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 30 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 30 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 30 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
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
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
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.