One of the most pernicious frames the Republican Party and Grover Norquist have ever placed on our nation is this idea that the rich should not be taxed at much higher levels than the rest of the nation. This frame is so well placed it has become nearly and article of faith for the nation if we some how put a significant amount of tax on those who can most afford it this punishes the whole nation. The Dog thinks this is flatly insane.
It is time to start talking about the fact we must tax the rich as a considerably higher level than we are now, if we are to get out of the mess we are in financially. It is not like we have not seen this kind of situation before and have not taken exactly that step. First a little history; during World War II our deficit was 30% of GDP, even given the differential between 1940’s dollars and today’s dollars that is a hell of a lot of money.
This is in a nation coming off the Great Depression as well, so there is a lot of money the Untied States had borrowed which had to be paid back. In order to do that, starting in 1951 all income over $300,000 was taxed at 90%. To be clear the income below that level was taxed at lower levels, based on our graduated income tax, so it was not like you were in a 25% tax rate up to that number and then bang, you are paying 90%. For each of the graduations you pay the rate up to a max, and then you pay a higher rate on income above that level and up to the next level.
In the 50’s we had 24 graduated brackets. This allowed a higher and higher level of tax up to the 90% at $300,000 and above. Which makes plenty of sense, when you think about the fact the lowest bracket when from $0 to only $2000 and was at 22.2%. Everyone in the nation was paying to fund the cost of our war and our debt, as a nation should do, but everyone was paying according the amount of money they earned. Just to give you a little idea of how much $300,000 was in the ‘50’s it would be equivalent to $6,390,000 (using a nominal GDP per capita calculation, you can find it here ).The Dog has to ask is there anyone out there who does not think people who make 6.3 million a year of more should not pay something above 50% on the money over that level?
Today we have only five tax brackets and they top out at 35% at 372,000. This is due to the Republicans for years claiming the tax code is too complex and when they go to reduce complexity, they do it not by eliminating tax credits or loopholes, but by cutting the number of brackets and bringing the brackets down. This has been going on for decades. As late as 1980 we had a 70% top rate at $215,000. During this same period of time we have seen money, private money, become a major factor in our political discussion with the founding of the Wingnut Welfare think tanks like the American Enterprise Institute and the Heritage Foundation. These combined with the self-funding candidates on the Right and Astroturf “public interest” groups have helped to keep the Conservative agenda sailing forward for far longer than it should have been able to.
So, we come to the place we are today, a nation with massive debt and a strong need to spend more money in order to provide what every industrial nation in the world but the United States provides, national health care for all its citizens. At the same time we have decades (since 1987 when the top tax rate fell to 28%) where the rich have been getting richer just because the nation no longer taxed at 50% in the top tax rate. This is no longer an acceptable state of affairs. We need to have the wealthiest Americans, who, lets face it get a disproportional amount of the benefit of being American, pay their fair share!
Lest anyone think we would be soaking these ultra wealthy, remember that if you had 5 million dollars in one place at one time, at 3% earnings in bonds it would return $150,000 a year. This is twice the median income in the nation at this time, so the Dog is pretty sure they could get by when they are earning 5 million every single year!
We have to be rational about our tax policy. Many people earning way above the cap the President has set for new taxes ($250,000 annually) will tell you they are paying too little. There are, of course many who will tell you they pay too much, but the reality is they do not, not even close to too much. We need go back to a tax system that does not have so many ways of cheating it. We need to reintroduce higher brackets above the ones that will come back into existence in 2010 and 2011. It is clear that cutting taxes and cutting taxes and cutting taxes is part of the reason we are in the hole we are in. This means we must recoup those taxes and do it for some time if we are to pay down our debt and get on firm financial footing.
That the ultra wealthy pay more for this is only fair, after all they got us in to this mess with policies they favored, and they got massively more wealthy doing it. The bill is due and they are the ones who should shoulder the load, just like the rest of their fellow citizens.
The floor is yours.
One house keeping note; all the tax rates for every year can be found at the Tax Foundation. Sure they are a conservative group, but they do provide good accurate date on the historical tax rates. They just draw the wrong conclusions form the data. You can find the tables for this article here.
"Originally posted at Squarestate.net"
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Not exactly the issue of the day, but it is coming and we have to start thinking, writing and speaking about it so we can do what will have to be done.
I could go along with more tax brackets but to say the rich caused the whole problem that we now facing is not totally accurate. This country (like many of its citizens) spent money like a drunken sailor for too many years. Wars, misguided social programs, you name it.
Obama said it himself. The government can not do everything.
No doubt this is not just a problem here. But many of the policies which have resulted in our massive deficit and debt came at the behest of the wealthy. Banking policy, trade policy, and tax policy are all part of the problem and it was not the working class gals and guys who were pushing these.,
If we financed our wars by raising tax dollars instead of increasing our deficit, we would never have gotten into Iraq. CEOs wouldn’t have been marching right alongside the protesters, but you better believe they would’ve made the right calls to the right people. The idea would’ve been DOA. Wars that don’t ask for economic sacrifices from the rich (cause they ain’t doing the fighting) are one of the most regrettable developments since WWII. Shameful.
All the Obama Administration handwringing about how to fairly control the compensation at federally-assisted bankster corporations could be solved very quickly. Let them pay their people whatever they like. Then tax the hell out of it. It’s the best, bluntest instrument in the federal arsenal.
Tax.
The.
Rich.
They aren’t very popular right now, and Americans’ aspirational goals of somehow reaching Rich status have finally been busted by their abuse of our system. Only in America could these “achievers” make this kind of money. So let’s tax them for the privilege of making this kind of money in our American system.
Tax.
The.
Rich.
I would Recommend this Diary Dog but some how it is missing!!
I totally agree with you Dog the Rich Fat Kats have been bilking the system for way to long and Must be made to pay for the privilege of being American and making much more money that they could every spend at Our expense. Due lack of good schooling broken down infrastructure and 45+ Million citizens with no access to medical care until they show up at the emergency room when it is too late to properly treat what brought them there in the first place!
Tax the rich and visit http://www.youstreet.org and help take the Fat Kats from buying the People’s Government!!
Thanks again Dog! Tax the fucking Rich, make them pay!!
AMEN!!! SING IT BROTHAS AND SISTAS!!!!
TAX. THE. RICH!!!!!
Here is a breakdown of who pays our taxes state to state, according to the Institute for Taxation and Economic Policy: http://www.itepnet.org/wp2000/text.pdf.
I learned about these folks through my Church Council Tax Fairness Workshops that they give explaining who pays our taxes and where they go on a state as well as federal level. Here is the ITEP home website for how corporate taxes are paid and there is also a wealth of other information as to where our tax dollars go and who pays them: http://www.itepnet.org/
I spoke with Robert McIntyre last week who is one of the researchers for this study for the links above. He says newer numbers are coming out some time this month. It has taken over 5 years to accumulate and crunch them. While he did not say it, something told me when I spoke with him, that the numbers are worse. he also said to thank the rest of his team for all the work they have done and I have. These people are awesome.
This should make you mad.
Cat In Seattle
Once diaries are promoted to the front page at The Seminal, the recommend button goes away.
Good luck persuading Americans about this. A lot of Americans are stupid like Joe the Plumber. They think they’re going to win the lottery and then OMG those taxes are going to be awful. Or the others who think their kids are going to be the next Bill Gates and then OMG those taxes. What amazed me driving around during the last 3 election cycles were the fools driving 1995 ancient looking Geo Metros or rusting 1989 Dodge Caravans with 2 Bush/Cheney or McCain/Palin bumper stickers. I even knew several people in my little work related sphere who were probably making $15-18K/yr and were big Bush/GOP supporters. Its like hello, you really like being screwed without lube dontcha?
If you want the opinion of an economist:
“The outstanding faults of the economic society in which we live are its failure to provide for full employment and its arbitrary and inequitable distribution of wealth and income”
-John Maynard Keynes in “The General Theory of Employment, Interest and Money”
(1936)
Any proposal like this is always greeted by the time-honored whine, “but it shouldn’t be the government’s job to redistribute wealth.” I notice these same people never seem to complain when the government redistributes wealth upwards, as it has been for the last 30 years at least.
It only makes sense that those who derive the most benefit from a free society should be the ones who pay a larger share to maintain that society. They seem more than willing to shell out vast sums for lobbyists, don’t they?
“The Dog thinks this is flatly insane”
The BlueCrow knows the Dog is right. The Rethuglican meme is: to get juice, squeeze the tree not the oranges. The corollary is: if squeezing the tree doesn’t work, abandon the idea of getting juice.
Consider the situation at Goldman Sachs. They’ve recorded enormous profits, partly because the Banks and investment houses don’t have to recognize the current market value of their toxic assets. If they did have to recognize these, there would be very little if any profit, and many of the Banks would have to go into receivership. Their profits are artifacts of the accounting rules, a chimera.
Now comes their plan to pay 50% of their “profits” out in bonuses, a move that certainly endangers the survival of Goldman Sachs if we have another round of collapse and those toxic asset values have to be recognized. So what’s their incentive to do that? Simple, it’s because their current tax rates are low enough to provide them with an incentive to just grab the money and run. If they knew they’d have to give back 90% of those bonuses, the incentive to take them, rather than reinvest in the company, would be gone. The institution they work for would be much safer. As would the investments of their stockholders.
High tax rates, coupled with vigorous enforcement can encourage greater responsibility to organizations and stockholders, and might have done a great deal to prevent the financial crisis we’re in now. Unlimited opportunities for greed to express itself in the financial system has undermined that system. It has to stop. And removing most of the incentive for irresponsible behavior by re-introducing high tax rates would be a really good thing both for our economy and for licking our deficit and debt problems.
The highest marginal tax rate was 94% and was in effect during WWII. Originally Roosevelt proposed a 110% tax rate on the wealthiest Americans. However, Congress cut the amount to 94%, which was later reduced to 91%. The cut to 70% occurred in the Johnson Administration and was coupled with a movement toward simplification of the tax code cutting the number of brackets spearheaded by democratic progressives like Senator Paul Douglas, one of the greatest of American progressive Senators. The rationale at that time was to lower rates and simplify in return for closing loop holes. For awhile this strategy worked, leading to an increase in tax revenue. However, it opened the way, in my view, to later Republican cuts of the top marginal rates, including the first major cut by Reagan to 50%. If we’d had the 50% to marginal tax rates during the George W. Bush Administration there would have been no deficits and a lot more money available for public investments besides.