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Top 10 Reasons for Higher Taxes on the Top 1%
Funding for our country's children is being cut, but we
allow a hedge fund manager to make enough money to pay the salaries of
every public school teacher in New York City. Most of his earnings are
taxed at a rate less than that of his secretary.
We haven't been able to do anything about it because the cry of
'socialism' from the top generates fear in the minds of average
Americans. It's a meaningless cry. Here are ten reasons why the
wealthiest 10% of us, and especially the richest 1%, should be paying
higher taxes.
1. Benefits to the rich (and everyone else)
Americans with land and expensive houses have the most to lose by
failing to support national security and a clean environment and
infrastructure repair. And they have a lot to lose from the growing
levels of crime and violence. Researchers Richard Wilkinson and Kate
Pickett have documented numerous studies that correlate economic
inequality with shorter life expectancies, increased disease and health
problems, and higher rates of murder and other forms of violence.
About their book "The Spirit Level: Why Equality is Better for
Everyone," Wilkinson says: "We quote a prison psychiatrist who spent 25
years talking to really violent men, and he says he has yet to see an
act of violence which was not caused by people feeling disrespected,
humiliated, or like they've lost face. Those are the triggers to
violence, and they're more intense in more unequal societies, where
status competition is intensified and we're more sensitive about social
judgments."
2. Correcting the redistribution of income to the rich
The richest 1% took $7 of every $100 of America's income in 1980. They
have increased that to $20 of every $100 today. In just one generation
they've TRIPLED their cut of the pie. Most of the gains by the rich were
not 'earned' in the sense of production, innovation, inventiveness.
They didn't work 3 times harder than everyone else as they tripled their
share. They benefited from tax cuts and deregulation.
3. Correcting the redistribution of income from the poor
Since 1980 our country's productivity has steadily risen, with total
income doubling approximately every 10 years. If the bottom 90% of
America, most of whom have not been lazy, had shared in this prosperity
at a level consistent with 1980 incomes, they would be making $45,000 a
year instead of $35,000.
Change to Win, a coalition of union organizations, notes that the high
point for wages was in 1972 when union membership reached 28%. Workers
are now "earning only 83 cents of every dollar they earned more than 35
years ago, while their productivity has increased a dramatic 80%."
4. Outmoded tax brackets
Our tax system is stuck at 1980s levels. As noted by The New Yorker
economist James Surowiecki, "Our system sets the top bracket at three
hundred and seventy-five thousand dollars, with a tax rate of
thirty-five per cent...This means that someone making two hundred
thousand dollars a year and someone making two hundred million dollars a
year pay at similar tax rates. LeBron James and LeBron James's dentist:
same difference."
5. Inequality to instability
As explained by Time's economics writer Stephen Gandel, "Consider what
[money held by the very rich] is doing now. It is adding to our economic
problems not helping. For the most part it is not money being spent and
trickling down. Instead it just adds to that global pool of money that
sloshes around our financial markets and creates all types of
bubbles...it actually makes our economy prone to booms and busts, and
less stable."
6. Instability to catastrophe
The current level of inequality is equivalent to that of the years just
before the Great Depression. There is reason to suspect that this level
of income inequality is dangerous to our economy. The only other year
since 1913 that the wealthy claimed such a large share of national
income was 1928, when the top 1% share was 23.9%. The following year,
the stock market crashed, which led to the Great Depression. After
peaking again in 2007, the U.S. stock market crashed in 2008, leading to
what some are now calling the "Great Recession."
7. The Tax Myth
The belief that the "rich pay most of the taxes" is incorrect. The truth
comes from the U.S. Congressional Budget Office and the Internal
Revenue Service. It's true that the top-earning 1% of Americans pay 23%
of their incomes in federal income taxes, while the lowest-earning half
of Americans pay only 3%. But top earners pay 5% of their incomes in
state and local taxes (sales, property, and income taxes), while low
earners pay 10%. Top earners pay 2% of their incomes toward social
security, compared to 9% for low earners. Top earners pay 0% (i.e., a
negligible portion) of their incomes in federal excise taxes (e.g.,
tobacco, alcohol and gasoline), while low earners pay 2%. Top earners
save another 1% through the Bush tax cuts, while low earners see little
benefit. So total taxes for top earners are 29% of their incomes. Total
taxes for low earners are 24% of their incomes.
Beyond this, the US Department of Housing and Urban Development and the
American Gas Association concur that low-income households pay over 20%
of their incomes for utilities, while high-income households pay less
than 4%. As a result, total taxes and utilities for top earners consume
33% of their incomes. Total taxes and utilities for low earners consume
44% of their incomes.
8. The Consumption Myth
The belief that rich stimulate the economy is another myth. If anything,
the poor stimulate the economy. Low-income earners have a higher
"Marginal Propensity to Consume," which means that they spend a greater
percentage of their overall income on consumption. High-income earners,
on the other hand, will hold more in investments. A University of
California study showed that from 1980 to 2003 the share of capital
income (stocks, interest, dividends) owned by the richest 1% grew from
37% to 57%.
It's not just rich individuals holding the money. The 500 largest
non-financial corporations are currently sitting on $1.8 trillion in
cash.
9. Wealth with Honor
Although our country is built on capitalism, wise American business
leaders have recognized the danger of the "free hand" of unregulated
open markets. Adam Smith, the father of capitalism believed that
unrestricted businesses tend to engage in "conspiracy against the
public." John Kenneth Galbraith said "Capitalism left to its own
devices, doesn't work properly; it excludes the poor, ruins the
environment, and fails to deliver enough collectively produced goods,
such as roads, reservoirs, schools and hospitals."
Teddy Roosevelt (in 1910, exactly 100 years ago) criticized the "small
class of enormously wealthy and economically powerful men, whose chief
object is to hold and increase their power...We grudge no man a fortune
in civil life if it is honorably obtained and well used...We should
permit it to be gained only so long as the gaining represents benefit to
the community...I think we have got to face the fact that an increase
in governmental control is now necessary."
Taxes were raised on the rich shortly after Roosevelt's speech, and the United States gradually became a middle class nation.
More recently, Warren Buffett and Bill Gates have been trying to
convince the rich of their responsibility to society. "Responsible
Wealth," a project of United for a Fair Economy, is a network of over
700 business leaders and wealthy individuals in the top 5% of income
and/or wealth in the US who advocate for fair taxes and corporate
accountability.
(10) As the Tea Party argues, there should be no new taxes. On 90% of us.
- Posted in
63 Comments so far
Show AllThis is a very insightful argument as to why the wealthy should and MUST pay their share of the tax burden.
There's only one reason why this won't ever happen. Half of the members in Congress as well as the Supreme Court are MILLIONAIRES!!!!!
This is the reason, plain and simple, why things won't ever change. The wealthy are completely RULING (not governing) the U.S. and there's no reason to believe that will change until the system of BRIBERY known as LOBBYING (what a "cutesy" word) is branded for what it is - A CRIMINAL UNDERTAKING!!!!
Bribing a "public official" has always been considered a crime! WE HAVE A CONGRESS AND A SUPREME COURT FULL OF CRIMINALS!!!!
OOPS, DUPLICATE POSTING
This was a good article all the way up to the end. Why hold up people like Warren Buffet and Bill Gates as people who have honor just because they have more money than they know what to do with?? Those men made their money manipulating their markets and shutting out others in a very cutthroat way.
The rich won't be convinced to let go of their excess cash by showing them their "Responsibility to Society" any more than LeBron James was convinced to stay in Cleveland by the abject loyalty of his fans.
I saw that asshole Bernie Sanders on some late night talk show and not once did he mention raising taxes on the rich, not even a little bit. They're not even considering it.
Bernie Sanders has stated many many many times on Thom Hartmann's Friday "Brunch With Bernie Show" that the bush tax cuts for the wealthy MUST expire; hence raise taxes on the rich.
It's not a question of raising taxes on the rich - it's a matter of making them pay their FAIR SHARE according to their incomes! Bush cut their taxes for no other reason than to let them keep more of their money and had the needed number of votes to pass it.
Manipulating the markets, as an 18 year old software designer and young investor, both coming into the world with next to nothing? Boy they must have had some good blackmail material!
A more accurate statement would be that they used the same tools available to anyone else in our free and capitalist society, only much effectively. And for this you seem to despise them. So do tell, when was the last time you gave half a billion dollars towards the eradication of a disease like Bill Gates? Or anything at all for that matter? Ah yes, the generous hearts of the progressive party - as long as it's someone else's money...
> So do tell, when was the last time you gave half
> a billion dollars towards the eradication of a disease like Bill Gates?
Money doesn't eliminate the disease alone. You need preventative policies which the US backed governments oppose.
The only reason that needs to be provided for raising taxes on people with higher incomes is that they pay too little now.
Actually, mightymite, it helps to talk about the big picture too - about what high levels of inequality does to a society. You can check out this site to see why greater equality helps **everyone**, and not just the poor people:
"Why More Equality?"
http://www.equalitytrust.org.uk/why
If you get a chance, check out the book "The Spirit Level: Why More Equal Societies Almost Always Do Better" by Richard Wilkinson and Kate Pickett mentioned in this article (and also in that site).
You can tax everyone equally but still have an unequal society. I don't disagree with your argument but we're not getting a straight definition for equal society in the US.
>>"...but we're not getting a straight definition for equal society in the US."<<
Martian Bachelor, personally, I'm not so concerned by "equal" distribution as I'm about "equitable" distribution - that is, one that's clearly based on fairness. Again, instead of defining it, I could describe it as one where everyone has their basic needs met, and then some, and has a life with dignity. It's clearly a mix of objective ("everyone", "basic needs") + subjective ("life with dignity") criteria. As a start, the subjective part can be set aside - it doesn't matter.
But the starting point has to be a recognition of the need for sustainability - both ecological as well as economic sustainability. I think some level of fairness should logically follow if the focus is on sustainability, because it's difficult to maintain an unfair society for long.
It's not difficult to see that certain resources are finite and some other resources have a finite rate of renewal. An intelligent society has to work out a system that can function using mostly renewable resources that have a finite rate of renewal, and using non-renewable resources judiciously.
If the basic framework is right, other things like taxation or wealth distribution will fall into place nicely. Unfortunately we are far from such a framework.
Ha! want to see a fatcat turn white?! Just demand a 10% flat tax with no Exemptions. (Sometimes they even faint) cool eh?
>^^<
Left out the inordinate use of the commons by the rich (courts, police, monetary system, contract enforcement, etc., not to mention the environment).
Have you ever watched "cops"? Cause let me tell you, it's not very often, or hmmm, ever in fact, that they have a domestic dispute, or violent offender on PCP in the gated communities. But I'm pretty sure you get to bypass court for PCP offenses these days. Yeah...
Illinois is currently in deep doo-doo, and people are screaming about a 50% tax increase - to a whopping 6% of their IRS adjusted gross incomes. It would be simple to hit the top of the charts with, say, a 10 year, 10% surtax. Wind it down each year after that by 1%. Unfortunately, Governor Quinn is weak-willed and would be unlikely to make any kind of decisive move on taxes, except for the rest of us. There is so much that could be done to make taxation progressive; to punitively tax trans-national corporations on the jobs they send overseas; on the minimal taxes, if any, they pay to their offshore hosts...How 'bout a 100% tax on the proceeds and on the payouts for cage fights?
Is Illinois a flat-tax state? If it is, such a tax increase is unfair, unless generous decuctions or credits are provided to moderate and low incomes.
Good luck getting the politicians dependent on wealthy donations for getting elected to listen. They wouldn't want to lose their cash cows, now would they? They still find ways to give the rich all our money anyway.
Please go to www.fixcongressfirst.org and check out the Fair Elections Now Act info.
Don't the rich know that all their money will mean nothing if a strong middle class is eliminated?
I get your point, however the global trade agreements that have allowed and fostered outsourcing of labor and production, and much easier access to markets worldwide, have completely changed that calculus so to speak. CEOs of these large multinational corporations don't really care whether or not there is a strong middle class here. In fact, an ever expanding poor class, even more powerless to change anything politically, works to their advantage, as it makes it more likely that they will continue to get what they want in more deregulation, more tax loopholes, fewer labor laws, etc.
what we are seeing is an end of the NATION-STATE model of world division -
the rich no longer see themselves as Americans - but as global; citizens - and the whole world is a cherry ready to be picked and spit out -
the rich could care less about the american middle class or the working poor etc....
they could care less about the environment, or police and fire protection as they increasingly have their own private services -
-----------------------------------------------------------
and an economic system that gives ALL the gains from the economy to one segment of the society is BY DEFINITION flawed!
I believe it's time to tax wealth - any wealth over 10 million should be taxed -
but I'm sure the politicians will come up with the most regressive tax around - a NATIONAL SALES TAX
That light at the end of the tunnel is not daylight but the proverbial train heading towards us.....
The wealthy should be taxed for the same reason that people hold up banks: that's where the money is.
But first, we need to nationalize the Wall Street banks and hang their officers and directors.
q
Seize private property by force and execute the owners, he says. Yes, we really are moving back to the good old days of Stalin here tonight, eh comrade?
Ah yes, misunderstanding socialism by invoking Stalin. Works every time.
Cutting the taxes of the rich causes economic recessions and finally economic depressions by a. increasing federal deficits and thus forcing the government to either waste money by borrowing it at high interest rates or by cutting expenditures and thus lowering demand for goods and services, and b. the rich socking away their tax cut monies in Swiss bank accounts or other offshore locations, where it just sits, idly, cutting demand. Our economy is driven by demand, either personal or government, so if people are out of work and poor they can't spend much, so demand falls, more layoffs occur and the economy spirals down.
So if you like recessions and depressions, just give tax cuts to the rich and wait awhile...
I had an idea recently, while thinking about how Congress is now owned by the corporations. Every person elected (or appointed, in the case of Federal judges) to public office should be required to convert all of their holdings in corporations over government bonds, and how those bonds mature over the course of the person's public service would depend upon their service to the national good, as opposed to corporate greed. That would eliminate the temptation to vote in favor of bills like the recent health INSURANCE "reform" bill, which was written by the insurance industry at the expense of the well being of _real_ Americans, instead of "corporate persons".
Good luck getting such a bill through Congress, or signed by the president.
Bush's tax cuts for the rich created jobs ... overseas. The money was not invested in America, it went to move American jobs to foreign countries.
Warren Buffett, a billionaire, pays a total (fed, state, local) tax rate is 0.2% of his income and investment gains, while a typical working, middle-class family pays 28% on its wages, about a 150-fold higher tax rate. Mr. Buffett pays a tax rate of 0.02% of his net worth, while a typical middle class family pays 36% of their net worth, about a 2000-fold higher tax rate. From http://fairsharetaxes.org
The top 1% in the US have gone from owning 22% to 40% of the nation's wealth in the last thirty years. This is largely due to the tax cuts for the wealthy investor class, started under Reagen 30 years ago. They were supposed to encourage investment and strengthen the economy. Instead average GDP growth during that 30 years was 2.7%, 25% lower than the 3.6% average for the 30 prior years. During those 30 prior years the top federal income tax rates were 50-92%, compared to 35% now.
The favored tax treatment for investments and the wealth concentration that resulted has lead to the demand for investments exceeding the supply of worthy investments .... investment bubbles ... recessions ... all but the wealthiest are at risk of losing their jobs. homes, opportunity to educate their kids...
See more: http://fairsharetaxes.org
Even some of the "less fortunate" millionaires are facing foreclosure because they have spent beyond their means.
I just read an article by Ted Rall about the fact that he is now making half what he made a year ago, and is struggling to keep his house. Chase has refused to renegotiate the mortgage on his house.
Yes, and if you bothered to actually fact check, your ridiculously slanted site, you would see that it is full of lies! I give you - http://www.washingtonpost.com/wp-dyn/content/article/2007/06/27/AR2007062700097.html
Buffet, using his tax rate of 18% to demonstrate the unfairness of the system at a Dem fundraiser. Well, to be fair your site was only off by a factor of a thousand or so...Amazing how easy it is to discredit some propaganda isn't it? 5 seconds and a Google toolbar.
Having to live within your means. That is just so sad for the mere millionaires.
Above a certain income level, the government can in fact spend the money more effectively than the rich.
Absolutely Brian,
If the government taxes the rich to create working class and middle class jobs, the stimulus effect is huge. Working people spend all their money, thus providing jobs for other people. The rich stash it away in banks, stocks and bonds, providing jobs for no one. That is why we have our recession soon to be depression. Too much money to the rich means there is no purchasing power, and therefor no jobs. As is happening now.
Fellate a rich person for lunch. Report this comment.
We need a new, stone memorial in Washington D.C. - on a scale with the Lincoln and Jefferson memorials. Dedicated to the memory of President Ronald Reagan, it would consist mainly of tiered rings of public toilets.
As visitors use those toilets, all public waste would channel downward and eventually flow through and over the exhumed remains of Ronald Reagan.
Carved into the marble walls would be the long list of things the United States experienced as the short or long term result of his Himalayan arrogance, his class narcissism, and [God help us] what he defined as Morality.
One memorial area could be dedicated to The Theft of Democracy. Another could be dedicated to the concentration of wealth in the fewest hands possible with legal impossibility of being transferred; the gelding of the entire Middle Class, mooting the economic value of most academic degrees, and the atrocity of turning Middle Class hatred upon the poor in stead of the rich; humiliating the poor and making survival wage jobs available those who accept that sexual access goes with the territory.
Let the architectural design contest begin. Nota Bene that Mya Lin is ineligible. She would realize too quickly the best design is a plain pile of shit.
Veritatis Splendor, Trylon.
Wow, I like it. And make the memorial modular, in order to add wings or additions for tyrants who were inspired by reagan.
Man, I really like the way you think! I was stoned through most of the Eighties, and I remember a has-been b-movie actor being elected (along with a former spook who almost got the has-been assassinated) but the only way I can recall what an imbecile Raygun was is through the homeless I encountered while wandering around the southwest and the venom my sister (still today) has for anyone who says anything good about him. Oh, and I remember ketchup as a vegetable.
If you are filthy rich you have stolen.
A new meme emerges: Multimillion dollar riches are obscene.
There will be the time when they will try to conceal their loot. Many will try to escape the fervor of a collapsing system. A new spontaneously applied ‘justice’ will emerge. There will be no safe havens safe enough to hide. Brigades of revenge will surface, hunting down the purveyors of inverted totalitarianism who will realize that obscene wealth will be their demise rather than their prosperity.
"The modern conservative is engaged in one of man's oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness."
John Kenneth Galbraith
"It's true that the top-earning 1% of Americans pay 23% of their incomes in federal income taxes"
This is so NOT true.
The top 1% of Americans pay 35% of their income in federal taxes if all that income is from a paycheck. Nothing is assumed or specified in this poorly written article. When the Bush tax break expire, soon, they'll pay 39%. I have absolutely NO idea where that 23% comes from in that article.
> I have absolutely NO idea where that 23% comes from in that article.
Tax loopholes.
35 percent kicks in after making so much, all money till then paid at lower rates
but 1 percent is misleading and includes doctors who were in training till they were fourty and owe two hundred thousand in debt,
and business owners who worked years barely making it before having some good years
etc etc
it is really the top 1/1000 of one percent who are f***ing it up
and who pay only 15 percent tax on dividends and capital gains
so the tax rate for the hyperrich is really much less than 23 percent
more like warren buffet who pays 3 percent
So, the elderly and disabled--even disabled veterans--should not be allowed to vote? Is this your first time out of the institution?
rich don t have to vote, they own the media and brainwash the masses, especially, I might add stupid white people
No representation without taxation. The PREDATORY CAPITALIST CORPORATE WELFARE KINGS which locate outside the USA TO AVOID TAXATION and are accorded the worldwide protection by the Pentagon/spy agencies. The WELFARE KINGS derive most of the benefits by USG taxes while paying none. Sounds like welfare to me. NO REPRESENTATION WITHOUT TAXATION.
No representation without taxation. No government contracts without taxation.
I suppose the residents of Auschwitz may have debated the fairness of their treatment and fate. That's what conditioning does to people--it distorts their sense of proportion and their frame of reference.
In the United States, if you're not making $1,200.00 per week, you're struggling to get by. You're one busted radiator hose away from the precipice. You're working and working and seeing your pitiful wages buying less and less. And to think of saving for that rainy day is to indulge in idle fantasies.
This article came close to this point then shied away from it. It assumes the $35k per annum of old was then a fair, living wage. No it wasn't. So, adjusting it to $45k does nothing but perpetuate the problem.
The shift in wealth does have a lot to do with tax policy but it is a gross overstatement to say that it is the dominant cause. The fact is, the American worker has been cowed into submission by the business community. Hatred for unions bred the sort of unions no one respects, as these so-called advocates for working people sold out their members and lined their own pockets with Mob money and "badly invested pension fund losses."
Clean house, ladies and gentlemen. We need to demand a new standard. We need to demand that people who work full-time at meaningful occupations earn enough to support a family on one salary. We need, at very least, the corporate profits of this country end up in the pockets of the workers. Let's see how well the "sit-on-their-butts-and-do-nothing" shareholders get by on the sort of crumbs they've been throwing at the rest of for the last 40 years!
The only way to get everyone thinking as Americans instead of us and them is to tax folks back into society. Instead of letting money accumulate in the hands of the wealthy elite.
The problem is, if corporations have bought and paid for the government to do their bidding, then there is no incentive for them to change course. The talk is about the deficits instead of taxing wealth as needed to break even. Only then would everyone begin to sit down and truly discuss what we spend our money on.
The next time you hear anyone talking about the deficits, get in their face and tell them that there wouldn't be deficits if we taxed income over $3M per year at 90% regardless of its source, i.e. dividends or interest. Most of us would never see that tax rate, not that we all wouldn't mind, eh?
If this doesn't happen, then there will be bloodshed after, as some other CD poster said, angry women crowd the streets demanding food for their starving children. In fact that's probably the only way that anyone in power now would be motivated to change the status quo, if they felt their very lives were threatened if they didn't exercise the morality they were all raised with. Otherwise, that upbringing only gets dusted off for a trip down nostalgia lane on Sunday mornings for an hour or so as a "must do" before brunch.
How's that?
The US is a free country.
You don't have to work and make a lot of money and pay the tax that goes with it.
With a progressive tax system, the richest and highest earners stay that way, we just bring them down to our level. Yes, if you claim to be American, you must be in the same boat.
After we get the deficit covered, we can talk about where we waste our money, but don't think I'm gonna let my kid be on the hook for wall street bankers taking value out of the system. That makes all the rest of us slaves and fools for still playing the same game and not starting over like the founding fathers did.
If the politicians can own corporations, (for analogy, think Hudson Bay Trading C0.) who can buy the politicians, and you pay the bill, not the corporations, then we're where the founding fathers were in the 1770's.
So, Mr. "I'm a shill for the rich", you must earn more than $3 million dollars per year to be equating 90% to being a slave. How much are you pulling in, and is it all in stocks, or was it gifted to you in a trust fund?