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Why We Must Raise Taxes on The Wealthy; Rober Reich
Topic Started: Mar 28 2014, 05:02 AM (362 Views)
tomdrobin
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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, tax rates 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 multi-millionaires and billionaires, and their corporations, now paying a relative pittance in taxes.


http://robertreich.org/post/4344201496
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Thumper
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There will be a revolt some day. We need to grow and strengthen the unions. That will fix the rich rapists, plunders and pillagers..
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wanderingjays
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Hogwash. Do away with all the subsidies and exemptions and make everyone pay at the same rate and most of your problems go away
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Berton
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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 growing the economy. The problem with Reich and people who thinks like him is that they think the "pie" is one size only. That it can not get larger. That is what makes his thinking so very wrong.

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campingken
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Since Congress controls the tax system and Congress is made up of wealthy men I don't see any changes on the horizon (unless the benefit the ultra wealthy).
Thumper may be correct. If we kill the middle class and have another great depression unlike the "greatest generation" Americans today will not sit at home and silently starve.
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Pat
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I believe the bottom line can be found in this question, "do we earn in order to pay taxes, or do we earn in order to better our lives and provide for our needs?

Taxes that pay for government are a necessity in order to enjoys the benefits of having a collective solution to some areas of life that is cheaper and more efficiently handled collectively. Paying for infrastructure projects, national defense, and air traffic control being examples. Right now the far reaching arms of government on all levels is abusive and inefficient for the most part. This is why conservatives would rather have private enterprise solve those needs we might have.

I agree the tax bite is too large for the middle class, but it is also too large for the top earners. Just because you have a hundred bucks in the pocket does not mean you should be reckless in how you spend it, and paying for more services by a government is wasteful. Now if Tom would like to help increase funding, or Robert Reich, then by all means go for it, just leave me out of your plans.
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wanderingjays
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In other words I've got mine screw you
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Banandangees
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I doubt Pat's income is in the upper 1% that Robert Reich talks about. I doubt anyone on this forum is within a visible distance of it. Increase their taxes if you must. I doubt that it will change our debt and deficit at all. Politicians will find new ways to spend it.... maybe even expand government.

Maybe the increased taxes of the upper 1% should be in the form of the 1% being made to create jobs to put more people to work so they can pay some taxes too.... and take care of their families themselves. It's good for their self esteem..... aren't we worried about self esteem now days.... no winners no losers... every one is even Stephen . So, if the 1% create jobs with the money they would pay in increased taxes, every able body works by the jobs created from that wealth of the upper 1%..... take it out of the hands of politicians who will spend it on everything but the "poor." Since the "great society" began, the poor and dependent have only increased in numbers in spite of all the social programs designed to help them. Somebody is mismanaging.
Edited by Banandangees, Mar 28 2014, 10:28 AM.
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Thumper
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Why are the Cons so protective of the 1%ers?
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tomdrobin
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Thumper
Mar 28 2014, 10:37 AM
Why are the Cons so protective of the 1%ers?
Because the 1%ers are their masters of the GOP. Double cross them, and bye bye campaign funds. You don't bite the hand that feeds you by raising their taxes. Now the non 1% cons are basically victims that live under the allusion that it's about freedom from government.
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