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OpEdNews Op Eds    H2'ed 8/14/11

Class warfare? It is the wealthy who wage it relentlessly

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Extreme income inequality causes a cultural separation that is unhealthy on its face and corrosive over time.... It is hard to imagine an adequate answer to the problems we face that doesn't involve greater redistribution of wealth.
"Can the Middle Class Be Saved," the Atlantic
In a meticulously researched article, the Atlantic in its September issue paints a bleak picture of the future of America's middle class.  But in truth the article does more: It documents the extent to which America has fractured into a country of the rich and the rest of us.
Two examples. First, author Don Peck cites a Citigroup study in 2005 that found the top 1 percent of Americans control wealth equivalent to 90 percent of the U.S. population (all but the top 10).
Secondly, he cites evidence that the pace of inequality is accelerating. He notes that from 2002 to 2007 (presumably the latest available statistics), the same top 1 percent received $2 of every $3 in additional income earned by Americans. 
Think about it. The rich and their well-oiled, well-placed "representatives" in Congress regularly shout "class warfare" any time anyone suggests that perhaps they are not paying their fair share of taxes. That should make the rest of us laugh -- or sneer. Because in this age of anonymous Super Pacs, big money apparently can buy just about anything.
If you consider this hyperbole, reflect on another remarkable set of statistics Peck shares. In 1960, just a half century ago, the top-income tax bracket in the United States was 91 percent. The rich, in other words, paid 91 cents of each dollar earned within that bracket in taxes. A quarter century later under Ronald Reagan, the original hero of small government and trickle-down economics, those in the top tax bracket still were paying a tax rate of 50 percent.  But today taxes in the top bracket are capped at 35 percent. And efforts to restore a few percentage points and bring the tax code to Clinton-era levels are met with such vitriol from Republicans that Democrats -- who also rely on the rich for campaign funds -- turn tail and run. 
But, you ask, how can we even think of raising taxes at a time when the economy is way off course, the markets veering wildly, and unemployment stuck over 9 percent? Don't we need the wealthy to create jobs, to let their wealth trickle down? You and I hear this every day.
The only problem is this: The wealthy are not creating jobs; they are hoarding cash.
What we need in hard times is for government to strengthen, not weaken, its safety net. What we need are targeted, government-funded stimuli such as one to rebuild the nation's crumbling infrastructure. What we need, at least in the short term, is more, not less, government spending. And that will require capital (not to mention someone other than the Tea Party controlling Congress).
America is broke today to some extent because of our decades-long and largely unfunded wars. But more so it is broke because we as a nation have forgotten that to have government, we have to pay for government, too -- all of us, but particularly those of disproportionate wealth.
The deficit rose $6.2 trillion under George W. Bush, nearly half its immense overall total. And he, of course, is the president who called for the last round of tax cuts that Republicans now insist would be unconscionable tax hikes if they are allowed to die.
Yet this country can't begin to stagger to its feet without a fairer distribution of taxes (and thus wealth). Peck makes other interesting suggestions, from targeted tax credits for and investment in innovation to developing "career academies" within schools that teach specific career skills alongside traditional academic courses. (Non-college-educated males, he notes, have suffered disproportionately since 2008. Conspicuously absent from Peck's analysis are African Americans and Latinos, who have really been hammered.)
In the end, Peck says, funding government fairly matters most. "High earners should pay considerably more in taxes than they do now," he writes. "Tax rates of even 50 percent for incomes in the seven-figure range would still be considerably lower than their level through the boom years of the post-war era (that would be World War II)."
Before you start feeling sorry for the wealthy again, consider this. Its well-healed members pay far less each time they sell stocks at a profit -- 15 percent capital gains taxes -- than many middle-class Americans who don't have money to buy and sell stocks pay on their income. The rich pay no Social Security tax on the vast majority of their income since income above $106,000 is not taxed for Social Security.
And when it's time to pass the estate on to junior? The lobbyists and Republicans have made sure the first $5 mil in inheritance isn't taxed at all.
So I ask you: who is it that is waging class warfare? 
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Jerry Lanson teaches journalism at Emerson College in Boston. He's been a newspaper reporter, columnist, writing coach and editor. His latest book, "Writing for Others, Writing for Ourselves," was published in January by Rowman & Littlefield.
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