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 multimillionaires and billionaires, and their corporations, now paying a relative pittance in taxes.
Besides, the president has the bully pulpit. But will he use it?
Robert Reich is the author of Aftershock: The Next Economy and America's Future, now in bookstores. This post originally appeared at RobertReich.org.
What is the point of talking if there is no action. What does it matter if we get it, Reich gets it but no one leads us to change???
Like in the Great Depression, the Rich have won the economic game...and we have lost.
Time to reset the monopoly game, put more soda and chips on the table and start the game over.
1) 1963 a law was passed that forbid the federal government from borrowing money form the Federal Reserve. the bill was originated to prevent what we are seeing today, we are only paying on interest we owe the reserve. The Federal Reserve, Wall St. and the investment community are controlling the most of the politicians as a result legislation is being past to serve them and not the people.
2) The Reagan Administration cut unemployment by incorporating Federal workers and members of teh Arm Services which resulted in almost cutting the unemployment rate in half, at least on paper. He we we see an unemployment rate of 9% it is closer to 18% when compared to pre Reagan years. the situation out there is much worse than reported by the media as adjustments for this shift in formulas were never made.
3) Our government buying thousands of solar panels from China make sense when we have the product and compabilities in this country and need the jobs here. (Is the enemy to our way of life in the middle east or here in Washington doing the bidding of the lobyist)
4) Is our system broke beyond repair? Is there an opportunity to reclaim it from the aristocracy of greed. Now we have in effect a two level social system which historicaly has always resulted in revolution.
A good part of those trillions of dollars sitting on the sidelines right now are from wealthy people, who simply don't know if it's worth it to risk their money for future income, particularly after Obama turned bankruptcy law on its head by paying of the UAW with GM and Chrysler bondholders funds.
The amount of money on the sidelines in excess of historical norms, if fully invested, earning historical returns would result in at most 10 Billion additional tax revenue, more like 5.
You obvious problem is assuming that talking point generalizations are actually controlling the market.
The 2010 deficit was $1.3 Trillion, and income tax revenue was only $899 Billion. That means we needed to collect $2.2 Trillion, which is more than twice what we're now collecting. You could double everyone's tax rates and still not get there.
Bank of America avoids paying taxes by using subsidiaries in offshore tax havens. Big Finance, like Bank of America, caused record deficits. Now burying the booty is resulting in massive cuts to basic services in federal and state governments.
These parasites have devoured the peoples government in their quest for profit. And all beholden to corporate money, no one in the Congress, the Obama White House, the courts or the press, will step in to stop or denounce the assault on Americas families.
We don’t need more diatribes on the Internet. We need to physically get into the public square and create a mass movement.
Todays hedge funds have super fast machines and can see the bid and ask before you do. and BECAUSE they still have not removed naked shorting they control all markets that they play with.
It would seem to me that it should be obvious to most that now have a weekly food bill that has doubled that something needs to be done like now.
Why does our Govt agencies not step in and stop this madness? is it because they are complicit? And last one more thing since I follow OIL, gasoline prices..it is now being said that although Americas refineries are aged and no longer operating in top form it has been said by OIL Corporations that "WE CONTROL output to keep prices where we want them so to maximize our profits" Today America IMPORTS 1 billion gallons of unleaded gasoline from Spain, Portugal...let me tell you that the cost of OIL transportation is out of site..it would be cheaper in the long run to build more refineries. MR
I guess we will all ironically have to rely on the support of Republicans to get Obama back in office again, because I want to see him gone for good. I think Obama is at once the most incompetent and worst passive president we have ever had, and after George W. Bush who would ever have thought that we would get another horrible President, just in a different way?
Who can press this agenda? I surely vote for and support Robert Reich.
http://www.facebook.com/note.php?note_id=336793291289
Our President is a leader but is stymied by our bought and paid for legislators on both sides that are taking big money to look out for the Corporations and special interest which does not include us
I realize the Republicans are behind a lot of his attacks, but Clinton had it just as bad and he was able to rally some support. Although I am not holding any of them up as what we need now, we need someone who is out side the system, and we cannot just hope that the President can be all powerful. We need Americans to rebuild the country from ground up and stop accepting the world we have been "rented".
If we had a President like Roosevelt he would figure a way to take on the big shots. Obama does not even allow himself to think about that.
So is not the President that is incompetent , but its the politically environment that we have created, e.g it require 60 senator to approve a bill, means it will require some concession to win some Republican over. However, by doing so it appears to some Democrats the he is weak or incompetent.
He has no choice given the cards he was dealt . Also,this is the best any one who will be elected in the future could do, unless we change our system.
OK, that's your take on it. I believe that he could at least try. That is what other great Presidents have done. Obama is having none of that, because he has no great vision for America, he is like a Middle Manager trying to please his boss so he doesn't get fired ... his boss are the Republicans
If he tried, I would not blame him for failing, I see all the problems you mentioned and more, but someone has to try or nothing will change.
To protect my exceptional status I allocate part of the spoils to politicians and policy favors, as well to media fawns and flunkeys. They all acquiesce to my retributive powers.
Even seeing disparity and injustice encircling, I remain in a life boat of non-bother. It is those with my stature that provoke turmoil and prevail over lesser rank.
My implied guarantees of safe passage will soon show, yet another safety raft to carry my overflowing decoys and disdain. Abolish your audacity of hope... now move along, or bow down to the hierarchy of elite power.
Best regards for your plan,
Status Q (Phat Chat)
"Besides, the president has the bully pulpit. But will he use it?"
Unfortunately the president and much of congress belong to, or aspire to belong to, or kowtow to the group that pay no taxes.
Regardless, there will be no change without voter pressure or a "poll" to that effect.
There is no good reason why those with very high incomes should not be taxed at much higher rates. Certainly anyone with a $10 million dollar annual income can get by comfortably on $6 million dollars a year. On that basis I propose the following tax rate: make the rate percent simply one-tenth of the log (to the base 10) of the annual income in thousands. So a condensed tax table would look like this:
Income....Tax Rate....Tax.....After Taxes
$10K..........10%........$1K........$9K
$100K........20%........$20K......$80K
$1M...........30%........$300K.....$700K
$10M.........40%........$4M........$6M
$100..........50%........$50M......$50M
$1B............60%........$600M....$400M
The middle class would see significant tax relief, thereby spurring on the economy, the national debt would be trimmed and the very rich would hardly notice the difference.
As a matter of fact G. E earned $3.2 billion tax benefit.
And you say "but G.E. is a corporation." Wrong. The Supreme court has ruled that Cooperation is now an individual. Get it now.
http://www.huffingtonpost.com/2011/03/25/ges-us-tax-bill-zero_n_840472.html