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Stop calling it class warfare
Robert Reich
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Kai Ryssdal: President Obama went to the United Nations today. In amongst his thoughts on the Israeli Palestinian question were some suggestions about the global economy: Urgent and coordinated action is what the White House wants.
As you know, the administration released its plan to cut the deficit earlier this week, which has brought us straight back to the same old narrative: taxes or spending cuts?
And that brings us to commentator Robert Reich.
Robert Reich: It is not "class warfare" to ask the rich to pay their fair share of taxes to bring down America's long-term debt.
After all, the richest 1 percent of Americans now takes home more than 20 percent of total income. That's the highest share going to the top 1 percent in 90 years. And they now pay at the lowest tax rates in half a century.
Before 1981, the top marginal tax rate in America was more than 70 percent. And now it's half that, and besides, most of the very wealthy take their income in capital gains. And that's now taxed at 15 percent -- down from 35 percent as recently as the 1980s.
Anyone who says the American economy suffers when the rich pay more in taxes doesn't know history. We grew faster the first three decades after World War II -- when taxes were higher -- than we have since.
And look: If the rich don't pay their fair share, the rest of us have to bear more of a burden. And that burden comes in the form of either higher taxes or fewer public services.
If anything, the people who have declared class warfare are those at the top of big corporations and Wall Street -- and they've declared it on average workers. The ratio of corporate profits to wages is higher than it's been since before the Great Depression. And even as corporate salaries and perks keep rising, the median wage keeping dropping, and jobs continue to be shed.
I mean, you've got the chairman of Merck taking home $17.9 million last year. And then this year Merck announces plans to boot 13,000 workers. The CEO of Bank of America takes home $10 million, and the bank announces it's firing 30,000 workers.
Call me old-fashioned, but the way I see it, we've got a huge budget deficit and a huge jobs problem. And under these circumstances it seems to me people at the top who have never had it so good should sacrifice a bit more, so the rest of us -- who haven't had it as bad in decades -- don't have to sacrifice quite as much.
Ryssdal: Robert Reich was secretary of labor for President Clinton. His most recent book is called "Aftershock: The Next Economy and America's Future." Next week, David Frum. Until then, your thoughts should you care to share them -- write to us.
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Subject: Tax reform
I know of a way we can fix all our government budget problems. Change the tax based on percentage of earnings to total earnings. After all it must be true that the more a pearson earns then the more he must be considered a esponsible person, and the more his responsibilities. So let him also be just as responsible for the government budget payments.
Just like the ideal kings of old, he was responsible for all the subjects below him. So are the most wealthy responsible to all those below them supplying their wealth. And since the budget is only a subset of the total earnings, even person #1 (see below) will not be paying 90% of his earnings but less. With this setup only 1 person would be unwilling to pay.All the rest of the taxpayers would have no problem paying their portion.Of course if it was
decided that persoms 7-9 were more responsible, then they would of course have to pay more taxes for their responsibility.
Here is an example with a population of 10 people for simplicity.
earnings %
1: 90%
2: 5.4%
3: 3.2%
4: .6%
5: .5%
6: .1%
7: .05%
8: .05%
9: .05%
10: .05%
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"Sure, Buffet pays 15% on his dividend and long term capital gain income, but that is not the first time the money was taxed. It was also taxed at the corporate level before he ever got his distribution or sold his stock."
Alas, that is simply not true. If only it were, we wouldn't have a kleptocracy where money and power accumulates in the hands of the few, with the bill being levied on the middle class.
When Warren Buffett buys a share of a company for $20 and sells it for $30, he pays exactly $1.50 (15%) in taxes. No payroll tax. No income tax. And no corporate tax.
As for corporations themselves, they only pay taxes on money leftover after every single expense and tax-credit has been accounted for. Thus, some companies can have billions in revenue and no tax bill.
Households, on the other hand, pay taxes on every single penny that comes in, regardless of whether (or how) we spend it.
A couple additional thoughts:
If companies/profit-making institutions should be allowed tax deductions for advertising/marketing and other costs of doing business, then employees of those institutions should also be allowed tax deductions for the costs they incur to do business (i.e., transportation, education, child daycare, etc.).
Corporations should not be permitted to contribute financially to the political process through campaign contributions because they themselves are not democratic institutions and do not necessarily act or spend money in a way that reflects the views and wishes of the majority of their employees or stockholders. Only individual persons are allowed to vote and should be permitted to spend their money on the political process through campaign contributions.
We all owe a debt to our society. Everything that we are, everything that each of us achieves in our lives, we do so on the back of the society in which we live, which provides the fertile environment and proper conditions for each of our successes: An education system with standards; a transportation system that is regulated to make/keep it safe; a monetary system (which works better and more fairly when it is regulated); an integrated energy grid; clean air and water (hopefully kept cleaner thru regulation); a legal system (hopefully not compromised by the influence of money on law-making); and on and on. Every one of us owes a great debt for all that our society offers and provides, all fruits of the hard labor and ingenuity of those members of our society who came before us and helped make our society what it is today. Those of us who are the most successful financially and have best exploited and taken advantage of all the opportunities afforded by our society owe, fairly in turn, the greatest debts to that society. No man is an island, and no person's individual financial success is an isolated event. Those who have obtained the greatest financial rewards for themselves have done so at the expense of the society around them, and so they should be made to contribute proportionately back to that society, as should we all.
Dr. Reich Doesn't "Get It"
As the founder/president of an advertising agency for more than 30 year, I understand that companies don't hire us so that WE make money. It's so THEY do, and are willing to share some of the added revenues with us. The same fundamental applies to individual or collective job seekers. If they can help my company make more money, I'm eager to pay them a meaningful portion of it in return. If they don't or can't, what possible reason would I have to hire them?
Thank you Robert Reich for a clear, concise explanation of class warfare. As a perennially middle class citizen, I worked three jobs to get through college, I�m quickly sliding down the slippery slope to the poverty pile because of folks who don�t pay their fair share-the rich. Boo hoo-taxes will shut down job growth. Please explain which jobs exactly corporations are creating because I would love to see that list.
Instead of speaking for the rich or poor, how about we ask the rich or poor to speak up?
Infact, they did. A couple of job creating small business folks called into NPR to say they would love to pay more taxes if they could only have more customers. Demand is the pain here, not taxes. They mention paying taxes as patriotic and a low concern vs having a business with customers.
This, of course, is exactly the opposite of the people that claims to speak for the rich or job creators. What we have now is the poor and middle class defending the rich on their behalf.
I hope we hear a lot more of this kind of common sense in the near future. It's a refreshing change from the reality-avoidance that is presently gripping the halls of Congress and the vast majority of pundits who get interviewed by the mainstream media.
I recently heard the situation explained very succinctly: Capitalism is most profitable when businesses under-pay for resources and externalize costs.
Under-paying for resources means they don't pay their workers a living wage, and they get government subsidies for their inputs (oil... timber... bank bailouts...) which effectively means that we the people are paying tax money that goes directly into large corporate bank accounts.
Externalizing costs means that the corporations rely on publicly financed services and infrastructure to support their operations: including everything from public roads and public safety to environmental cleanup and, yes, publicly financed health care (hugely profitable WalMart, for example, relies on publicly funded Medicare to provide health care services for its underpaid, uninsured employees).
The public subsidizes corporate profits. Therefore it is only reasonable for corporations to subsidize the public in return. For all the tax cuts and subsidies that we've been handing out lately, I sure don't see a lot of job creation going on...
"They only call it class warfare when we fight back."
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