More Taxes on the Wealthy

They Can Afford it, and the Country Needs It

The rich and Corporate American can well afford to pay more taxes. Congress and President Reagan enthusiastically reduced government revenue thirty years ago, but lacked the will to make corresponding cuts in spending. That is also the time our country began to run huge deficits, and started borrowing to fill the void. We have been selling our financial soul to the Orient ever since, a fact that many Americans seem to have been ignorant of until two years ago - curious.

Much of the grousing about President Obama’s plan to “tax the rich” circles around the specious theory that tax cuts for the wealthy spurs economic growth, and increases revenue (remember the “Laffer Curve“, “Supply-Side” and “trickle down“ economics?) The Republicans have been pushing the bogus argument for thirty years. It has yet to bare fruit; we aught to stop trying things that don‘t work.

Over those same thirty years the wealth of the country has become concentrated in fewer and fewer hands. Republicans seem to think taxes are evil and unfair, especially taxes on the rich. They conveniently disregard the fact that government, by its nature, redistributes wealth. They don’t acknowledge that the redistribution has, for the past generation, been a continual siphon from the lower to the upper classes of the economic ladder.

It is ludicrous to hear Republicans complain that Obama wants to “spread the wealth” by increasing the top tax bracket to the 2001 level of 39.6%. - a rate that is historically modest. For many years government tax policy was geared toward an equitable distribution of wealth. That started to shift in the mid-sixties, and accelerated in the early eighties. Only twice in our history has the top bracket been lower than the present era: 1.) 1913 at 7% when income tax was enacted. It jumped to 67% in 1917 and rose above 70% in succeeding years; 2.) 1925 thru 1931, when it fell to 25% . By 1928 the nation’s wealth was concentrated at the top of the economic pyramid, a recorder breaker surpassed only by the present. “The Great Depression” followed in 1929. We are now in “The Great Recession”.

The top tax bracket from 1944 through 1963, a twenty year span, was never less than 91% and had as many as 26 brackets. The economy boomed. The middle class was active and robust. Jobs were plentiful. The wealth of the country was more evenly distributed than at any time in our history. One can argue whether higher taxes make that possible. Maybe, but it certainly didn’t stymie economic growth.

The federal tax code presently has just six brackets, the top being 35%. A person making a taxable income of $250,000 will pay $67,617 (that’s maximum - lots of loop holes to whittle it down). Another way of looking at it - the person gets to keep over $182,000. Most Americans today would have difficulty comprehending an after-tax paycheck of $3,500 a week. An earner making a million a year will take home $13,000 per week; one making ten million a year gets to keep over $125,000.

Impressive! But those are paltry in comparison to the super-rich. One making a hundred million a year takes home $1,250,000 per week. A billion year earner - yes, there are such creatures - takes home $12,500,000 - like winning the lottery every week. Many pay a smaller tax rate than the rest of us. Numerous corporations pay no taxes. CEO’s and hedge funds managers pay only 15% “capital gains” tax.

One thing that’s changed over the last thirty years is the rivers of money that have flowed into the political system. This commenced in the mid-seventies when businesses began to form (The Business Roundtable, an early example) in unprecedented ways, creating and financing organizations whose aim were to influence government policy. The trend continues. Hundreds of millions fund “Think Tanks” and K Street Lobbies. Phalanxes of lawyers write “White Papers”, authoritative reports, to sway congress to “special interest” view points. Sometimes they even write the laws. For every public sector lobbyist in Washington there are hundreds speaking for Corporate America and the superrich.

Equal sums are funneled into political action committees to finance campaigns and manipulate elections. The recent Supreme Court decision “Citizens United vs The Federal Elections Commission” has freed corporations and labor unions to pump unlimited funds, anonymously, into politics. That contest will certainly go to corporate America because its adversary, labor, is a frail shadow of its former self. These moneyed activities are self-serving. They act neither for the common good nor the long-term interest of people.

The unequal distribution of wealth hasn’t come about because the rich are smarter, or better educated. They don’t work harder, or have an edge on technology. It has transpired, as it did in the “Gilded Age” of the 1870‘s, and again in the 1920’s, because money is power and organized power impacts government policy.

We Americans pride ourselves on being an egalitarian society, but a natural tension exists between democratic ideals and the moneyed aspirations of Capitalism. Wealth presently dominates the system. The middle class is in decline. Many wonder if the unequal economy is devolving toward us becoming a nation of “have-and-have-nots“. Some think we are already there. Others say that our democratic government is a parody of its former self? The article was published in the Anchorage Press