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A Very Good Reason to Tax the Very Rich
A hedge fund manager who makes $5 billion in a year is making enough money to pay the starting salaries of 100,000 firefighters. On a one-year monetary basis, a financial expert is worth 100,000 times more than the man or woman racing to the scene of a medical emergency.
![](/sites/commondreams.org/files/imce-images/thomas-paine.jpg "Thomas Paine noted that everything "beyond what a man's own hands produce" came to him from society, and therefore "he owes on every principle of justice, of gratitude, and of civilization, a part of that accumulation back again to society from whence the whole came."")
Thomas Paine noted that everything "beyond what a man's own hands produce" came to him from society, and therefore "he owes on every principle of justice, of gratitude, and of civilization, a part of that accumulation back again to society from whence the whole came."This is an extreme case, but there are a million other examples of Americans who, on the average, have tripled their share of the American income pie in just 30 years (after taxes). The richest 1% didn't work three times harder than the other 99 million American families. They benefited from the social and capitalist structures to which they often object paying taxes.
The very rich have made their fortunes in good part because of taxpayer-funded research at the Defense Advanced Research Projects Agency (the Internet), the National Institute of Health, and the National Science Foundation. They benefit disproportionately from national security and a business-enhancing infrastructure. They have taken advantage of tax cuts, de-regulation, and a financial system fine-tuned for the making of money at diminishing risk. The richest 10%, with 80% of the stock market and a 15% capital gains tax, have settled back to watch their assets grow. According to a study by the University of California, in 2008 only 19% of the income reported by the 13,480 individuals or families making over $10 million came from wages and salaries.
The standard argument against this is that everyone has an equal opportunity to benefit from past accomplishments. But it isn't true. An American born in 1970 in the bottom economic quintile had only a 17% chance of making it into the top two quintiles. Reports from Brookings, Pew, and the OECD show that much of Europe has more economic mobility than the United States.
Even for those who headed up the newest computer-based technologies, their successes have depended on the input of thousands of physicists and chemists and chip designers and software engineers and market analysts over many years to lay the groundwork for the infrastructure and protocols needed for success.
At the time of the American Revolution Thomas Paine noted that everything "beyond what a man's own hands produce" came to him from society, and therefore "he owes on every principle of justice, of gratitude, and of civilization, a part of that accumulation back again to society from whence the whole came."
But instead we face a destructive form of class warfare in which a small percentage of people are taking almost all the new income. The middle class has been under siege for 30 years. Based on Internal Revenue Service figures, if the average middle-income family had just maintained its share of America's productivity held in 1980, it would be making $10,000 more per year ($45,000 instead of $35,000). An astounding 90% of American workers have seen their inflation-adjusted incomes go down since 1999.
Everyone who contributed to American productivity deserves to benefit from it. Extreme disparities in the system need to be fixed. That means taxed.
27 Comments so far
Show Allunfortunately you'll never see articles like this on the corporate owned media like msnbc, cnn, fox, abc, cbs
Because economies rely upon transactions that are governed by the laws of thermodynamics, all those who provide labor or energy to the transaction bear the victimization of the losses occasioned by the second law of thermodynamics. Finance provides neither labor nor energy and obtains all the profits, in addition to bearing no losses whatsoever.
Interesting viewpoint.
Changing the tax codes is meaningless. I don't want an opportunity to climb the ladder, but rather, everyone to stand on the same ground, share the same planet.
It is disingenuous to use the uniformed firefighters to make the case for the "down trodden" middle class. I suppose it is a bad time to play the law enforcement card. Are they worth more than a field hand who labors all day to bring food to the middle class refrigerators?
$35,000 must look mighty inviting to people living on $2.00 a day. Bucheit fails to acknowledge that the thirty five grand is only possible because of the under valued worker elsewhere. I've heard enough of this "save america" bs.
Thanks for pointing out the obvious:)
When my toilet is plugged up I know exactly why plumbers make what they do. Especially if I've tried to fix it first.
You have a toilet? Count your blessings.
I agree. We don't need just to change the tax code, we need to change the social-economic system that produces massive inequality of income (and power). You mention $2 a day. Did you mean $2 an hour? I think this is more like what US agricultural workers are paid. But consider the clothes on our backs and the shoes on our feet. These are likely made by someone making $2 a day.
We also shouldn't forget the environment that is getting ripped to shreds by corporate jets of the wealthy and the motor vehicles of us privileged folks in the (over-) developed world. Most of us, including most CDers, are "bought into" a system that's rapidly destroying the viability of Planet Earth.
d, I was referring to the $2 a day paupers, just didn't make the transition clear. Sorry. $10 an hour doesn't generate enough cash to pay rent in many places.
Over developed is right. Most in the western/modern culture can't imagine leading a simpler, less techno dependent life. They were born into it and don't know any other way. I understand, but they are going to have to get over it.
Were you planning to move somewhere else? If so then I'm sure you don't care about saving America. Quite understandable.
Not hardly. I'm attached to the land, not the culture.
Isn't it curious that this continent is named after a European?
Arrogance is as arrogance does.
The rate of taxation on the second million should always be higher than the rate on the first million.
Unfortuntely the ultra-wealthy are Sociopaths -
They don't care if they blow up the world for another nickle.
They don't care if they blow up a company that has existed for hundred years employing thousands - for another nickle.
They don't care if they have to start a war and kill Millions for that extra nickle.
They don't care if 50,000 Americans die every year because they don't have health insurance.
They don't care if every fish and living organism in a river floats to the top Dead.
They don't care if they have to blow up the world economy destroyng trillions in wealth to make another nickle.
These sociopaths DO NOT CARE. They only understand power, violence and threats.
And by their actions they will bring violence upon themselves eventually - none too soon I say.
No doubt about it, mtdon. And one of the side effects of a nation run by sociopaths is a populace that emulates them. Do I even need to say "Black Friday"?
The truth is told! HURRAH!
Paul, excellent article!
As a retired faculty member, I would add one correction, given the current discussion over military spending. DARPA did not create the Internet (cap. I). That group simply experimented with packet-switched networking. The Internet should be credited to: the work at Xerox PARC in the late 70's (ethernet), the work of Bill Joy and others at Cal (networked UNIX), the creation of the Web at CERN by Berners-Lee and others, and the creation of the first Web browser (Mosaic) by Andreessen and colleagues, while he was a student at a state school. It's a good example of building infrastructure as a creative collaboration over time, and most of the accomplishments were funded with public dollars. One amusing memory is a faculty member telling me in 2000 that the Internet had not made any company a profit...
Taxation is not going to redistribute wealth only pay for programs at a government level. Relying on government to fix our problems will only leaving us waiting or leave us worse off, or leave us utterly dependent on government programs. What we need is a redistribution of the stuff of wealth which at its core is land. All over the world land is seized and sold illegally to corporate interests. The people who used to use that land to provide their livelihood are now forced to work their own land for slave wages ($2 a day would be generous) or die of starvation. Children are forced to work instead of going to school, and the entire economy is corrupted so that only a chosen few are allowed to advance.
Taxation might be a beginning, but we need a fundamental shift in our economy away from the profit motive before we can really talk equality.
Good article, but you have the messaging wrong. It's not "Tax the Rich" which translates to "punish the rich for being successful" in the minds of most people. It's "make the rich pay their fair share" just like everybody else. That's the bottom line, and who can argue with that?
Wealth/power concentration can be prevented by yearly referendums to cap personal net worth. Taxation fails because it is decided by the 1% and politicians fail because they are bought by the 1%. Only direct economic democracy by the 99% can control the money-power
A few months ago, I got into a deep debate with a person with the tea party, about taxes. This person kept saying, "I'm not using my tax dollars for this and that (pointing to unemployment & welfare benefits, social security...)." I calmly asked this person, "so when does people with money pay taxes? As far as I know, the rich hide behind non-profits, foundations, federal trusts, not to mention they are the ones getting tax-credits...do you really mean the money that we pay in taxes? It's no secret that most rich doesn't pay for everything when celebrities get free hotel rooms and other goodies just to appear (they don't always have to sing, dance...), and they don't always have to buy things because people are always giving them things in order to get their name out their, or some other reason - example, the televised award shows, sometimes the actresses are borrowing jewelry and gowns, ballplayers get shoes, they get free meals...
Forgot to add,
I've met rich people that always prey on the less fortunate by doing some of these things, if you say "I'm going to go and buy a burger or coffee..." the rich would say, "Ooh! Can you buy me that too!" Then they (rich) pretend as if they are looking in their purse/pocket for money, then use the excuse, that they must have left the money in another purse/pocket, or that they didn't think they would need to bring any money with them. Yes! And some do promise to pay you back, actually. If you dare remind them of this, they usually say, they had forgotten about it. Fact remains, you'll never get the money back, and if you do, whatever relationship you've had with them (worker, friend...) it's over due to the harsh words they will say to you.
In a nation where the working class have been generally ill-conditioned into believing that they too can be as "rich" as them, those same folks will cut off their own noses to spite their faces by railing against the idea of properly taxing the wealthy elite. The day that the vast majority of the electorate can be successfully convinced most of us have no chance that any of us will ever get to be the next rich snob behind the curtains. OWS, from my experience, could be the ticket to reach that day sooner.
"We don't need just to change the tax code, we need to change the social-economic system that produces massive inequality of income (and power)."
Which means that the ethics within the group are poor. It doesn't matter the system under which a nation is organized, so long as the people subscribe to a fair ethical behavior. Unmitigated greed will destroy any society. The Flag of the US symbolically makes reference to this in the standards to be upheld.
Our flag is made from scraps,
For frugal is our way.
Simple living lets others simply live.
We will shame you for your riches,
Scorn your vanity,
If greed should get the better of your soul.
There’s salvation in compassion,
Poverty in greed,
So what we have we share with loving care.
We understand hard work,
Have no tolerance for cheats,
Politician in their office should beware.
To those who say we need more than a change in tax policy: That's precisely what Tom Paine suggested in his last pamphlet "Agrarian Justice". In it, he stated that "There are two kinds of property. Firstly, natural property, or that which comes to us from the Creator of the universe – such as the earth, air, water. Secondly, artificial or acquired property – the invention of men. In the natural property all individuals have legitimate birthrights. Men did not make the earth. It is the value of the improvement only, and not the earth itself, that is individual property…I care not how affluent some may be, provided that none be miserable in consequence of it."
Paine believed that accumulated wealth was both the product of society and a form of theft (or, at least debt) to the landless and dispossessed. To remedy this, he proposed an estate (inheritance) tax to pay for a one-time dividend to all youth entering adulthood and an annual dividend to the elderly, the lame and the blind.
In other words, Thomas Paine proposed a universal social security program paid for by a "death tax" on the wealthy - the very things which today's self-proclaimed "conservatives" are fighting against tooth and nail.
Yeah, but he was a godless son of a stay maker and a foreigner ta boot. What would he know about christian and american values?
Seriously Robert, this was posted late. It is worth sharing, so consider posting the idea again.
it's also important to tax the very wealthy so they can appreciate what they have and work towards being a part of american society rather than it's major adversary on improving and advancing everyone's quality of life ...
It cost the American taxpayers $150,000 for each high school graduate, another $100,000 for each college graduate. This education benefits the individual and society but most of all it benefits businesses which could not exist without educated employees.
Federal Income Tax only accounts for 25% of taxes paid. Federal Taxes only account for 56% of taxes paid. When all taxes are considered the effective tax rate is a flat tax rate on income of about 33%.
But the effective tax rate based on financial wealth is 25% for the bottom 80% and only 5% for the top 20%. I sure the effective tax rate on the top 1% is significantly lower than 5%.
A 1% “property” tax on financial wealth, a 0.75% “sales” tax on financial wealth and a 6% flat income tax on all types of income with a $10,000 deduction per person and no other deductions, exemptions or credits would produce the same revenue as the current Federal tax system. Corporate taxes, payroll taxes and all other Federal taxes could be eliminated.