Saturday, February 20, 2010

Tax the Rich!

For years the GOP, with the complicity of some Democrats, has used our tax code to transfer wealth from the poor and middle classes to the very rich.


For Democrats wavering in their resolve to end the Bush tax cuts for the wealthiest Americans, shocking new data from the IRS should hopefully stiffen their backbones. Between 2001 and 2007, the 400 richest taxpayers doubled their annual incomes to an average of $345 million, while their effective tax rate plummeted to only 16.6% from 29.4% in 1993.

Following recent analyses confirming that income inequality in the United States has reached record levels, noted tax journalist David Cay Johnston summed up the new data, "The incomes of the top 400 American households soared to a new record high in dollars and as a share of all income in 2007, while the income tax rates they paid fell to a record low. The numbers tell the tale of the widening chasm between the rich and everyone else:

In 2007 the top 400 taxpayers had an average income of $344.8 million, up 31 percent from their average $263.3 million income in 2006, according to figures in a report that the IRS posted to its Web site without announcement that were discovered February 16...

Adjusted for inflation to 2009 dollars, the top 400 enjoyed a 27 percent increase in their income, or nine times the rate of increase for the bottom 90 percent...Since 1992, the bottom 90 percent of Americans have seen their incomes rise by 13 percent in 2009 dollars, compared with an increase of 399 percent for the top 400.

Unsurprisingly, the public disclosure of the top 400 report first introduced by the Clinton administration was halted by President Bush (only to be reinstituted by the Obama White House last year). Unsurprising that is, because the sheer size of the massive windfall for America's rich due to the Bush tax cuts would make a Warren Buffet blush.



As the Center for American Progress noted, the Bush tax cuts delivered a third of their total benefits to the wealthiest 1% of Americans. And to be sure, their payday was staggering. The Center on Budget and Policy Priorities detailed that by 2007, millionaires on average pocketed $120,000 from the Bush tax cuts of 2001 and 2003. Those in the top 1% stashed an extra $45,000 a year. As a result, millionaires saw their after-tax incomes rise by 7.6%, while the gains for the middle quintile and bottom 20% of Americans were a paltry 2.3% and 0.4%, respectively. (Other CBPP studies demonstrated that the Bush tax cuts accounted for half of the mushrooming deficits during his tenure in the White House and will continue to do so over the next decade.)

And as the New York Times uncovered in 2006, the 2003 Bush dividend and capital gains tax cuts offered almost nothing to taxpayers earning below $100,000 a year. Instead, those windfalls reduced taxes "on incomes of more than $10 million by an average of about $500,000." As the Times revealed in a jaw-dropping chart, "the top 2 percent of taxpayers, those making more than $200,000, received more than 70% of the increased tax savings from those cuts in investment income." So it should come as no surprise that the income share of the 400 richest Americans doubled over the past decade.



And yet, the usual suspects among the Republican Party (and some quislings among the Democrats) are pleading that the rich should be spared even as their share of the national wealth reaches stratospheric levels…

Inserted from <Crooks and Liars>

I have long held that a seldom discussed cause of the Republican recession is this grotesque transfer of wealth.  As the filthy rich sucked up more and more of our nation’s wealth, lower and middle class Americans found themselves getting poorer in real terms.  Everything was going up except their stagnant wages.  The housing bubble would never have occurred, if these Americans, encouraged by smooth-talking predators,  had not felt the need to leverage the equity in their homes to educate their children, pay for their sky-rocketing health care premiums, or just maintain their standard of living.

Most economies resemble a pyramid in which a broad base holds up a small capstone.  But in today’s GOP rendered economy, the capstone has become so heave that its weight is crushing the base.  Until this gross inequity is addressed, there can be no escape from the bubble/crash cycle.  The solution is easy enough, if we have the political will to do it.  Tax the rich.  For example, if rich people had Social Security and Medicare payments deducted from their entire salaries, including bonuses and stock, the solvency issue in those programs would be instantly cured.

Cousin FatCat has a different opinion.




rjs said...

here's a pdf showing the highest income tax & cap gains brackets since was 94% on incomes over 200K at the end of WWII, and as high as 91% as recently as '64

rjs said...

looks like i screwed up the above link:

Randal Graves said...

Oh sure, tax the rich. Then who will create your precious jobs?

Jerry Critter said...

Our precious jobs? What jobs. Like all the jobs they have created with the Bush tax cuts?

Oh wait. What is our unemployment again?

Thanks for all the jobs!

TOM said...

Which is why the Bush tax cuts should end. Also why those same rich people should have a tax hike, to balance out the the unfair advantage they got.

My blog post "Mondale Was Right" shows with graphs and figures how high tax rates do not inhibit economic growth. And also shows, that tax cuts do not increase economic growth nearly enough to raise revenues to pay our bills, or increase employment.

That lesson was shown in the economic History of the United States. A lesson not learned by Republicans, who caused our multi trillion dollar debt.

TomCat said...

Thanks RJ. Great info!

LOL, Randal.

Jerry, Randal is a comedian. He doesn'l mean it. But you're right.

Tom, I agree and I look forward to reading your post tomorrow.

Lisa said...

Wait - Randal is a comedian?????

Yes, please, let's tax the rich. I mean, from where I sit lovingly looking at those thinky graphs and such, it's pretty apparent. They have all the money. Okay, most of the money. Can't I afford at least a little hyperbole on my little unemployment stipend?

Lisa G. said...

Taxing the rich is always unpopular because that's where Congress people get the money to fund their campaigns. Duh!

If the Dems had a spine (which is looking less likely everyday) they would let the Bush tax cuts expire. But with the Repubs always shouting cut taxes, the idiots that vote for them don't realize that they won't be cutting their taxes, but the taxes of the rich. It's the definition of insanity. I'd like them to show some real numbers (from a non-partisan org, like the IRS) to show that tax cuts provide jobs. They can't because they don't exist; it's all fiction.

TomCat said...

Yes Lisa, and the Pope is Catholic!

Lisa, from what I've read, tax cuts that are truly directed to the lower and middle classes get spent and stimulate the economy. These are what the Republicans call "boutique tax cuts". Republican "middle class tax cuts benefit the rich. They get spent to replace people with machines and export jobs.