income tax rate

Romney, Ryan Don’t Get the Average Joe

Leo Gerard — Tue, 21 Aug 2012 09:39:18 -0400

GOP presidential nominee Mitt Romney foolishly revived the dust up about his income tax secrecy last week. He claimed he paid at least 13 percent, an assertion easy enough for him to prove by releasing his tax documents.

But he’s refusing to do that. He called the concern about his tax rate “small minded.” Much more important issues overshadow it, he contended.

Maybe so. But the American people, the Average Jane and Joe, do care whether Romney used tricks and loopholes and offshore accounts to manipulate the tax system and pay nothing. And they’re not “small minded,” as Romney accused them of being, for wanting to know.

For them, a quarter billionaire who paid nothing or paid a rate lower than the middle class lacks the principles they like in a president. The vast majority of voters aren’t going to dissect the budget proposed by Romney’s running mate Rep. Paul Ryan, but they will vote based on the values it reveals. Romney’s ability to rattle off technical details won’t decide the election. Morality, or Jane and Joe’s perception that Ryan and Romney’s policies lack it, will.

Other millionaires have led the nation. In fact, the majority of those in the past presidents club were millionaires. But some of the nation’s wealthy presidents had spent time with America’s Average Janes and Joes and understood their dreams and struggles and were sympathetic to them.

Though raised on an estate, Franklin Delano Roosevelt knew suffering firsthand after being cut down by polio as a young man. He spent long periods with working men and women in Southern recuperation centers as he tried in vain to get his legs to work again. Immediately on his election to the presidency, he launched programs to aid the impoverished.

By contrast, Romney and Ryan, both raised in privilege, have demonstrated remarkable insensitivity to everyday Americans.

Romney, scion of a Detroit car company executive, said as GM and Chrysler struggled in the midst of the Great Recession, “Let Detroit Go Bankrupt.” He’d have countenanced an uncontrolled bankruptcy for the two corporations, costing tens of thousands of middle-class workers at assembly plants, car dealerships and auto part manufacturers their jobs, their homes and their hopes. He’d have done nothing and let them all suffer. There’s a certain carelessness, a heartlessness to that. Those aren’t values many middle-class workers cherish in a president.

Ryan also grew up without worry about money, in a small town where his family owned a construction business and his father was a lawyer. Because his father died when Ryan was 16, Social Security helped him pay for college. Ryan’s plans, however, imperil Social Security for future generations, for the next decade’s 16 year olds who lose fathers.

Ryan sponsored legislation during the Bush administration to privatize Social Security, allowing the fund to be weakened by the draining of untold billions that would be risked on Wall Street, on the very stock market that crashed during the last year of Bush’s reign, sucking the value out of private pension funds. Many middle-class workers don’t find gambling with their retirement security attractive in a president.

Ryan and Romney are in trouble with America’s Average Janes and Joes over their tax proposals as well. Romney says he wants to cut income taxes by 20 percent for everyone, which he claims he would pay for by ending tax deductions. He has declined to specify which ones, however. Here’s what the nonpartisan Tax Policy Center said about his plan: it would cost the wealthy like Ryan and Romney less and the Average Jane and Joe more.

That’s right. Specifically, the plan would reduce taxes each year for the nation’s wealthiest 5 percent, ranging from a cut of $1,800 for the least rich to nearly $250,000 for the most rich. For the other 95 percent of taxpayers, the nation’s middle class, Romney’s “tax cut” would mean a tax increase averaging $500 per household because, the Tax Policy Center said, tax breaks that the middle class depends on, like the one for mortgages, would disappear. The center said it was a fantasy for Romney to suggest he could fund his plan by eliminating only tax breaks for the rich.

The Average Jane and Joe may not read the entire report. But they do understand this one key fact: The Romney tax plan will cost them more and Romney less. Many will find the injustice of that to be unattractive in a president.

Similarly, Ryan’s budget “Roadmap” would also lower Romney’s tax rate. Ryan would require him to pay less than 1 percent. That’s because the vast majority of Romney's $21 million income in 2010 came from capital gains, interest and dividends, and Ryan would eliminate all taxes on capital gains, interest and dividends.

Most middle-class household income, all of $50,000 a year and declining, comes from wages, not capital gains, interest and dividends. So those families would be paying rates way higher than 1 percent. In fact, the Tax Policy Center determined that Ryan’s budget would raise taxes on the bottom 30 percent of wage earners.

The Average Jane and Joe may not memorize all those facts and figures. But they will recall that Ryan wants quarter billionaires to pay 1 percent and them to pay way more. That’s just galling. Far from what the middle class finds to be a desirable trait in a vice president.

When a reporter asked Romney about his tax rates last week, the Republican candidate had just finished lecturing the ensemble on the intricacies of his Medicare plan using a white board.

What Romney can’t comprehend is that for the middle class, it’s not the numbers.

What the Average Jane and Joe will recall is that Romney and Ryan plan to privatize Medicare, to destroy a beloved program on which the middle class depends. What they’ll know about Romney and Ryan is that their proposed policies show they don’t have a clue what it’s like to struggle. And don’t care. Carelessness is not a quality the middle class finds desirable in the occupants of the Oval Office.

Equity and Sensibility

Leo Gerard — Wed, 21 Sep 2011 12:58:33 -0400

A long time ago, in an historical America, lawmakers determined a progressive tax code to be the fairest and most logical for all.

The legislators asked more of those who had benefitted most from the advantages America provides. They asked less of those who benefitted least.

As time passed, the rich and wealthy corporations perverted the progressive tax code. Now what America’s got is a flip-flop under which the fabulously wealthy pay taxes at rates lower than the middle class.

This week, President Obama proposed returning the tax code to a time closer to equity and sensibility. He asked that millionaires and corporations pay taxes at the same rate as the middle class. Not more, as they once did. But at an equal rate. It’s not revolutionary. It’s retro. And it would help create jobs.

It’s an idea whose time has come – again. And it should be implemented immediately.

Obama called it the Buffett Rule after billionaire Warren Buffett who has written repeatedly that he thinks it’s wrong that he pays taxes at a lower rate than his secretary. He spoke out most recently in a New York Times op-ed on Aug. 14 titled, “Stop Coddling the Super-Rich.” Here’s what he said:

“Our leaders have asked for ‘shared sacrifice.’ But when they did the asking, they spared me. I checked with my mega-rich friends to learn what pain they were expecting. They, too, were left untouched.

“While the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet, we mega-rich continue to get our extraordinary tax breaks.”

His petition to American lawmakers for a return to fairness has been joined by fellow billionaire Mark Cuban and a large group of Americans calling themselves Patriotic Millionaires for Fiscal Strength. In an open letter to political leaders, these millionaires asked to be taxed more. It says:

“We are writing to urge you to put our country ahead of politics.

“For the fiscal health of our nation and the well-being of our fellow citizens, we ask that you increase taxes on incomes over $1,000,000.”

Cuban wrote on his blog that millionaires may choke when they see the size of their tax bills, but then they should rejoice at having such a “problem.” He also said:

“In these times of ‘The Great Recession’ we shouldn’t be trying to shift the benefits of wealth behind some curtain. We should be celebrating and encouraging people to make as much money as they can. Profits equal tax money. While some people might find it distasteful to pay taxes. I don’t. I find it Patriotic.”

The rich are ready to pay their fair share. It’s not fair now. Buffett and the other richest 399 billionaires in America pay an average income tax rate of 16.6 percent, while a worker earning between $35,000 and $84,000 a year pays a marginal rate of 25 percent.

Obama described the simple math of tax rates in seeking institution of the Buffett Rule. The nation is faced with a massive deficit and a crushing recession. America doesn’t receive sufficient tax revenues to buy everything it wants. So it must make choices. It could continue to give the rich and corporations special tax treatment and pay the country’s debts on the backs of the middle class. That would require slashing the programs that sustain workers – Medicare, Medicaid, food inspection, public education, Pell Grants – and the government programs that kindle the economy and provide middle class jobs such as infrastructure construction.

Or America could ask the rich to pay a tax rate equal to that of the middle class. America could end outrageous loophole for massively-profitable corporations – loopholes that not only enabled GE to pay no taxes at all last year but allowed it to demand the government give it $3.2 billion! Asking the rich to pay an equitable rate would raise enough money to moderate cuts to crucial government services.

The wealthy supporters of increasing taxes on the wealthy recognize another benefit of paying more – it increases their ability to earn more. Government services, from public schools and roads to civil courts and patent protections benefit business. Cutting funding for those services threatens business profits.

In addition, if government spends money to renovate schools and improve infrastructure as Obama has proposed in his jobs plan, it creates jobs. Those workers spend money. And that stimulates demand for products.

Only when corporations experience demand will they begin spending some of the record $2 trillion in cash they are now just sitting on to hire new workers. Those new workers will spend their paychecks, further increasing demand. It’s a virtuous cycle. The rich pay more in taxes and get more in profits.

Tax equity is not radical. It’s basic fairness. In fact, it’s not even progressive. Progressive would be returning to the days when the fabulously wealthy and profit-fat corporations paid higher tax rates than the middle class. Progressive would be charging the rich a “wealth tax” each year, not on their earnings but on the value of their holdings. This tax, suggested for the United States by Yale law professors Bruce Ackerman and Anne Alstott in a Los Angeles Times op-ed, already is collected by France, Norway, Switzerland and five other countries.

Parity isn’t progressive. But it is equitable and sensible.

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Leo W. Gerard also is a member of the AFL-CIO Executive Committee and chairs the labor federation’s Public Policy Committee. President Barack Obama recently appointed him to the President’s Advisory Committee on Trade Policy and Negotiations. He serves as co-chairman of the BlueGreen Alliance and on the boards of the Apollo Alliance, Campaign for America’s Future and the Economic Policy Institute. He is a member of the IMF and ICEM global labor federations and was instrumental in creating Workers Uniting, the first global union. Follow @USWBlogger.