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Raise taxes on the rich
Robert Reich
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Bob Moon: We keep hearing about how much we can't afford and what programs we need to cut to rein in the federal deficit. But there could be two edges to the budget knife.
Commentator Robert Reich wonders why one agenda item seems to be missing from the conversation.
Robert Reich: As Americans get ready to file their taxes, politicians are battling over how much to cut government spending in order to reduce huge deficits. Curiously though, one option for deficit reduction seems to be off the table. That's to raise taxes on the very rich.
For decades now, America's top earners have been pulling in a larger and larger share of the nation's total income. Over the same period though, their tax rates have steadily declined. In the 1950s, the top marginal income tax rate was 91 percent. Now it's 35 percent. Even when you include deductions and credits, the super-rich are now paying a far lower portion of their incomes in taxes than at any time since World War II.
Meanwhile, capital gains and dividends -- a big chunk of their income -- were taxed at 35 percent as recently as the late 1980s. Now, they're taxed at 15 percent. And the estate tax has now vanished for estates under $5 million or $10 million a couple.
If the rich were taxed at the same rates they were taxed a half century ago, they'd be paying some $350 billion more this year in federal taxes. That would be trillions of dollars over the next decade -- a major contribution to eliminating the deficit.
Now yes, of course, clever accountants and tax lawyers would find ways around any tax increases, but this was always the case.
The real difference between now and then is the political power of the super-rich is much greater. After all, that's why their tax rates are so much lower.
But it's just possible that the devastating budget squeezes in Washington and in state capitals, and the slashing of public services vital to the middle class and the poor, may prompt Americans to look back 50 years -- and ask why the super-rich shouldn't pay the same tax rates now as they did then.
Moon: Robert Reich was Labor Secretary for President Clinton. His most recent book is called "Aftershock: The Next Economy and America's Future." Next week, David Frum. And in the meantime, you can always throw your two cents into the budget debate -- click on this contact link to let us know what you think.
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Instead of being diverted by the question "who are the rich?", just cut to the chase and go after the corporations (GE, NewsCorp, BofA etc) who are paying little or no taxes. With a corporate tax rate of 35%, how is it remotely fair that some of our largest corporations pay a 6% tax rate or less, while the middle-class picks up the tab for this corporate welfare.
A reasonable definition of rich is top 20%, of middle the middle 60%, and of poor the bottom 20%. The top 20% is about $110,000 family income (the average income of Arlington, Va.) The rich complain they are middle class. They should try to get by on the average $60,000. It is Obama who admittedly (read Bernanke) has a wealth effect stimulus--do everything to increase profits to increase the stock market. It will trickle down. Drive down the dollar to increase the value of foreign corporate earnings (50% of S & P earnings) and since de facto oil prices are priced in Euros, drive up oil prices--and then don't include them in inflation figures. There is a reason that Clinton liberals like Reich and Stiglitz have no role in this Administration, only Robert Rubin Wall Street types from the de-regulation Clinton years. And this is the 'left-wing" party. What a system we have.
So, I know this has come up in other shows but who exactly is the "rich" where taxes are concerned? When marketplace was talking about the extensions of the Bush tax cuts it was household make more than $250K (I can't remember if that is married or not). So when politicians say "Tax the wealthy to aid the poor" and such, who do they mean? Are they just being ambiguous so they (the politician) do not have to admit that they are "rich"?
I sure don't feel rich but I am only paying 10% less in taxes then the "wealthy" in this article/story.
P.S. I love Marketplace, it's my favorite NPR show. :) Kia ROCKS!!!
Take a good look at history. Herbert Hoover (R) like Ronald Reagan and the current Republicans, believed in the “trickle-down†theory. If they kept the income tax low on the wealthy, the wealthy would spend more and invest more, this in turn would raise the economy. Great theory, however it didn’t work then, it didn’t work under Reagan and it still hasn’t worked to this day! Before the sweeping changes created by Franklin D. Roosevelt (D), there wasn’t much of a “middle-classâ€. There was the super-wealthy, the wealthy, and everyone else. It was the changes made by Mr. Roosevelt that created a middle-class and it’s the middle-class that has created this great economy. The wealthy can only spend so much, but the middle-class because of their sheer numbers can and has created great economic wealth! Furthermore, we are currently in 2 wars. Never in our history have we ever had a war, while simultaneously getting lower taxes. How can we fund them while having lower taxes?. Our current wars, have made the wealthy of this country even richer, why shouldn’t they pay more?! It is our children, our loved ones who’s blood is spilled for the wars they make and profit from!
One question for everyone here that disagrees so much with Dr. Reich. If taxing the rich is so bad for GDP, job growth and economy, how can one explain the economic success of the US throughout the entire 20th century? All along tax rates were sky high for the highest earners...in fact income tax was meant only to be paid by the rich when it was first developed to tax those who had been the most successful partly due the US pool of talent and solid infrastructure. it is nicked named 'trickle down' for a reason.. A trickle doesnt translate to much. If high taxes are so bad for for incentives how does one explain the robber barons of Rockefeller and Carnegie? Not to mention Gates, Trump and Buffet? All of who paid a much higher rate of tax but all were still motivated to earn more? At best using conservative estimates the gov't only gets 25% back for every dollar in tax breaks for the rich. give the man the respect he deserves....
In just about every household in the US, the one who's income is the highest is the one who pays more, while the rest of the household typically pays what they can. For most households this system works well. But not according to the Republicans, they believe that the wealthy should pay less and get more. Imagine if everyone ran their households according the Republicans ideology… the breadwinner would pay less and get more, they would have the money to buy all of his/her toys and have a good time. While the rest of the house struggles to keep things going. Those with lower paying jobs would have to take on 2nd. & 3rd. jobs just to make ends meet, and those in school would have to work longer and study less or give up school all together. Hmmm, sounds familiar?!
The last time I had any expectations of responsibility from my elected officials was in 2006. By then the minimum wage had been hostage by the wealthy for 10 years. Like now, improving the life of the average American was believed to be contingent on the low cost to the affluent. Then nothing else happened for two years. That was the last time I held any faith that our government of the people represented the people. It's Deja Vu all over again.
There are times when Robert Reich says something that sounds reasonable and even enlightened that I may agree with. Then there are the times when he trots out the tired old "let's tax the rich more and solve all our problems" argument and I think Berkley Bob is living in a time warp, or something. How dare people get rich! They might form companies and create jobs. Don't they know that should be the government's job?
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