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The Phony Budget Crisis: Forget Austerity, Tax the Rich
Everywhere you look, from the federal government to the states to your hometown, budget crises abound. Services are being slashed. Politicians and pundits from both parties tell us that the good times are over, that we’ve got to start living within our means.
![](/sites/commondreams.org/files/imce-images/tax_the_rich_0.jpg "Members and supporters of Welfare Rights Committee stand in front of banner after a "tax the rich" last year in Minnesota. (Fight Back! News/Kim DeFranco)")
Members and supporters of Welfare Rights Committee stand in front of banner after a "tax the rich" last year in Minnesota. (Fight Back! News/Kim DeFranco)
It’s a lie.
Two case studies have made news lately: California, where new/old governor Jerry Brown is trying to close a $25 billion shortfall with a combination of draconian cuts in public services and a series of regressive tax increases, and Wisconsin, where right-winger Scott Walker says getting rid of unions would eliminate the state’s $137 million deficit.
Never mind the economists, most of whom say an economic death spiral is exactly the worst possible time for government to cut spending. Pro-austerity propaganda has won the day with the American public. A new Rasmussen poll funds that 58 percent of likely voters would approve of a shutdown until Democrats and Republicans can agree on what spending to cut.
The budget “crisis” is a phony construction, the result of right-wing “starve the beast” ideology. There is plenty of money out there—but the pols don’t want it.
There is no need to lay off a single teacher, close a single library for an extra hour, or raise a single fee by one red cent.
Every government can not only balance its budget, but wind up with a surplus.
The solution is simple: tax the rich.
Over the last 50 years tax rates for the bottom 80 percent of wage earners have remained almost static. Meanwhile the rich have received tax cut after tax cut after tax cut. For example, the rate paid by the top 0.01 percent—people who currently get more than $6.5 million a year—fell by half (from 70 to 35 percent).
Times are tough. Someone has to pay. Why not start with those who can most afford it?
Europe has the world’s best food, its best healthcare system and its best vacation policy. It also has one of the fairest ways to generate revenue for government: a wealth tax. In Norway, for example, you pay one percent of your net worth in addition to income tax.
What if we imposed a Norwegian-style wealth tax on the top one percent of U.S. households? We’re not talking upper middle class here: the poorest among them is worth a mere $8.3 million. This top one percent owns 35 percent of all wealth in the United States.
“Such a wealth tax…would raise $191.1 billion each year (one percent of $19.1 trillion), a significant attack on the deficit,” Leon Friedman writes in The Nation. “If we extended the tax to the top 5 percent, we could raise $338.5 billion a year (one percent of 62 percent of $54.6 trillion).”
But that’s just the beginning. Wealthy individuals are nothing next to America’s money-sucking corporations.
Business shills whine that America’s corporate tax rate—35 percent—is one of the world’s highest. But that’s pure theory. Our real corporate rate—the rate companies actually pay after taking advantages of loopholes and deductions—is among the world’s lowest. According to The New York Times, Boeing paid a total tax rate of 4.5 percent over the last five years. (This includes federal, state, local and foreign taxes.) Yahoo paid seven percent. GE paid 14.3 percent. Southwest Airlines paid 6.3 percent. “GE is so good at avoiding taxes that some people consider its tax department to be the best in the world, even better than any law firm’s,” reports the Times‘ David Leonhardt. “One common strategy is maximizing the amount of profit that is officially earned in countries with low tax rates.”
America’s low effective corporate tax rates have left big business swimming in cash while the country goes bust. As of March 2010 non-financial corporations in the U.S. had $26.2 trillion in assets. Seven percent of that was in cash.
The national debt is $14.1 trillion.
Which is a lot. And, you see, entirely by choice.
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85 Comments so far
Show AllYou're quite correct Ted that taxing the rich is part of the solution. I would have also included slashing the military budget by at least 75%, eliminating Homeland Insecurity and the CIA, closing all U.S. bases abroad, raising the minimum wage, unionizing all Americans, establishing universal, single-payer healthcare, raising import taxes on frivolous made-in-China goods and repealing Citizens United.
Having said that, I don't see how this can be done. Is doesn't matter who we vote for, a Democrat or Republican seems to get in at every election further undermining the public interest. A national protest is a remote possibility as most Americans shape their political viewpoints on the basis of MSM pundits who naturally never point the finger at their corporate bosses. Even in the supposed liberal bastion of Wisconsin, the majority of voters elected the right-wing ideologue Scott Walker! I'm afraid we will have to sink much, much further until the American electorate finally 'gets it'.
Space Cadet, YEP. But the elites will not do any of this. It isn't in their interests. They would rather see us fighting each other. How many people that used to be in unions are now saying get rid of them. It is the stupidity of the people and the whoring ways of our government that got us into this mess. Only if we rise up will there be a chance. but I doubt it. All the talk about Libya and the treatment of the civilians will go out the door and they will do it to us.
Those FEMA camps are not CT.
It is not the stupidity of the people. Our government has complete control of the media and do not allow us to know anything but their propaganda. Our only chance is to rise up and follow the directions that Tunisia and Egypt have given us. Get out on the street!! They are doing it in Wisconsin and in Libya, we need to do all over our nation. On Saturday, March 16th there will be demonstrations on the anniversary of 'shock and awe'. That is the day to get out and say, "No austerity!! End the wars and tax the rich!"
Our elected officials are not heeding our voice. We need to make a stand to FORCE them to listen to us!
I strenuously disagree that "it is not the stupidity of the people." While our government has complete control of the media, how is it that you know anything other than their propaganda? The Truth is not something that is available only to the mystics and the elite. It is there for everyone to see if they but make the effort. What you claim is the cruelest hoax and the most pernicious propaganda. Don't buy into it!
The truth is not "there for everyone to see." Even among those with the luxury - yes, the luxury - of being able to put the time into this that many of us do, most have not seen through the fog of propaganda and indoctrination.
We are in the Homeland occupied zone of the empire, and the intimidation and indoctrination here is extremely intense.
Blaming the working class people is buying into the propaganda and is the cruel hoax.
The working class people are not stupid. Also, fear mongering is not helpful. Neither is the "it's hopeless" theme.
What are you proposing happy talk, sociopathic, psychopathic optimistic psychobabble propaganda to continue instilling the American public with mindlessness. Ignorance is chosen.
To start, don't buy into the meme that "tax cuts" are the only thing to do and that tax increases are bad.
Please don't blame the working class people - us.
Two comments:
Well, duh.
But, how?
"The budget “crisis” is a phony construction, the result of right-wing “starve the beast” ideology. There is plenty of money out there—but the pols don’t want it."
of course they do, the pols take the money to screw the masses every time an election rolls around.
...peace...
FIRST IMPRISON THE RICH! Not all of them .of course; just 100,000 or so of the worst offenders.
Then strip them of their assets and distribute the fire sale proceeds among the populace in the form of tax free reparation payments.
After that you can tax any rich bastards still around.
And make sure anyone making $50,000 or less pays ZERO federal, state, county and city income, property or sales taxes. I guess everyone has forgotten that Obama stated on the campaign trail that he didn't believe people making $50,000 or less should pay income taxes. It was just another campaign lie that we are all so nauseatingly used to.
Practice makes perfect.
It's ALWAYS time to consider a national strike for any or no reason. Whether it would be sensible is another question.
"What if we imposed a Norwegian-style wealth tax on the top one percent of U.S. households? We’re not talking upper middle class here: the poorest among them is worth a mere $8.3 million. This top one percent owns 35 percent of all wealth in the United States.
“Such a wealth tax…would raise $191.1 billion each year (one percent of $19.1 trillion), a significant attack on the deficit,” Leon Friedman writes in The Nation. “If we extended the tax to the top 5 percent, we could raise $338.5 billion a year (one percent of 62 percent of $54.6 trillion).”
Who is this ignoramus, Ted Rall?
The U.S. federal government does not have constitutional power to impose a tax on wealth. States and municipalities have broader power and impose taxes on, e.g., real estate and in some states boats and airplanes. The sixteenth amendment to the U.S. Constitution was designed to overrule a U.S. Supreme Court decision that the federal government could not tax income, and it does that, but it does not extend to taxing wealth. The "death" tax (i.e., estate tax) is a tax on wealth transfer, which has been equated to "income" for the recipients. The sixteenth amendment provides as follows:
"The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."
See http://en.wikipedia.org/wiki/Sixteenth_Amendment_to_the_United_States
Constitution
Horrible Horace, the poster boy for Procrustean Bed thinking, strikes again.
Hang on to your wallet, pal. The mahket is about to take the dive of the century. Your 401K is about to become a fractional derivative. LOL
horace needs to go back to wall street, doubt he makes his money on a 401k
has no clue what is happening to regular people
You have a substantive response to my constitutional analysis?
The constitution could be amended. Sounds far-fetched, but it has been done before.
Yes, how about Article I, Section 8 of The Constitution of the United States:
"The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defense and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States"
A wealth tax would be uniform throughout the United States.
Article I, Sec. 8 doesn't do it.
See, http://en.wikipedia.org/wiki/Pollock_v._Farmers%27_Loan_%26_Trust_Co.:
"Pollock v. Farmers' Loan & Trust Company, 157 U.S. 429 (1895), aff'd on reh'g, 158 U.S. 601 (1895), with a ruling of 5–4, was a landmark case in which the Supreme Court of the United States ruled that the unapportioned income taxes on interest, dividends and rents imposed by the Income Tax Act of 1894 were, in effect, direct taxes, and were unconstitutional because they violated the provision that direct taxes be apportioned. The decision was nullified in 1913 by Amendment XVI to the US Constitution."
As a result of Pollock, a federal tax on wealth would be unconstitutional because, as a practical matter, it could not meet the apportionment standard.
You have a substantive response to my constitutional analysis?
Horrible Horace is nervous. He is starting to double post. Stop pounding that keyboard, Horace!
I know, the thought of losing some of your beloved money strikes fear in your left, oversized ventricle.
No, I was trying to respond separately to you and that other idiot, djb, but the system didn't place my posts correctly.
Me, an idiot?
My word, horrible Horace, your masterful command of Shakespeare's language is slipping. Surely you can be more creative in your Ad Hominem, sociopathic, pathological delivery.
Look up idiopathic diisease. You might learn something. You suffer from it.
Ah- the "system" didn't place your post(s) correctly. You must be in a great deal of pain. It shows through in every idiotic rant that you post. Hmmm. Horace. Whore ass. Harass. Well, maybe one day the "system" will place you AND your posts correctly.
Your posts belong in the recycle bin - then simply click "delete", and you really all ready know just where you belong, as all of us know where you belong. You're just going to be so upset when your neo-con world comes tumbling down around you because we know that you like to think that you are "special" and "rich" and one of the "elite".
But you're not. You are just Horace; the whore ass who likes to harass. And when the "system" breaks down- and it will- you think that the magic neo-cons are going to scoop you up and save you. But they won't. They despise and use you and you have been so busy alienating everyone in contact with your miserable whore ass! What will grumpy, pretentious, arrogant little Horace do then?
The End
(because no one cares about you or your ravings.) buh-bye.
Horace, you are on the other side. Trying to disguise that is dishonest.
You say whatever you think might work to advance the agenda of the few, the wealthiest. End of story. No matter how persuasive your argument may be, why should we care what a person who opposes us thinks?
Why should I care whether you care? You are in the miniscule minority and you have no influence whatsoever on what goes on in the United States.
There it is. You don't give a shit what anyone here thinks. Because you represent the rich, the tiny minority who control virtually every goddamn thing out there, you are ipso facto RIGHT in your opinionating. You're on the side of raw, unabashed power over everyone not rich enough to have any power. That screams loudly through every one of your more-power-to-the-rich posts. You are fascism incarnate, that is, if you actually have a body. I think you're some disembodied program running from a Wall Street outpost.
Thanks. You make my points for me.
No, the poor working class people are not a "tiny minority." Yes, as you say we have no influence whatsoever on what goes on in the United States. That's the problem.
Unlike what your Marxist ideology dictates to you, you do not represent the "poor working class people". The left-wing individuals who post on this website have been with us in spirit for a long time, going back to Norman Thomas, Earl Browder, Gus Hall and others. A politically insignificant and impotent group of kooks, crackpots, anarchists and some truly deranged people, but nevertheless fun to play with.
we produce more goods and services with less labor than ever before
the true value of money is the goods and services available to buy
therefore, we have plenty of money value
we should all be working less, retiring earlier, having more vacation, better benefits
and government needs to tax the rich to pay for essential services like military, police fire, ems, highways, mass transit, including air travel, repair infrastructure
and why not pay for things that enhance life like national parks, the arts, how about science to help ecology, clean up toxic waste, reverse greenhouse gas
all of these would put money in peoples pockets they would spend it and it would create more jobs by the multiply effect
multiplier effect give money to people who would spend it like middle class or poor, expand the economy, by a factor of 5 o 10 for every one given out
reverse multiple, give that money to the rich who only hide it or use it to position themselvees for more money, shrink the economy by a factor of 5 or 10
Perfectly stated.
Here is the same point of view expressed differently:
http://www.commondreams.org/video/2011/03/02
People are asking how to redistribute the wealth. Simply return to the tax system of Dwight Eisenhower. Simply reassert the importance of protecting the society at large that was practiced in the past and included in ancient cultures all across the world. Go back in time. Study the past. Ask the elders to talk to us about the past. For that matter look at the teachings of the major religions of world. We only need to go back to our roots. It is all right there for anyone to see. Look at Walker in Wisconsin or for that matter the celebrities on Fox News. Would the people of the past have countenanced such abusive and self-centered behavior? Only arch villains from the past behaved in this way and even the memories of these people continue to condemn them to this day. Watch carefully how these people operate. The words and techniques used by people such as Walker can be found in the past. Those who do not study history are condemned to repeating it. That is what is happening today. We are repeating history. There is really nothing new here.
We could create another history channel. Murdoch is not about to permit this kind of exposure on his own network.
The stated tax rates in the 1950s, which lefties love to cite as the good ol' days, are illusory and misleading since there were so many tax loopholes -- personal service corporations, deductions for accelerated depreciation, oil depletion allowances, perpetual, offsetting devices to shift income from one tax year to the next (e.g., cattle feeding programs in which the feed was bought in year 1, generating a tax loss, and the cattle sold in year 2, generating a gain), tax straddles and other tricks and tropes -- largely eliminated in the the bi-partisan 1986 tax reform law -- that few if any rich people actually paid taxes at a 91% rate.
I'll concede that there were loopholes in the 1950s, but by what quantity did they reduce taxes paid by the rich? If they knocked the 91% rate down to, say, 75%, that's still a big difference from what is paid now.
How about to close to zero via income shifting from year to year, depletion alllowances, etc.?
JerzyJoe says it was about 50%. Zero, 50, 90. I wonder where all these figures come from.
I don't think there are any reliable figures, but it is clear that the loopholes were used extensively to nullify the Democrats' confiscatory tax policies.
Zero is a lie.
I did some research into it, and the cumulative amount for the richest .1% was 59%, and these folks were STILL the richest SOB's on knob hill!
The tax rates they paid back then put them in what was closer to the same boat as the rest of us than the minuscule rates they pay today. It also helped put a bunch of our fellow countrymen & women to work on infrastructure projects that paid far greater dividends to the country than the rich making "investments" would ever have done. Remember the interstate highway system?!!!
Don, correct, and the next time we fix the roads it'll be chain gangs from here to Tucson.
Hello Horace,
Thank you for pointing out that there were many tax loopholes available during the 50's. No one paid taxes at 91% due to the fact of a graduated income tax and the 91% figure was the top level but it was only achieved after paying taxes up from dollar one till reaching the 91% at lower taxes on the prior money. Example if you pay 1% on dollar one and 2% on dollar 2 and 3% on dollar 3 etc until dollar 91 at 91% most of your dollars were taxed at a lesser tax rate. We need only one tax loophole today all money earned both for individuals and business is taxed! The amount paid is based upon a graduated tax.
I have been craving articles like this! Yes!!!!
Fantastic, clear, easy-to-understand-with-your-gut graphics from recent Mother Jones article "It's the Inequality Stupid":
http://motherjones.com/politics/2011/02/income-inequality-in-america-chart-graph
Ahh, nothing like seeing a nation in denial over its collapse, while we in the middle, watch both sides reach out with knives instead of open hands to solve the problems at hand. The greedy of both sides are at it in full-force.
I'm afraid Mr. Rall and others like him are about to get a schooling in economics. That box of bandaids on which they've used to patch-over their failed policies (both parties) is now sitting empty. The scams have finally and totally overwhelmed the systems of governments in Washington and its 50 states, along with people like Mr. Rall's common sense.
The job of the author, like many others in the press and world of political hacktivisim, is to create a fuss. Its just what they do.
I'd stay clear of the silly 'fussin', name calling and general hate mongers (on both sides) and stock the pantry, hold some (decent) coinage, save your dough and stay home until the coast is clear.
You might even consider buying a gun. Yikes, I know, its a terrible option to exercise. But probably needed --if you have a family.
Just my opinion. But it could get mighty ugly out there. Hope I'm wrong.
"You might even consider buying a gun. Yikes, I know, its a terrible option to exercise. But probably needed --if you have a family."
Yeah, for when your in-laws get foreclosed and then move in with you.
One side, the fascists.
When will you be withdrawing and going it alone? Soon?
No fussing. We'll just grab pitchforks and torches and burn the plantations of the suckers who are robbing the wealth of this land and the souls of the people.
There's an Earned Income Tax Credit for working stiffs; how 'bout an Unearned Tax Surcharge on adjusted gross incomes over $1,000,000.00? Dividends, capital gains, hedge fund profits, etc. can all have their status as "income" changed to slow down the acceleration of cash piling up in private or corporate accounts. Death Tax? That only effects a small number of people - Bill Gates, the Kochs, and the Waltons among them. It was started under Teddy Roosevelt to put a lid on the accumulation of unearned wealth. But again, as previous posters have said, none of this will happen in the current legislative/political environment.
"Times are tough."
BECAUSE OF THE RICH!