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Tax the Rich? No, We Haven't Taxed the Little Leaguers Yet
Like Rush Limbaugh saying: "The top 1% is paying nearly ten times the federal income taxes than the bottom 50%!" This is true. But AFTER TAXES, the top 1% keeps 20% of the nation's income, while the bottom half of earners retain just 14%.
Or the argument that low-income people don't pay taxes. Based on recent data from the U.S. Congressional Budget Office and the Internal Revenue Service, the total of all state and local taxes, social security taxes, and excise taxes (gasoline, alcohol, tobacco) consumes 21% of the annual incomes of the poorest half of America. For the richest 1% of Americans, the same taxes consume 7% of their incomes.
Or the aversion to 'redistributing' income, because that's a form of socialism. From 1980 to 2006 the richest 1% nearly tripled their after-tax percentage of our nation's income, while the bottom 90% of America has seen their share drop over 20%. Either the wealthy started working 3 times harder or we've experienced a massive redistribution of income toward the rich.
Internal Revenue Service figures show that almost half of our country's income goes to the richest 10% of Americans (those making at least $283,000 a year). The distribution of wealth is even more skewed, with the richest 1% of Americans owning more than the poorest 90%.
Here's another way to look at it. Since 1980 our country's productivity has steadily risen, with total income doubling approximately every 10 years. If the bottom 90% of America had shared in this prosperity at a level consistent with 1980 incomes, they would be making $45,000 a year instead of $35,000.
Local initiatives to balance the budget generally target middle-income earners. Regressive state income taxes, the sales tax, new property taxes, gas taxes, sin taxes, utility costs, license fees, parking meter rates. If this isn't enough, there might be a cutback on after-school programs in low-income areas, or a cutback on park services, even if it means some of the parks won't open as a result.
We rarely hear serious proposals to return income tax rates to the levels that helped to build a strong middle class a half-century ago.
Innovative, industrious business leaders certainly deserve to be well-compensated for their efforts. But it's a rare individual who has succeeded without the support of numerous other individuals within the company, or of all the outside people who provided the education, research, and product development that inevitably led to that success.
Don't penalize success. But don't skew the gains of productivity toward the rich, either. Great economists like Adam Smith, John Kenneth Galbraith, and John Maynard Keynes recognized that reasonable limits must be in place to curb abuses of the capitalist system. A progressive income tax is the best way to do this, no matter how much yelling we hear from the top.
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68 Comments so far
Show AllSuccess is merely a legally acceptable formula where an individual derives private wealth from a publicly supplied infrastructure. If success and genius could be equated, the Newton Company would own everything – but even that company would owe royalties to the estates of Kepler and Galileo.
Warren Buffet (second richest American, worth tens of billions))summed it up succinctly when he said that he pays a 10% income tax bill while his secretary who makes $60K pays 17%.
An equally serious problem lies in where the tax money (that the rich, the working class and the poor all pay) is spent, and how more and more legislation favors the rich at the expense of the working class and poor.
Lets assume that Rush Limbaugh's assertion that the rich pay x amount is true. The thing Rush doesn't tell you is how much tax money flows back to them in various forms of corporate welfare. Much of that corporate welfare gives the already rich an unfair advantage over the not-yet-rich to make even more money.
Corporate taxation is another topic that needs to enter the discussion. In 1970 corporations paid 29% of US income tax. Today they pay 6% and within 10 years they will pay none. The Limbaugh/McCain rhetoric about the US having higher corporate taxes than the rest of the world looks only at line 1. By the time corporations utilize applicable loopholes, the bottom line calculation makes the US a great place to do business.
Every dollar that a coporation is not paying in tax results in another dollar the IRS must collect from a working class person.
Unfortunately, under the law, a corporation IS a working class person.
Sioux Rose
Since wealthy elites control all forms of mass communication/media (apart from the Internet), they get to frame the discourse in ways that favor their own interests.
I think it was EZEFLYER who suggested an income cap. Although that may seem like a sci-fi ideal at the present time, once the full ramifications of this worldwide stock market vampiricm of funds are felt, the beginning stir of a global revolution of the proletariat will begin. I do believe a time will arrive in the next 12 years or so when no state (apart from a rogue one here or there) will allow ANY individual to amass the kind of wealth that now holds the power of a king, and through it surreptitiously sways national policy while inverting any semblance of the greater good. This stock market manipulation of false products has so gutted the very meaning of paper "wealth," as to make an entirely different value system inevitable. The cause has been set into motion, the effects are yet to be seen.
As usual, you hit it right on the head, Sioux Rose.
Uh, it was 91% for the highest income level (not sure what it was back then, maybe millionaires only) under President Eisenhower. Was Ike a thief?
THE 91% TAX RATE UNDER TRUMAN, EISENHOWER AND KENNEDY YIELDED THE POST WAR ECONOMIC BOOM YEARS.
Throughout the 20th Century economic growth has always been higher when tax rates on the rich were highest. Four reasons.
1. Poor and middle class people SPEND ALL THEIR MONEY, which stimulates the economy. Rich people, however, save and invest most of their money, so there is comparatively LESS spending stimulus. (Their most lucrative investment, of course, is to buy the government, where a million in "contributions" and lobbying can get you a billion in profits.)
2. Taxes on the rich are turned into public investments in education, health, transportation and energy which benefit the entire economy.
3. Taxes on the rich reduce the need for government borrowing and debt, which create inflation and a weak dollar.
4. The rich put their extra, untaxed money into high risk speculation which inevitably bursts, as is happening now. Why did banks push deceptive sub-prime, variable interest mortgages which could not possibly be paid back? Why did investment houses buy up "derivatives" of these impossible mortgages? And why did AIG "insure" these phantoms? Simple. Because at every step of the daisy chain, executives were making tens of millions of dollars in bonuses and stock options, protected by the Reagan tax cuts and loopholes. They didn't need to worry about the long term health of their companies, much less that of the overall economy, because they were walking away with wheelbarrows full of cash. Public outrage over the AIG bonuses is about 20 years too late. If they had always been taxed at pre-Reagan rates, the companies would not have been so reckless.
If you need some slogans for the tax-the-rich campaign, here are two you can use free of charge.
"Modern banking. It's not just a job, it's a heist."
and:
"Tax the rich. More money for billionaires is like more matches for 5 year olds."
Above the Clinton tax rate of 39.6% for over $250,000, we need two more marginal rates: 45% of so for over a $million, and 60 or 70% for over $5 million. Without these rates the economy will not recover.
Excellent summary!
St. Jerome's judgement : " Opulence is always the result of theft : if not by the actual possessor, then by his predecessors."
It requires a good deal of logic chopping to justify the massive concentrations of wealth (and power) that have resulted from a select few harvesting the productivity of average workers. The statistics are inescapable; as producivity of the worker has risen, hourly compensation has declined and the resulting profits are sucked off by those at the top.
Union busting was, I believe, a major contributing factor in this.
A revival of the union movement(with a better informed rank and file this time)could be the key to achieving more equitable participation in both profits from production and political power.
Instead, we have socialism for corporations, and unions for doctors (AMA), lawyers (ABA) and CEOs (PACs).
Think this game is rigged?
tnmoderate March 25th, 2009 12:19 pm, back when the income tax was 50 percent, just before Reagan came into office, the wealthy people I met through a job in the advertising world rarely paid the full tax rate. This is one of the 'hidden lies' of wealth that bloviators like Limbaugh carefully doesn't share with his Dittohead audience -- there are so many loopholes for protecting your money from taxation only available to the rich that they actually pay, like Buffett, about 10 percent in taxes, if that.
Rich people who earn their money from investments, trust funds and the like also aren't hit by payroll taxes -- the biggest chunk of the average worker's tax burden.
Many of my well-heeled pre-Reagan lunch companions crowed proudly that they had avoided paying any taxes whatsoever. Like the current crop of pampered dimbulbs, they couldn't understand why the waiter or sommelier gave them a dirty look upon hearing this happy announcement. One said, regarding a disgruntled waitress who had overheard him bragging, that "she's lucky she has a job." This was from a guy who had been living off a trust fund, never had to work a day in his life, graduated from an Ivy League college because, like Bush, he was a 'legacy,' and 'dabbled' in running a business for 'fun.'
Sorry, but thickheaded aristocrats like my former business contact should pay 50 percent or more in taxes -- call it a 'human stupidity fee.'
Aside from that, if you are worth a million dollars and have to pay 50 percent in taxes, you can still live comfortably on $500K, and let's keep in mind that your taxes go to maintaining the roads, the bridges, the courts, the police, the firefighters, the military, the government, and now the banks which makes it possible for you to stay rich and have highways for your expensive sports cars and Hummers to drive on to get to your summer home or winter ski resort.
Or do you think the middle- and lower-class, who typically have one or no car, should just foot the bill for the excesses of the wealthy with silent equanimity?
Tax the rich
feed the poor
tax the rich
'til they're rich
no more.
Whether we want to admit it or not, there is a class war in progress.
Guess who has been losing this war for the past thirty years ?
Famous quotes: Warren Buffet: "If there's a class war going on, my side is winning."
T Boone Pickens (the title of his book): "The first billion is the hardest"
Our system makes it very hard to get rich, and very easy to get richer once you're rich. Its socialism for the rich only.
uh, where have you been? The rich have been brutally raping the rest of us for 35 years.
It's true few paid the 94% on everything they earned; it's also true that few who make over $250,000 pay anywhere near %28 of their income.
On the other hand, most who make less than 100K pay the full 28% on everything they earn, because they are not wealthy enough for tax shelters.
So the wealthiest pay tax at 15% while the rest of us pay somewhere between 20-28%.
IN 1988 REAGAN LOWERED THE MARGINAL TAX RATE TO 28%, the lowest since 24% in 1929.
see: "Top US Marginal Income Tax Rates, 1913--2003"
http://www.truthandpolitics.org/top-rates.php
"If that were true, how would you explain the fact that the greatest prosperity in US history came under conditions when (as per http://en.wikipedia.org/wiki/Taxation_in_the_United_States)"
Europe and other parts of the world had not yet fully recovered from WWII. Also, Soviet Russia and it's satellites couldn't compete with their failed communist systems, and there were no emerging economies from India, China, etc. These factors represented a relative competitive advantage for the US.
Corrolation is not causation.
OK then, the problem being that there are now controlled experiments to evaluate economic "principles", there is just the real economy. It quickly becomes philosophical. Regarding taxes though, it does seem to make some sense at least that a tax on something will tend to be a disincentive for that something.
What's so wrong about everyone being poor? I seem to remember a famous philosopher once said, "If a man asks you for the coat from your back, give it to him." What a smart guy, he advocated sharing, even gave away food, what a weirdo.
Thank you!,Dave Ramsey, for those words of wisdom, but aren't you a bit out
of your league here.
Everyone is poor, but able to feed themselves and keep their kids alive and off drugs and able to get decent health care.
tnmoderate March 25th, 2009 12:47 pm: "and the result in fairly short order is that everyone is poor."
Your comment is belied by the fact that the wealthy, as has been noted in this thread, paid a 90-percent income tax rate in the US during the '50s and early '60s and the economy was never in better shape. Contrary to everyone being reduced to poverty, the middle-class expanded and home ownership was at its peak.
In Norway, where everyone is taxed 70 percent of their income, they also have a very high standard of living and you don't find people begging on the streets or living in cardboard boxes as you do here. Of course they have single-payer universal health care, low-cost housing for all subsidized by the government, a job available for nearly anyone who wants to work, and their citizens are not allowed to drop into poverty and homelessness. What a hellhole. ;)
Somehow the crazy Norwegians who could vote out this system have chosen not to, although there are plenty of right-wing politicians on the ballot who would enjoy making Norway more like the US. (Well, maybe not so many anymore.)
Sounds good, Uncle Ho. But it's no good. Tax the rich fairly, that's all you should ask. And it might be a good idea to put a limit on how much a person can possess. Why does a man or a family need billions of dollars, or even a billion, or even multimillions? OK, it's fun to play the money game (for some people), but then give your money to those who need it, keeping enough to live comfortably. When I see wealthy men buying jets or huge yachts, or yet another mansion, it makes me ill. It's also pretty sickening to see athletes and rock stars and movie personalities overspending and pampering themselves.
On second thought, your little poem does sound pretty good, Uncle Ho.
We could also end war. That would save a lot.
Joe
jclientelle March 25th, 2009 1:01 pm: "We could also end war. That would save a lot."
True. And if we reduced our defense spending to twice the amount every other country spends on defense, we could save hundreds of billions every year as well.
Innovative, industrious business leaders certainly deserve to be well-compensated for their efforts. But it's a rare individual who has succeeded without the support of numerous other individuals within the company, or of all the outside people who provided the education, research, and product development that inevitably led to that success.
It is nice to see this repeated in an article. In a sense, individual success is more correctly the success of a team.
...don't skew the gains of productivity toward the rich, either... A progressive income tax is the best way to do this, no matter how much yelling we hear from the top.
Why isn't an indexed compensation scheme (12-16:1 for highest to lowest paid in an organization) a better form of control? Often a small control at the source can achieve more control than applying similar measures to outcomes. Indexed compensation acknowledges that aside from a very few cases, it is the team that succeeds not just an individual within the team, however important the person's role might be.
The broader problem is currently both power and money are concentrated in the hands of a few. As a society, we have achieved enough spread in education to decouple these two concepts. An indexed scheme will help achieve this. This democratizes resource allocation, allowing people to invest in causes, programs, and organizations they prefer. Gamers will spur innovations in personal computing, Trekkies will invest in the space program, Social workers will create organizations to provide for health and disease care, and so on.
Capping income suffers from the same problem with that of the progressive income tax. Both try to control the problem at the sink, "downstream" if you will. Both give the impression of penalizing success, and worse, perpetuates the illusion that it is the individual that succeeds rather than the team.
Indexed compensation schemes are the better form of control - they acknowledge that the individual relies on others to succeed, promoting cooperation and harmony in society.
"Can't conceive of any way indexed compensation enforced on a private company could be remotely constitutional."
...as if this gov't showed the slightest respect for the Constitution...
Make it a condition of the corporate charter.
Yes. At the very least this will distinguish the "personhood" of a corporation from that of an individual, until we can figure out a way to get rid of the former.
the problem is that unlike eisenhower's time we live in a situation of almost unstoppable increasing scarcity where the most probable scenario means the death of billions of us in the not too distant future.... our first step must be to move out of our denial...
In 2004, the richest 1% of people in this country had 34.3% of the wealth. The next 9% had 36.9%. The next 10% had 13.4%. The poorest 80% of people had only 15.3%.
For these numbers, check the Economic Policy Institute:
http://www.epi.org/
For most of these numbers and additional troubling ones, go to:
http://www.inequality.org/
Click on "By the Numbers".
The Bush tax cuts further benefitted the rich and more wealth trickled upward. See:
http://www.commondreams.org/cgi-bin/print.cgi?file=/headlines06/0405-12.htm
Along with great wealth goes great power, political power, economic power, and control of much of the media. What can we believe?
Conservatives have said that Obama is trying to redistribute the wealth. I can only hope that this is true.
The Economic Policy Site has a series of books for different years entitled "The State of Working America". Some excerpts are available on the site. They make for interesting, if troubling, reading.
Wealthy people would stomp your head into the ground to make a penny. Let's stop romanticizing them and see them for what they are, human corruption. If you think this is stereotyping then you haven't lived long enough.
How much do they pay you?
Please don't tell me you carry all that water for free?
You are obviously too young or too ignorant. I was a republican. I voted for Reagan. I watched Greenspan under Reagan jimmy Social Security, FICA and my tax bracket UP while the low and high brackets were dropped. Any fool could see they were going after the cash cow that produced the most but had the least influence in politics. Wake up, pal, you are being used.
Quick Question,
Who caused the withholding of pay for income taxes to become law? Milton Friedman. Now it's against the law (they can fine you) if your withholding isn't 80% of what have to pay. And THAT, by the way, is unconstitutional. You are supposed to be paid interest on that withholding. Criminal activity is now so accepted that brainwashed fools just look at imbecilic talking points like "I've never worked for a poor man" or "the poor are lazy" while having a shit fit about our holy, saintly, philantropic rich. Poor fools. The rich love you, pal.
Not really that stupid, tnmoderate. Sure the wealthy can be gracious and they have good manners when it suits them, but when it comes to their vaunted 'bottom line', they will do anything including murder to keep or increase their assets and positions of power.
I used to work for the 'carriage trade' and have actually known a few who were what I'd call descent human beings, but there are always exceptions to every rule.
Go ahead, tnmoderate, and say what you really think, and then maybe we can see true stupidity. It's my guess that you belong to that class of really stupid people, the wealthy wannabes.
It appears that Mr. Krabs is not only a cartoon character.
We need a "NATIONAL ALLIANCE for a REAL GRADUATED INCOME TAX" (NARGIT?)
which will unite labor and all progressives.
If we do not restore taxes on the rich to pre-Reagan levels (70%) the economy will not recover.
Obama is now borrowing to stimulate the economy. OK for now. But if borrowing and debt continue to escalate, the Chinese will stop lending us money. They are already publicly worrying about whether they are going to get paid back. If the Chinese and the rest of the world lose confidence in the dollar, our currency will collapse, and interest rates will rise to attract new borrowing. The economy will fall apart, and today's recession will be remembered as the good old days.
Restoring pre-Reagan tax rates is the only way to avoid this catastrophe. Will somebody lead a single minded income tax coalition to head off the next DEPRESSION. We may have a few years before the ax really falls. But building the necessary coalition or alliance has to start NOW. Mr. Buchheit, are you ready to start the work? Who is going to step up to this plate?
There is no limit on greed as the present bunch of scoundrels have proved. It is even more of a tragedy when they are allowed to set themselves up as special people who follow the Biblical principles, and are the protectors of our nation. By hiding behind the Bible and the Flag, they are able to fool many people into letting them run our country for their own monetary benefit. The ridiculous mantra of "lower taxes for everyone equally and it will trickle down" works wonderfully for the rich crowd, and the masses fall for it.
We may not have much more time to change this sick situation, and if Obama cannot get it done, our country may never return to where we were just eight short years ago. It is great to work with everyone if possible, but now we need strong action to reverse this dangerous trend. Socialism is is always a good scare word, but what has out of control capitalism done for us? Some middle ground of philosophies is the only method that works over time.
The one obvious lesson to be learned from all of this is that 'trickle down' economics does not work. The rich are given all the power and wealth at first and are expected to spend and support those below them. In practice, however, they use their wealth and power advantage to exploit and manipulate those below them to both build even greater power and wealth and prevent those below from taking any of it from them.
In Australia we have a progressive taxrate which i've attached below (directly from the Australian Tax Office Website). System works great and is accepted by all and has been for my lifetime.
I suppose one of the advantages we have is that our biggest money people shift operations overseas to expand their market and begin extorting other systems. Say hi to Rupert for me.
Taxable income
Tax on this income
$0 – $6,000
Nil
$6,001 – $34,000
15c for each $1 over $6,000
$34,001 – $80,000
$4,200 plus 30c for each $1 over $34,000
$80,001 – $180,000
$18,000 plus 40c for each $1 over $80,000
$180,001 and over
$58,000 plus 45c for each $1 over $180,000
Also, this does not include the 1.5% medicare levy (Yes we get taxed 1.5% of our income for free health care. It's really not that hard!)
PS. You get money back if you also have private health insurance(which gets you into better hospitals faster and is only a new program.
"In Australia we have a progressive taxrate "
Similar to the US.
Yes, US federal tax rates are still progressive, but not as progressive as Oz rates, notice that the top brackets are 40% and 45% and kick at a lower income. Of course, we don't know what kinds of deductions are allowed in Oz.
It is rarely mentioned that the real regressivity in US taxes are the state an local taxes - especially when combined with the SS and medicare tax. My state has a flat 3.07% tax with few deductions allowed unless you are a business owner. Most local governments and some school districts also impose a 1% to 3% tax on "earned income" - i.e just paychecks not investment or business income. A progressive tax is prohibited by the state constitution. My state (PA) is suffering terible budget and crumbling road, bridge and public transit woes which could be address with a progressive tax, but it is impossible because the rich run our state.
Real estate taxes on primary homes are also very regressive, as shelter is a basic necessity. In many states, sales taxes are imposed on food and clothing and drugs. Local taxes are quite regressive in most US states. Most poor poeple pay a much greater percentage of their income in local taxes than the rich. For example in Illinois the lowest 20% income range pay 13% of their income in taxes, while the top 1% pay about 5% of their income in local taxes. It would be much worse than this if the federal SS and medicare tax is included. Really fair, huh?
www.ITEPnet.org
---USAn---
Remember President Obama's promise to make sure anyone who made less tha $50,000 a year would not pay federal taxes? We'll he let us know flat out that he was lying. In yesterday's press conference he answered a question on charitable deductions clearly referring to the "deduction" a person making $40,000 a year could make. Now why in the hell does a person making $40,000 a year need a deduction when you, Mr. President, had planned to eliminate federal taxes for anyone making $50,000 a year. You lied, Mr. President. You had no intention of carrying out your promise. You better reconsider or you will NOT be reelected.
Uh, I believe he was using an example under current law. Eliminating taxes for those making less than $50,000 a year would take new legislation, yes? That's up to Congress, Obama can't pass laws on his own.
"Obama can't pass laws on his own."
You are correct, but that doesn't stop presidential candidates from making promises about such laws.
Now that I think more about it, I suppose he could order the IRS to not collect taxes on lower income earners...but that is abusing power.
It's very clear that our tax dollars are flowing directly into the hands of that top 1% now - directly. I feel injured and robbed. In fact, often I think of the government as a well-organized, huge, criminal gang. The uber-gang, it's got it's accounting wing taking care of bidness in the US Treasury, fine diggs, and the military wing is chewing up the middle east and the industrial wing is making billions manufacturing stuff like depleted uranium munitions, weapons that deafen our fellow species in the ocean, cars that kill the planet, etc. Time for a taxpayer protest? April 15 comes near :)
I for one do NOT like these creeps picking my damned pocket. By the way I'm ditching Blank of America in favor of my little home-town bank - why do business with someone who is robbing me? :)
Just after April 15th...
04.25.09
http://EndTheFed.us
Rally at Every Fed Bank and Office
"Audit the Fed! Repeal The Fed!"
Support HR 1207 and HR 833
Even better, join your local credit union.
"But it's a rare individual who has succeeded without the support of numerous other individuals within the company, or of all the outside people who provided the education, research, and product development that inevitably led to that success."
I dunno. Everyone I've ever known who was "successful" always seemed to get to there because of who they knew, who they were related to, or what income bracket they were born into.
thegreatrockyhill March 25th, 2009 8:57 pm: "Everyone I've ever known who was "successful" always seemed to get to there because of who they knew, who they were related to, or what income bracket they were born into."
That's been my experience, as well. The so-called 'self-made' man or woman these days is usually white, comes from a nice neighborhood or suburb, attended good public schools, and often borrowed the money to start their business from family and friends. I have actually heard some of these people say they raised themselves up "by their own bootstraps," as a way of denigrating poor folks, especially poor folks who aren't the proper skin shade, for being lazy and unwilling to work hard for success. The day every white person becomes as brilliant as Da Vinci or Einstein, I'll buy this silly argument.