Since deregulation, airlines have a roulette wheel of fares. Multiple fares, hundreds in many markets, that are supposedly based on travel on a particular day of the week, times, minimum stay, maximum stay, class of service, advance purchase, blackout dates, refundability, passenger type (senior, military active duty, military on leave, childs fare, person accompanying another passenger on a reward coupon, special convention/company discount fares, fares set up with the carrier by the company sending private contrtacted psgrs to Iraq, Afghanistan (Blackwater), travel agent fares, etc. The list and fares are mindboggling. Bumped psgrs from overbooked flights) And here is a kicker....those coupons for getting off the flight and take the next flight are written off at MANY times the cost of your regular ticket because the airline explains it as a ticket that allows no advance purchase and travel allowed at anytime and without a minimum or maximum stay. In other words, the airline creates revenue by forcing (or allowing) psgrs off the flight and then gets the U.S. taxpayer to pay for the free travel as it is excluding the carrier from paying tax.
It is impossible, literally impossible, for the IRS to conduct an audit of U.S. commercial psgr carriers.
U.S. banks that own these aircraft (which is peanuts) and the fluidity of the constant stream of cash is why you will NEVER see an airline investigated for fiscal reasons.
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SitandStay
Lorenzo&BushH8ter
12:08 AM on 04/18/2012
Continued in two other comments.........
but just add this.....the air carriers ARE Wall Street and are the banks.
The technology is already available for air travel without having a pilot on board....and your tickets will not be any cheaper.....as you can see, the price of air travel will continue to rise BECAUSE IT CAN.
That's called deregulation. Lap it up.
10:39 PM on 04/17/2012
Since it is tax day, I'd like to note that we are at least as progressive as the Europeans in our tax policy. http://reason.com/archives/2012/04/16/taxation-american-style
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HUFFPOST SUPER USER
jamenta
There are other human values besides greed
01:24 AM on 04/18/2012
Heh. But what you won't talk about is our US effective tax rates upon corporations or the rich - which compared to most European countries - is not even in the top 10.
12:47 PM on 04/18/2012
"The rich pay a substantial share of taxes across the developed world, and this share has risen in recent decades. According to the OECD, a think-tank, the top 10% of earners contribute about a third of total tax revenues—28% in France, 31% in Germany and 42% in Italy. Rich Britons pay about 39% of total taxes while America’s wealthiest households contribute a larger share to government than in any other OECD country, at 45%." http://www.economist.com/node/21530093

"In the OECD, the United States also has higher-than-average effective average and effective marginal tax rates,..." http://www.aei.org/article/economics/fiscal-policy/taxes/report-card-on-effective-corporate-tax-rates/
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Swegin
the "collective" is part of our human nature
07:12 AM on 04/18/2012
Europeans get much more back for their tax dollar. like health care and education, and public transportation.
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HUFFPOST SUPER USER
aacme
My micro-bio is on a strict need-to-know basis.
08:20 AM on 04/18/2012
Yeah, but they don't get to kick the sh*t out of a small country every few years. That's not cheap, and doesn't do anything for the infant mortality rate, but it's worth it.
12:49 PM on 04/18/2012
If they aren't doing as good of a job, that sounds like a reason for not to give our government more tax dollars.
10:35 PM on 04/17/2012
I worry about this: http://www.ritholtz.com/blog/wp-content/uploads/2011/07/outlays-GDP.png in relationship to this: http://greenewable.files.wordpress.com/2008/10/total-federal-government-receipts-as-a-percentage-of-gdp-1945e280932008.jpg

I worry about this: http://1.bp.blogspot.com/-TOMOeWPuTvE/TsQR4KXKqZI/AAAAAAAABg0/S0GvdbCNRMs/s1600/cbo%2Bproj.gif

I worry that spend, spend, spend, tax, tax, tax Keynesians such as Reich never realize they are not the solution, they are the problem.
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SitandStay
Lorenzo&BushH8ter
11:43 PM on 04/17/2012
And just when did YOU first become aware of this ?????? LOL
Ratio of the entire U.S. federal budget in 1957, adjusted for inflation, to the amount spent so far on the Iraq war: 1:1

Estimated amount Bush-era policies will cost the U.S. in new debt and accrued obligations: $10,350,000,000,000 (see page 31)

Percentage change in U.S. discretionary spending during Bush’s presidency: +31

Percentage change during Reagan’s and Clinton’s, respectively: +16, +0.3
02:30 AM on 04/18/2012
You know, I can't do anything about the mistakes of the past except to try not to repeat them. Blame whomever you want. Let's just stop the insanity.
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HUFFPOST SUPER USER
jamenta
There are other human values besides greed
01:26 AM on 04/18/2012
I worry about how far greed and selfishness will continue to destroy this once great democracy of ours. How guys like you Chaos2Night - turn a deliberate and blind eye to this nation's wealth inequality and growing poverty. I wonder how much more millions of Americans will suffer because of uncontrolled corporate greed and the thievery taking place on Wallstreet.
12:53 PM on 04/18/2012
I worry about greed and selfishness too. I also know we cannot be a great democracy if we bankrupt ourselves.
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10:27 PM on 04/17/2012
The problem is capitalism - it is a system designed to transfer wealth from the workers to the owners.

End capitalism and the process of concentrating of wealth stops.

Let the capitalists go to China and work their magic there.
11:11 PM on 04/17/2012
Of course, wealth is rapidly concentrating in China despite the nominally communist regime. The problem in any system is the tendency of people with power to try to increase it and form an entrenched aristocracy. Socialists are not immune. One needs systemic tools to block concentration of power and keep market power in the middle class. this is not new. To quote Thomas Jefferson from a recital on speculators: "That all the capital employed in paper speculation is barren & useless, producing, like that on a gaming table, no accession to itself, and is withdrawn from commerce & agriculture where it would have produced addition to the common mass: That it nourishes in our citizens habits of vice and idleness instead of industry & morality: That it has furnished effectual means of corrupting such a portion of the legislature, as turns the balance between the honest voters which ever way it is directed." There are tools that would help. See, e.g. the Shared Economic Growth proposal, which harnesses greedy impulses to undermine the wealthy and give American workers market power again. Such subtleties are necessary to prevail against entrenched power.
11:44 PM on 04/17/2012
No thanks,
You can go to Europe
10:21 AM on 04/18/2012
I have a much hotter place you can go to.
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smalljaws
It can't happen here.
10:16 PM on 04/17/2012
Republicans can't be taken seriously until they part ways with Norquist and raise taxes to pay for the big government spending of the Reagan and Bush years. The last GOP president to balance the budget was Ike. He was the first president to warn of the danger of the military-industrial-congressional complex. Military spending will account for 57% of discretionary spending this year. Five per cent of the world's population accounts for 50% of all defense spending in the world. It's unsustainable. Ike said it best, " We will bankrupt ourselves in the vain search for absolute security. "
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PotomacOracle
The Solution:debt free credit clearing systems
09:58 PM on 04/21/2012
Taxes don't pay for anything and it's been that way since August, 1971 when we abandoned the gold standard and fixed exchange rates. Where you been smalljaws?
10:09 PM on 04/17/2012
Why don't they figure out a way to run the govt with the trillions of dollars they collecting today?
10:44 PM on 04/17/2012
Clinton ran the Government with $1.9 trillion . . .

Now folks like RR scream about austerity if anything is cut from the $3.8 trillion dollar budget.
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SitandStay
Lorenzo&BushH8ter
11:45 PM on 04/17/2012
I'd give anything to be as blissful as you.
02:46 AM on 04/18/2012
Clinton didn't have two military occupations in foreign countries lasting over ten years with a few other excursions and attacks going on at the same time.
That took Bush to get started and Obama to continue.
What a tag team.

Clinton's contribution to the mess was his dealings with the banks.