10 reasons to raise taxes on the top 1%

[Craig234]

I'm quoting this commentary because it smmarizes a lot of the good points on the issue.

It's pretty simple, really. Over the last 30 years, the taxes and laws have shifted to shift a lot more income to the top - to the point that the bottom 80% have taken home almost - ore less than - zero of the growth after inflation, while the increases are higher the higher you go - up to the top 0.01% being far higher than the top 0.1%, far higher than the top 1%, far higher than the top 5%, etc.

This shift has caused not only problems - but the guarantee of ongoing big problems not yet seen.

Unlike the right's 'lower taxes always no matter what' mantra, we're not talking about 'always higher tax on the right', but about reaching a 'good level', let's at least start with reversing the imbalancing shifts the last 30 years - which include as the commentary notes a change from the top 1% taking 7 of every 100 dollars in 1980 to triple that, 20 of every 100 today.

That share did not need to change - if the economy doubled, the rich remaining at 7 of 100 would still double as well. We're talking about share of the pie, not size of the pie.

And the effects are cumulative, as the income concentrates at the top year after year, ownership of the nation does, too, and the top class owns more and more of the country.

This isn't noticable while it's building but it leads to disaster - and it's incompatible with democracy.

Ultimately, there is a 'balance of powers' between groups like the rich and poor, but not a lot of balance when one becomes dominant. The rich come to find that some of their interests are inhibited by things like sharing with the 'middle class', and that conflict that democracy is supposed to address at the ballot box isn't, when the concentrated wealth can buy votes - not in bribes, but from a big system of 'think tank propaganda' and consolidated corporate media that fools voters to vote for their agenda.

Save234

From www.commondreams.org

Top 10 Reasons for Higher Taxes on the Top 1%
by Paul Buchheit

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.

 

[Craig234]

This post reserves to discuss why myths of the right on this issue are wrong later.

To start it off:

'If you want to raise taxes on the rich it means your jealous'.

I'm pretty disgusted by this one to the point of anyone using it being considered not worth responding to, but it can be mentioned.

It's pure propaganda, delegitimizing one side of the issue irrationally - bypassing any discussion of the issues to say 'don't discuss issues, they're just wrong'.

So, no matter how high the concentration of wealth - if we return to the height of oligarchy, robber barons and serfs, massive poverty for 99% of the people, starvation, slavery, the argument can and would still be made, 'jealous' for those who want to change those things.

It considers that wanting the US to have as many do as well as possible isn't 'the American Dream', it's jealous, when what's in the way is the excess concentration of wealth. Every shift of money up to the top is 'they earned it' and 'that's investment for growing the economy', though.

'The rich getting more is a good investment creating more wealth for everyone'. AKA trickle down economics.

Does this one really need a response? Even the right seems to largely admit it's false.

But it's still out there sometimes, so let's note, it's wrong.

Not wrong as in 'there's no truth to it' - like any good propaganda there is some.

But a study showed for every dollar cut in taxes for the rich, about 20 cents came back in the economy growing - a pretty bad 'investment'.

Of course any group who gets more money will fuel the economy somewhat - the poor tend to spend it all, provoding a lot more fuel that benefits those at the top too.

But the wealthy prefer the money directly - more efficient to enrich them, with most of it going into acquiring more of the wealth of society.

If taxes were 90% on the rich, there would be more truth to it - at the other extreme, there is too little for the rich to grow the economy. But this isn't the other extreme, it's the extreme with too much going to the rich, making for them to own a lot, reducing efficiency, opportunity, and harming society. The US never has seen 'the other extreme'; communist countries did.

 

[totalnoob]

Craig has money envy. Poor little socialist.

 

[JSt0rm]

I think nick1985 would agree we need to tax the top 1% to pay for the government workers.

 

[Ns1]

n/m, moving to a different thread

 

[spidey07]

What a load of socialist bullshit. This is America, we don't think like that or want any of this crap. Jealousy is such an evil emotion.

 

[child of wonder]

You reserved a post to talk about jealousy.

You are clearly jealous.

 

[waggy]

i feel there are some wrong reasons in this.

"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."


Well they aldo take far more of the risk then the middle class. so they shouldn't get the benifit of that? who is to say they don't work as hard? EVERY business owner i know has worked harder then you would believe and risked a lot.


actually nearly all 10 are not true.

seems more of a whiny post to redistribute wealth. to give to those that don't want to work or take risk.

 

[blackangst1]

This is just a rehash of things you've parroted in all the tax threads. I guess its nice its in one thread.

My question is, whats the total solution? Raise the top bracket from 35% to...what exactly? (Looking at this from your POV for a minute) You and I both know the problem isnt the percentage per se but deductions. Hell, the top rate historically was in the 1940's at 94%...you arent naive enough to think people ACTUALLY paid that...are you? In today's tax structure, even doubling the top bracket wont put a dent in the lifestyles of the top 1%. Because of deductions and tax credits.

So, what do the progressives feel is "fair"? What percentage? And would that be leaving everything else in place? Because if so, it really wont do much in the ultimate goal of removing that wealth from a select few and spreading it around. All it will do is encourage more out of country investments and loopholes.

 

[Jhhnn]

What a load of socialist bullshit. This is America, we don't think like that or want any of this crap. Jealousy is such an evil emotion.

Funny that- it seemed to work rather well, pre-Reagan...

Of course, Spidey's just a child, so he wouldn't have lived that...

 

[Jaskalas]

The more money you get, the more you'll need. Quite a paradox.

 

[blackangst1]

Oh and the point #7 is stunningly OT:

7. The Tax Myth

The belief that the "rich pay most of the taxes" is incorrect.

This particular progressive looney doesnt understand the statement. He goes off on a rant totally unrelated to the fact that according to the same CBO and IRS the top 0.1% pay 17.5% of all taxes collected federally and the top1% pay 39%.

Unbelievable.

 

[Phokus]

even doubling the top bracket wont put a dent in the lifestyles of the top 1%. Because of deductions and tax credits.

Are you insane? You have it the other way around, deductions and tax credits don't have an effect on doubling the top tax bracket.

 

[Phokus]

A Look at the Tax Returns of the Top 400 Taxpayers

http://blogs.wsj.com/economics/2010/02/17/a-look-at-the-tax-returns-of-the-top-400-taxpayers/

Just a reminder that the richest Americans pay a lower effective tax rate than you or i do and conservatives are quite LITERALLY retarded when they argue for tax cuts for the rich.

 

[Phokus]

The more money you get, the more you'll need. Quite a paradox.

Bill Gates and Warren Buffet have so much money they're giving it away. Where the hell do you guys come up with this shit.

 

[Infohawk]

I wonder what liberal blog Craig read this----- oh okay Common Dreams.

Dude at least link to them.

 

[Matthiasa]

So you are suggesting increasing the capital gains tax again?

 

[SammyJr]

What a load of socialist bullshit. This is America, we don't think like that or want any of this crap. Jealousy is such an evil emotion.

And you think you speak for all Americans?

 

[blackangst1]

Are you insane? You have it the other way around, deductions and tax credits don't have an effect on doubling the top tax bracket.

A Look at the Tax Returns of the Top 400 Taxpayers

http://blogs.wsj.com/economics/2010/02/17/a-look-at-the-tax-returns-of-the-top-400-taxpayers/

Just a reminder that the richest Americans pay a lower effective tax rate than you or i do and conservatives are quite LITERALLY retarded when they argue for tax cuts for the rich.

First of all, I never said deductions had an effect on doubling the tax rate. You might want to re-read a little slower.

And the REASON the rich pay a lower effective tax rate than the rest of us is exactly my point: deductions.

 

[SammyJr]

iddle class. so they shouldn't get the benifit of that? who is to say they don't work as hard? EVERY business owner i know has worked harder then you would believe and risked a lot.

I'm in favor of shifting the top bracket to $1 million before raising it.

That said, SMALL business owners take risk. They should get the benefit. The $1 million+ banker/exec set don't risk anything. They sit in a board room and get a fucking golden parachute no matter what they do - bad, good, layoff Americans, bankrupt the company, it doesn't matter. There's no justification for not taxing these leeches.

The worst are the hedge fund managers. Their risk is that they might only make $150 million instead of $300 million and they contribute nothing to society. They serve no function in society that is desirable and are more worthless than a guy who shits on the floor in a public restroom.

 

[werepossum]

First of all, I never said deductions had an effect on doubling the tax rate. You might want to re-read a little slower.

And the REASON the rich pay a lower effective tax rate than the rest of us is exactly my point: deductions.

You should be amazed he can read at all!

One simple point - income is EARNED, not DISTRIBUTED.

 

[Darwin333]

number 5 is bullshit, at least in recent history. Excessive leverage, almost exclusively due to .gov and the "private, semi-private, quasi-private, or whatever the fuck you want to call it" Federal Reserve actions is what caused the last few booms. Increased taxation will not solve the problem when you can simply leverage up some more.

I question #6 as well. Typically those are the times when the wealthy gain more wealth and power (at least long term) and this time was no exception. Isn't it odd that the big financial guys typically buy their competition for pennies on the dollar during most of those crashes. I find it even odder that it seems to be a lot of the same players 100 years later.

#7 is absurd. First of all, you don't get to add "utilities" in with taxes. Secondly, the Feds knew damn well that excise taxes would disproportionately hurt people with less money. Thats just the way it works with those methods of taxation. I don't get to include my capital gains taxes (admittedly relatively small) when comparing my middle class taxes against the poor. "Sin taxes" have ALWAYS been a tax on the poor, period. If you don't like that then you should advocate their removal, same thing with lotto except I call it a tax on the stupid.

I don't get number 8. Do you want investment in companies or not? I can show you a dozen recent posts from the left bitching about the rich hording their money and not investing it. Some go as far as to argue we should intentionally increase inflation to make them invest it.

Number 9 is fairytale nonsense.

Some of the others have valid points but he should have made it a "5 reason" list if he wanted it to be taken seriously.

BTW, if you really really want to increase wages in this country you are going to have to fuck over the poor in some other place. It sure doesn't seem like you agree with "equality" all that much, unless its just American's you are concerned with and fuck the rest. That includes the cheap ass labor we import from the south. THAT is why wages have stagnated, not because of "taxes". You are simply arguing for more revenue to the federal government.

 

[SammyJr]

You should be amazed he can read at all!

One simple point - income is EARNED, not DISTRIBUTED.

I take issue with the idea that most of those in the $1 million+ bracket earn anything. Yeah, they make a lot of decisions that shift around massive quantities of money, but do they add any value to their product? In most cases, through their efforts at offshoring and cost cutting, they make the product crappier. They generate only short term profits at the expense of the long term health of the company and the country. That's not earning. That's like a someone starting heroin - feels great at first, but not for very long.

 

[Darwin333]

Funny that- it seemed to work rather well, pre-Reagan...

Of course, Spidey's just a child, so he wouldn't have lived that...

Exactly what seemed to work rather well pre-Reagan?

 

[spidey07]

A Look at the Tax Returns of the Top 400 Taxpayers

http://blogs.wsj.com/economics/2010/02/17/a-look-at-the-tax-returns-of-the-top-400-taxpayers/

Just a reminder that the richest Americans pay a lower effective tax rate than you or i do and conservatives are quite LITERALLY retarded when they argue for tax cuts for the rich.

Include the top 5% and watch the rate drastically be much higher, closer to 45% federal tax. You're taking the statistical outlier. Not to mention all that capital investment produces much more than a wage slave worker.

The real tax cuts need to occur for the top 5 and 10% as we're the ones that spend the most money and grow the economy.