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.