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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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Mr. Reich is undoubtedly a smart and accomplished person. I value his opinion pieces but do get tired of this "rich pay their fair share" line of persuasion. It is disengenuous because the rich pay way more than the poor on a dollar basis if not a percentage basis. If you truly want "fair share" taxation, then why not propose a flat head tax? Isn't that "fair"? Why not eliminate the income tax and replace it with a consumption tax? All people can choose their own tax dollar contribution by what they consume. Isn't that "fair?" Why should Americans who have found their way to wealth on the backs of their hard work, persistance, ingenuity, luck and risk-taking pay more taxes than others? Is that "fair?" If you want to pick on folks born wealthy - who didn't earn it - then why not propose a 100% tax on inheritance? Don't disproportionately tax hard working rich people. To me - these are all "fair" proposals/ideas. You should consider them on their merits if you are intent of defining what is "fair." Maybe they are good ideas or maybe they suck. But yes Mr. Reich - it is absolutely class warfare to buy votes with the poor and middle classes by promising a transfer of wealth from the rich. If you truly believe in this, then give everyone one vote per tax dollar they actually pay. Wouldn't that encourage the rich to pay more taxes? They'd then be able to vote out the people who want to transfer wealth or find ways not to pay taxes and live with the consequences of reduced representation. Is that "fair?"
I am fiscally right and socially left (and not rich) so this issue is thorny to me. However, I strongly posses the value of hard work and believe hard work should be rewarded not disproportionately taxed away. That is not fair.
Dear NPR:
The US economy grew faster after WW11, of course it did. There was 16 years of bent up demand caused by the Great Depression and WW 11.
Mark Twain, "Letter to the Earth", page 110, "Influx of labor to reduce wages by 10%...." Check it out.
Also, Jason, you can't site information from a year that has not occurred, considering the real data is not in yet. A look at what happened 2+ years ago is far more accurate, since all the data has actually been gathered, and actually exists.
http://www.cbpp.org/cms/index.cfm?fa=view&id=3505 Jason G - your link is convoluted and misses a large portion of the real picture. Seth L - are you saying life has gotten worse for the working class since the early 1900s? I would say it has gotten a hell of a lot better.
Reich's commentary is so disingenuous it borders on outright lies. He likes to say that taxes on the "rich" are lower now than in the decades after WWII, but that is only when measured purely by their marginal tax rates not their effective rate. The fact is that even when the highest marginal rate was in excess of 90% no one actually paid that rate due to a host of deductions and exemptions. The fact is that today the middle income quintile pays 14% of its income in taxes while the top quintile pays 25.5%. The top 1% pays 28% and the top 0.1% pays 30.4% of its income in taxes. That is inclusive of payroll and most importantly corporate taxes and is a point that Buffet, Reich, and Obama conveniently neglect when talking about taxes. 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.
Instead of telling you the whole story, Reich would much rather pander to his base that simply believes that success is not earned and merely a matter of chance, that the government is the only source of equity, and that the same tired redistribution politics will work this time. That is the very definition of class warfare. I encourage everyone to dig deeper than this thin tissue and learn the true facts for yourselves:
http://www.taxpolicycenter.org/numbers/displayatab.cfm?DocID=3190&topic2...
And a more dated reference:
http://www.nytimes.com/2007/07/15/business/yourmoney/15view.html
Seth, your government as a share of GDP statistic gives an incomplete and inadequate picture of the effect of government spending on the economy. If the GDP becomes smaller then your statistic rises in value, even if government spending remains static.
Reich's commentary is so disingenuous it borders on outright lies. He likes to say that taxes on the "rich" are lower now than in the decades after WWII, but that is only when measured purely by their marginal tax rates not their effective rate. The fact is that even when the highest marginal rate was in excess of 90% no one actually paid that rate due to a host of deductions and exemptions. The fact is that today the middle income quintile pays 14% of its income in taxes while the top quintile pays 25.5%. The top 1% pays 28% and the top 0.1% pays 30.4% of its income in taxes. That is inclusive of payroll and most importantly corporate taxes and is a point that Buffet, Reich, and Obama conveniently neglect when talking about taxes. 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.
Instead of telling you the whole story, Reich would much rather pander to his base that simply believes that success is not earned and merely a matter of chance, that the government is the only source of equity, and that the same tired redistribution politics will work this time. That is the very definition of class warfare. I encourage everyone to dig deeper than this thin tissue and learn the true facts for yourselves:
http://www.taxpolicycenter.org/numbers/displayatab.cfm?DocID=3190&topic2...
And a more dated reference:
http://www.nytimes.com/2007/07/15/business/yourmoney/15view.html
To Seth L's comments: so you want the government's share of GDP to revert back to equal 1902?
Do we get rid of our Interstate highway system? Do we let people die on the streets rather than treat them in hospitals?
Do we allow people to die of lead paint poisoning? Allow car companies to build cars that kill people so they can make more profits? In 1910, over 2 million children under the age of 15 were working in the US. Are we ok with that too? Do we eliminate our military too? The US is still the world's largest exporter, and our military helps to make it safe. What about our public school system? I guess we'll have to get rid of that too....
We have not yet reached the point of embracing Karl Marx. Steering the United States without tweeking Capitalism here and there WILL result in eventual collapse. Then Karl and his friends will show up. You cannot keep cooking the golden goose and eating it all by yourself without sharing for too much longer....
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