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The Truth about 'Class War' in America
Republicans claim, in Orwellian fashion, that Obama's millionaire tax is 'class war'. The reality is that the super-rich won the war
Republicans and conservatives always fight back against proposals to raise taxes on corporations and rich individuals by making two basic claims. First, such proposals amount to un-American "class warfare", pitting the working class against corporations and the rich. Second, such proposals would take money for the government that would otherwise have been invested in production and thus created jobs.
Taking his cue from Warren Buffett, President Obama has announced a 'millionaire tax' as part of his budget plan; Republicans have denounced it as 'class war'. (Photograph: Rick Wilking/Reuters)
Neither logic nor evidence supports either claim. The charge of class war is particularly obtuse. Consider simply these two facts. First, at the end of the second world war, for every dollar Washington raised in taxes on individuals, it raised $1.50 in taxes on business profits. Today, that ratio is very different: for every dollar Washington gets in taxes on individuals, it takes 25 cents in taxes on business. In short, the last half century has seen a massive shift of the burden of federal taxation off business and onto individuals.
Second, across those 50 years, the actual shift that occurred was the opposite of the much more modest reversal proposed this week by President Obama; over the same period, the federal income tax rate on the richest individuals fell from 91% to the current 35%. Yet, Republicans and conservatives use the term "class war" for what Obama proposes – and never for what the last five decades have accomplished in shifting the tax burden from the rich and corporations to the working class.
The tax structure imposed by Washington on the US over the last half-century has seen a massive double shift of the burden of taxation: from corporations to individuals and from the richest individuals to everyone else. If the national debate wants seriously to use a term like "class war" to describe Washington's tax policies, then the reality is that the class war's winners have been corporations and the rich. Its losers – the rest of us – now want to reduce our losses modestly by small increases in taxes on the super-rich (but not, or not yet, on corporations).
To refer to this effort as if it had suddenly introduced class war into US politics is either dishonest or based on ignorance of what federal tax policies have actually been. Or perhaps, for conservatives, it is a convenient mixture of both.
Much the same sort of analysis applies to the Republican claims that taxing corporations and rich people takes money that would otherwise be invested in business growth and thus create jobs. Last Friday, the US Federal Reserve reported a record quantity of cash on the books of US businesses (over $2tn). Even with the currently low taxes on businesses and the rich, that money is not being invested and is not creating jobs. It is not being distributed to anyone else and so is not being spent on consumer goods either. Taxing a portion of that money to finance Washington's stimulation of the economy by spending that money – or even better, by using it to hire and pay the unemployed – would be a much more effective way to provide jobs than leaving it as cash hoards in corporations' coffers.
Last month, Warren Buffett upset many of his "mega-rich friends" by what he stated categorically in a New York Times op-ed. He made it clear that he had never encountered any serious investor who decided whether or not to invest based on tax rates. It was always the prospects of profit that made the difference. He then urged Americans to raise taxes on the rich like himself. He also hinted – none too subtly – that it was becoming politically dangerous for the whole economic system's survival to keep having the minority of extremely rich people paying federal tax at lower rates than the middle- and low-income majority.
The final irony of loose talk about class war is this: the Republican and conservative voices opposing all tax increases for corporations and the rich thereby provoke, as Buffett intimated and New York Mayor Michael Bloomberg more explicitly warned last week, a renewal of class consciousness in the US. Then, Washington might learn what class war really is.
83 Comments so far
Show AllIf the Democrats were actually a populist, opposition party, we would have heard them labeling Republicans' serial regressive tax policies as class warfare.
Not only have Democrats failed to call Republicans on their class warfare tax policies, it was a Democrat President, House and Senate that extended the Bush tax cuts beyond December 31, 2010.
Hard for them to do that, when they belong to the same millionares clubs and actually are exempt from insider trading laws.
ray, democrats are simply not the radicals that today's republicans have become. Have you seen the recent video of Andrew Breitbart's call for right-wingers to make use of their guns against liberals?
Your use of fear in lieu of a social analysis of how oligarchic wealth controls society is telling IMO Greg. You cannot in fact critique oligarchic wealth because your beloved DIms are ALSO in their pocket Greg. Get back to me when you understand how state capitalism including Keynsian booster shots keeps the empire afloat, mmmK Greg?
Until we challenge big business, bank, and state centralist control of society the pattern will keep repeating itself regardless of whether the spokes model reading the teleprompter lines has a D or R embroidered on their pocket, get it?
We agree on at least one thing: "...oligarchic wealth controls society..." Usually with the Ds we are slightly better off than with the Rs. Lately the Rs are going completely loony tunes, however. Luckily you are free to think you may have a magic solution.
Oh how, have we been "better off," under OIly Bomber? Cite specific policy, and back it up with references, thanks!
I was going to say we've not had to deal with the nuclear fallout from Iran, as McSame would have launched (or told Israel to do it for him)... However, we are dealing with fallout anyway, from Fuckushima. Then I thought about health care, and I know that mcsame would not have fucked with it at all, so instead of being worse off under Obama's health "care" plan, you'd have had the same old same old pay for it all system. But of course, you don't have even O's screwed up plan, because you don't get it unless he's re-elected.
Fortunately, you didn't ask me the question. :)
While we argue about R's and D's, here is a reminder of the Big Picture we are facing:
http://monthlyreview.org/2001/03/01/global-media-neoliberalism-and-imperialism
If the non-rich had any sense, they'd revert to the condition of the school yard and, when the term "class warfare" was used, would yell, "You started it and it's not fair!"
It appears to me that Bloomberg's comments area analogous to relaying threats of extortion. Pay those people off, or they'll hurt you. Is this really the argument you want to make about poor people? That they cannot control themselves and you'd better do what they say, or else?
Yes, that's exactly the message. It's how we got the New Deal.
Poor people are harmless, if they're happy. Oppressed people, less so.
Extortion? Hey, I didn't choose to be born in this world. Nor did anyone else. I don't know anyone who chose to be poor (some priests make that claim, but they have their asses covered in cloth, their bellies are filled and heads housed in parish homes). I, like everyone else, would rather be doing productive things and having a decent life.
If it takes a bit of extortion to get that, fine. It's not about controlling 'ourselves', especially when the rich don't control themselves (L. Helmsley wasn't an anomaly), it's about living. I think there are many who have argued on this board and others that killing in defense of your own life is acceptable. No job in a capitalist society does equal death, you work it out.
"Those people?" My friends and family and loved ones, my working class brothers and sisters in the struggle?
You call this extortion - stop oppressing people or they might just fight back some day?
This is some sick and distorted thinking you are displaying here, and it is all too common. You want us to be suspicious of fear those who are suffering the most, who have the least power, while we are to see the predators among us as benign and admirable.
Is this really the argument you want to make about rich people? That they can and will hurt us so we had better not rock the boat?
Take it as you wish. The uber rich have bought our government and through bribery (lobbying) have designed the system to funnel the wealth of those who actually create it up to those who either "manage" or "invest."
When government fails to represent the masses it is no longer an effective government and must be adjusted so the it represents the majority (democracy) rather than the few (oligarchy.) Of course the ideal situation is a republic, where the voices of the minority are heard as well as the voices of the majority.
Horace, er Peter P., what we in the bottom 80-90 percentile want is equality, such as that which existed between the end of WW II to the beginng of the seventies. Reagan, with his voodoo economics (trickle down) unleveled the playing field by giving the rich less regulation in investments with lower taxes and corporations less regulation in many areas that cut costs to them (but not the prices they charged for their products or services) along with lower taxes. He begin the unraveling of Roosevelt's New Deal, which had worked almost perfect in creating an economy that not only benefitted the poor, but the rich as well. Henry Ford was right on the spot when he defended paying his workers decent wages. By doing so, they could afford to buy the cars that they made. That bit of common sense no longer exists in the corporate world.
The upper crust have used their money to buy the influence they have. The rest of the population doesn't have that option, so, if representatives in government ignore the voters after they have been elected, the only recourse by the masses is to use their strength in numbers and forcably take back what is rightfully theirs.
If you consider that extortion then so be it. Of course you also have the option of not being so self serving and selfish and contribute to society rather than take from society. Why is that so difficult to see and why is it so difficult to see that concentration of wealth is destructive to everyone, including those with the wealth?
Horace!
Thanks, aussidawg!
It's a trifling matter at best, but I just couldn't put my finger on this former nym and I was fitfully worrying it like a loose tooth. Ah, relief!
Buffett hinted, "....it was becoming politically dangerous for the whole economic system's survival to keep having the minority of extremely rich people paying federal tax at lower rates than the middle- and low-income majority."
"Washington might learn what class war really is."
A revolution called for by the likes of Anonymous can be easily neutralized by police and media. Riots on the other hand just seem to ignite with or without a spark and are much harder to control. Rioters in England were mocked for stealing DVD players. Maybe that is what a capitalist revolution first looks like. The west is all about the money.
The riots of the 60's were about poverty. The riots brought about Johnson's War on Poverty. Today, a continuing mega-gap between rich and poor no longer threatens our democracy, our democracy was lost, the mega-gap may just now be starting to threaten the wealthy themselves. The Plutocrats may be sensing this and starting to verbalize their premonitions.
I agree with your opinionon the political power of riots.
In a plutocratic system like ours that provides no real representation and sham elections, the only recourse is mass action.
In the 30's we had viable mass organizations to press for change through strikes, marches and direct action. Today, US mass organizations are in a truly sorry state, and riots are the last option left to resist effectively on a mass scale.
First you have peaceful organized scheduled protests and a lot of fawning letter writing. Then, civil disobedience by committed activists - people like masked anarchists, Green Peace, etc.... Riots are the final stage of societal breakdown before all out war. Riots are spontaneous, unorganized, born of poverty and oppression. Everyone needs a stake in the empire.
Peaceful protesting seems to lead nowhere. Civil disobedience gets a few people sent to prison. Although I in no way promote violence myself, history shows that riots get results. Spontaneous outbreaks of rioting around the country happened in the 60's. To pacify people, Johnson introduced the "War on Poverty".
Today, we have declared war on the poor themselves. It is hard and costly to control an unruly mob. It is easier and cheaper to keep them pacified. What would it cost Plutocracy to keep the poor in beer money and cigarettes? What would it cost Plutocracy to bring jobs home? What happens to the poor today will happen to the what is left of the middle class tomorrow.
Extreme wealth is no more than numbers on a page. Greed kills.
Is Mr. Buffett willing to release his tax returns, so we can take a look at which loopholes he uses? I am wondering how many tax attorneys he employs or has under contract? Why is it he always comes up with these statements about his secretary approximately a year before elections, but after the elections nothing is ever done about it, even when democrats win? I remember him making this same claim back in 2007.
Mr. Buffett isn't the bad guy. Nothing wrong with someone being rich as Midas. what is wrong is not paying your fair share, which Buffett is trying to do. He can't pay MORE than the tax rate his income is pegged at under the law, or it will just be refunded to him. At least Buffett is trying to get the government to tax him MORE, which is more than I hear any other rich bastards asking for. I say bravo to Mr. Buffett, a true rarity among the rich Elite.
Demonstorm: Well said. It's amazing what some in this forum will seek cause to discredit. I encourage forum readers to seriously consider what motivates these individuals... they pretend to lean left, but what they're seeking to do is discredit ANY progressive causes, strategies, agendas, or spokespersons.
That is absolutely true. What is really scary is just how pervasive the thought police are; if I'm not mistaken the readership on this site is such a miniscule portion of the total population that it makes you scratch your head why they would even bother. Most of the regulars here are not easily fooled and the scales have fallen from their eyes a very long time ago. I'm guessing: must make sure these ideas do not spread. Most of the honest debate that happens here is not over the truth of events, but how to proceed from that.
Buffett paid very low taxes overall, because he, like all rich people, took advantage of all the loopholes he could find.
Whether he isn't the bad guy or not is more of a philosophical question. When billions of people have too little to eat and have no decent lodging, is it evil to have 10s of billions of dollars (each billion is the equivalent of a person earning $100,000 per year for 10,000 years). How many children with serious medical conditions could he have helped, or how many who face hunger every night? Personally, I think having billions of dollars is per se evil, no matter how much good you may do with it.
I am not positive, but it is my understanding that Mr. Buffet did not take advantage of every loophole he could find. I believe he stuck to all the regular-type loopholes without indulging in any of the various intricate tax dodges that so intrigue many of the wealthy and their tax specialists. After all, most of his income is capital gains and subject to only 15% tax.
Sources, please. Show me where Mr. Buffett took advantage of "tax loopholes" to lower his tax burden. If you can't, then please don't use that specious argument in your response. That's called an "Assumption." I prefer to deal with facts. And the facts are that Mr. Buffett has spoken very loudly and vociferously about how he thinks it is ridiculous that he pays less a percentage of his income in taxes than his own staff does. He has repeatedly referred to the Capital Gains tax, which is pegged at 15%, and how when he sells stocks for millions in profit, he only pays 15% - and NO FICA - while his secretary has to pay 25% of her paycheck on her piddly earnings. He has proposed raising the CG tax over and over so he can pay the same rate as his employees do.
"Nothing wrong with someone being rich as Midas."
Says you. WTF kind of leftist are you? Or are you a libertarian.
Buffets extreme wealth and all extreme wealth comes from the oppression of the mases worldwide. Extreme wealth is also a threat to democracy.
Buffet may be the nicest of the damned, but he's still damned.
I have a few questions,
What good gene does a politician possess that a CEO does not? Is not human nature the same for both? Are you going to tell me that a politician who made it to the top was able to be less ruthless then the CEO who made it to the top?
If human nature is the same for persons of both entities, why should I fear the company more then the government? Any company controls a miniscule portion of the GDP pie, involvement with their products/services is voluntary, and their coercive power is limited. With the government their percent of GDP is huge, involvement with their products/services is mandated by law, and their coercive power is enormous. (fines, jails, military and how many nuclear weapons are at their disposal?)
If you get a majority, would it be moral to vote your constituents more of a minority's income or assets? What is there to stop the majority from doing that?
Let's suppose I'm rich, how much will you allow me to keep, and should I thank you for allowing me to keep anything?
If governmental services are superior why is participation forced?
What good gene does a politician possess that a CEO does not? Is not human nature the same for both? Are you going to tell me that a politician who made it to the top was able to be less ruthless then the CEO who made it to the top?
Very little difference under our system.
You should fear both, the State and the capitalists. In the US, the capitalist oligarchy controls the State and uses the state's power to gain ever more wealth and power.
"If you get a majority, would it be moral to vote your constituents more of a minority's income or assets? " Yes, in the interests of social equality and because most fortunes arise from corruption and government favoritism.
What is there to stop the majority from doing that?"
Nothing.
"Let's suppose I'm rich, how much will you allow me to keep, and should I thank you for allowing me to keep anything?"
I would tax your income and assets and use them to build a more just society. you don't have to thank me for it.
Progressives see fairness as an outcome, Libertarians as a process.
I do fear both Government and Companies as human nature guides both so the same rules apply. That is why I prefer a fair process to a fair outcome. To get your desired outcome the process has to be bastardized and living (in poker you are better than me so my 1 ace beats your full house to keep the outcome equal). The power granted to accomplish this corrupts and leads to the cronyism we both despise.
"most fortunes arise from corruption and government favoritism." Some definitely: crony capitalism at work. My side expects cronyism always, but governmental power is a multiplier. That is why we seek to limit governmental power, not to expand it.
I have enormous distrust of persons who rise through the ranks of political machines or through the dog eat dog world of large corporations to look after the interests of society at large. Their egos are way to big, ruthlessness is a prerequisite and being comfortable with picking the winners and losers is disgusting.
"I would tax your income and assets and use them to build a more just society." To me that is not justice.
I think a professional non-political civil service backed by strong whistle blower laws provides a lot of protection against cronyism. Of course the Repubs hate civil servants for that very reason.
Also anti-trust laws, if properly enforced, can reduce cronyism and the acquisition of too much power by the few.
Private companies inherently are concerned only with the bottom line and could care less about the interests of the masses. This is why a government that is in the control of the masses, not the corporations, is critical to regulatingthe excesses of capitalism.
Strong unions are imporaant here too. They are the most effective way for the working class to advance its political and economic interests. This is wher I put my energy, for the most part.
One problem that I have with with libertarianism is that it provides no method for workers to advance their interests. Under libertarianism, the rich quickly capture the government and bust the unions.
Frankly I see libertyarianism as mostly concerned with the freedom of the wealthy classes and hardly at all concerned with the interests and freedom of the masses.
As for taxing wealth being unfair, that presumes that the wealthy "earned" and are absolutely entitled to their wealth. I don't believe that and think that the wealthy have benefited the most from society and should give a LOT of money back.
I'm by no means the best Republican, I thought G. W. Bush was one of the worst presidents in my lifetime, maybe the worst president of my lifetime, but Obama has been even worse. The only think that scares me more than Obama, is the Republicans winning both houses of Congress and the Presidency in the next election, (that would lead to even more cronyism then we already have).
"Private companies inherently are concerned only with the bottom line and could care less about the interests of the masses." EXACTLT! SPOT ON!!! Why, because human nature guides them. Here is our problem: Politicians are inherently only concerned with hanging on to power, and could care less about the interests of the masses. Why, because human nature guides them also.
I was in two unions, they have their problems, but I am a union supporter. I think the society at large looks to government to protect them from abuses of capital, and not unions in today's society. I think society is in error on that one and would be better served by unions then government.
I think most Libertarians are more concerned with freedom for their families. If truly honest, I believe humans in general are self interested. All are concerned with the conditions of society right until it interferes with that which they are passionate about. An example is we all felt bad for the Japanese people after the tsunami, but lost little sleep over it. If we were to lose our jobs we would lose far more sleep and take far more action. Which was worse for society at large?
I'm not a class warfare guy, I don't care what others earn, I try to concern myself with my actions and how I can serve my family.
I do wish you well, and enjoy intelligent discussions. Thank You!
US productivity has doubled over the last four decades.
This means that you should be working half as many hours as were worked each week in 1970 to maintain a 1970 lifestyle or you should be paid twice as much as you currently make.
But, wages have fallen by 7% since 1970.
This is not the "invisible hand" at work but the result of "central planning" (yes, central planning, just like in the old Soviet Union as well as in Japan, South Korea, Singapore and any other former third-world country that marshalled their limited resources to become a first-world economy).
The middle-class economic ruin was planned. This is a complete betrayal of the middle-class by the elite.
I can't think of one US industry that would exist without government support:
Financial Services - needs a bailout every 22 months;
Commercial air travel - needs government airports & air traffic control;
Pharmaceuticals - government research develops over half of all significant drugs & the exorbitant price paid for drugs only in America is a private tax;
Defense Industry - totally government dependent;
Computers & Internet - both developed by the government;
Housing & Construction - tax credits, interest deductions, etc;
Fossil Fuels - a complete market failure, if downstream environmental costs were included in the price, fossil fuels would not be used.
"US productivity has doubled over the last four decades....But, wages have fallen by 7% since 1970. "
Yes, and I can remember being told constantly in the 1970's that higher wages were tied to "higher productivity." This was the meme in news reports constantly as we suffered daily and weekly from higher prices on store shelves, at gas pumps and at the Doctor's office. At the same time wages stagnated and insurance costs ate more and more of our paycheck. Then in the 1980's we were told of increasing wages and a "rising tide." Funny, I didn't see my wages rise, only the prices on the grocery store shelves, etc. Now that I am semi-retired they tell me I need to give up some of my "entitlements."
Frankly, I'm mad as Hell....
People blame Reagan - and he surely deserves blame and a nice hot eternity If there's a God in heaven but much of the blame can be placed at Nixon's feet:
1. Ending the gold standard
2. Nixon and Kissinger Opening China in 1972
and the die was cast.
Forget the gold standard. It's a stupid relic of the past. It has long since outlived its usefulness. Do some textbook study by a non-wacko. Also, trying to ignore/isolate China forever was not a realistic plan.
"Forget the gold standard. It's a stupid relic of the past. It has long since outlived its usefulness."
Yes, if you are a hedge fund manager or a derivatives trader and you want to make $1.5 trillion magically appear on a daily basis out of the $70 billion or so of the world's GDP, then yes, the gold standard is a "stupid relic."
Removing the gold standard was a ploy by the Banksters to funnel wealth from the debt of the masses into their coffers.
Do you know which team your on?
he's been ONLY reading the mainstream corporate econ textbooks
The gold standard was in force for the Great Depression, remember? It was there for the many boom/bust cycles in the previous decades. And by the way, mtdon, sometimes a little inflation is just the ticket.
There is nothing magical about gold.
Why not go on the "lead standard" or the "tin standard" or use sea shells for currency?
the gold standard lessened Inflation - an unseen tax on the working class....... The end of the gold standard by nixon allowed the capture of the economy by the Fiat Federal Reserve......
and we didn't need to engage China and use them as a race to the bottom slave labor supply - coupled with trade policies that gave benefits to outsourcers.... We didn't Open trade with Cuba...... we didn't need to with China either..... Reagan is offered the mantle of Supply side economics but it all started under Nixon.
Sorry but i don't buy either of your arguments......
Inflation has two sides. If you owe money, inflation works in your favor because you pay back with less valuable money. A little 1930s German inflation would help a lot of homeowners today.
Absolutely, but emphasize "little" and leave out the "1930s German." A little inflation would do us lots of good.
It might help with their Underwater house - but it would take away any savings by the increased cost of Health care, Fuel, Insurance and Food. Those are affected by inflation much more than the slow moving Wages are.
Sorry but inflation is the hidden Poor Mans Tax..... the reason?
Wages never keep up with inflation so inflation directly eats away at your purchasing power........ especially in today's world where the COLA's are skewed to under measure inflation.
Sounds good on paper but doesn't work in the real world.
When unions are strong, then wages can often easily keep up with inflation. In fact there have been times when union bargaining, with inflation in mind, has actually kept wages above inflation, which ironically helps to increase the rate of inflation. Of course while this 'sounds good on paper,' in today's 'real world' unions don't hold a lot of sway.
Thank you for using the term "central planning."
I've been explaining to my friends for years that the economic system in this country is just the capitalist version of central planning; instead of a communist party and a politburo, we have the corporations and the mega-rich ruling class.
Look around you: most companies (i.e. brands) are part of monopolies and cartels and THEY decide on the prices and products they will roll out. They will also manufacture shortages (Exxon anyone) from time to time to extort more profits. Monsanto, Archer Daniels, General Foods, Big Pharma, etc etc are all part of that central planning scheme.
Over the last 30 years The Top 1% have Tripled their wealth while the rest of us have Lost Wealth and our Average Income has stagnated or decreased.
So we have a current Economic System that delivers All the Gains from Growth to basically 1% of the population.
This is the very definition of a flawed and Corrupt Economic System forced upon us by a Captured Governing system.
Crony Kleptocratic Capitalism is a farce - the wealthy can start giving up some of their ill-gotten gains or we'll take them by violence and rioting. During the Revoultionary War we tarred and feathered these Economic Royalists. The French used the guillotine. The Russians lined them up against a wall and shot them. FDR and Eisenhower taxed them at around 90% on incomes over 3 million.
It's their choice. Which of the above will they choose?
Hear! Hear!
AGREED! Maybe its time too organize, and make that change happen?
Right-on! Mt. Don & Egg.
People who contribute to the CD forum often surpass the articles' authors in content, depth of analysis, and sheer honesty!
"Over the last 30 years The Top 1% have Tripled their wealth..."
What's really insidious: the "rest of us" were instrumental in tripling the 1%centers's wealth by being good little consumers. Hell, they even gave us dozens of credit cards so that we would consume ad nauseum. Yes sir, we enslaved ourselves into debt so we could build the Chinese "miracle" and fatten the portfolios of the investor class that benefited from shipping all those factories/jobs to China. We've been had! We were lured into the stock market game so that we would have some "skin in the game" and have the illusion (delusion?) of being part of the ownership class. All the while, that easy credit was also in place to give us the illusion we had buying power to replace "real" living wages. After all this, do you still feel like sitting in front of the 24/7 mammon-worshipping-messaging TV tube? This country has gone nuts and has lost its moral compass and its sense of values and balance.