Forget the “Buffett rule.” It’s not enough. What’s more, “letting the Bush tax cuts expire for the rich” isn’t enough either – although it might get us halfway there.
As for that “Simpson Bowles” so-called “deficit reduction” plan: It’s a hoax, another ploy to give the ultra-rich yet another huge tax cut – unless you believe that the lobbying fairy will magically grant a wish that’s never been granted before: an end to billionaires’ loopholes.
If you buy that – which I don’t – then the plan’s just grossly unfair.
The real moment of truth Washington won’t face is this one: It’s time to admit that we can’t rebuild our economy – or balance the Federal budget – without raising taxes on the very wealthy. That’s what Simpson, Bowles, and all their highly-funded friends won’t tell you: We need to raise their taxes a lot.
And by “a lot,” I mean doubling them.
Left Is Right
Let’s be clear: I’m not talking about imposing sharp increases on incomes over $250,000 or even $500,000, at least not until the economy’s healthier. At those levels an expiration of the Bush tax cuts would probably be enough. But once you hit income of a million dollars a year and over, we should go back to the higher tax rates that were in place for millionaires during the Nixon years.
That’s right: When it comes to taxes, Nixon’s the One. And Eisenhower was much stronger on these issues than Nixon.
The public’s being bludgeoned by deficit reduction rhetoric from people who clearly couldn’t care less about deficits. They certainly don’t intend to do anything about them. Ike and Nixon would throw them out of the cabinet room if they walked in with proposals like these.
Once we get back to their brand of Republicanism, we can revitalize the genuine left and start having a real economic debate in this country.
Get Back to Us When You’re Serious
Don’t let yourself be intimidated or bullied by the billionaires’ pre-paid advocates, who travel in a pack as DC’s self-described “centrists.” Sunlight – the economic kind – will cause the minions of the radical Right to melt back into the darkness.
So don’t let them scare you. The solutions to our economic fiscal concerns are obvious, and tax hikes for the wealthy are high on the list. The only question is, Do we have the political will to do carry them out?
Of course, we won’t solve all our problems just by raising taxes on billionaires. But we can’t solve those problems unless we do.
Here’s what we should be saying to our lawmakers – and to the billionaires who finance them – next time they want to cut vital programs in the name of “deficit reduction”: Show us you’re serious, by giving us a serious set of tax rates.And by “serious,” we mean Dwight D. Eisenhower “serious.” Then you can talk to us about “shared sacrifice.”
But not until then.
We’ve reached such a low point in our political process that Warren Buffett represents the left flank of acceptable discourse.
The “Buffett rule” says that billionaires shouldn’t pay a lower tax rate than his secretary. Thanks for that, Mr. Buffett, since it more than many of your peers have been willing to concede. But you shouldn’t pay the same rate than your secretary? You should pay a much higher rate.
Where wealthy interests are concerned, “floors” like the Buffett rule quickly become ceilings.
All Take and No Give
Only one household in 364 collected more than one million dollars per year, according to the most reliable study, and yet those households collected more than a third (36.1 percent) of the total national income. Just 25 hedge fund managers earned a total of $22 billion dollars in 2010.
Over the next ten years we could add to much-needed government spending – or cut the deficit – by $110 billion to $150 billion. How? By returning to Eisenhower-era tax rates for these 25 people alone. That’s how skewed our national debate has become.
In the 25 year period leading up to the banker-caused crisis of 2008, the percentage of national income going to the top 1 percent soared to levels not seen since the runup to the Great Depression. And in the first year of recovery from that crisis, most of the nation’s economic gains went to the top 1 percent, while 90 percent of the population saw their more modest 25-year gains wiped out altogether.
Let’s put that another way: Over 25 years, the wealthiest among us jury-rigged the system to take more of our income. The 99 percent bailed them out — and then the wealthiest among us took all the gains while ninety percent of us lost what little progress we’d made.
And yet millionaire households, as members of the top 1 percent, pay less as a percentage of their income than than those in the 90-99 percent bracket, and not much more than middle-class families do.
What’s more, the highest earners among the 1 percent – the richest of the rich – are often those who pay the least. Hedge fund operators’ management fees are taxed as capital gains, for example – for money they’re earning, not investing – which allows them to pay just 15 percent on their income.
Million-dollar households make 42 percent of their income, on average, from capital gains at these ultra-low rates today. The portion of their’ ncome that isn’t being taxed at the 15 percent rate is subject to the official top marginal tax rate of 35 percent under the Bush tax cuts — and that’s before the loopholes kick in.
And man, do they kick in. Even the figures quoted above should be taken with a grain of salt, given high-earning households’ ability to lower their “taxable income.” That makes even these generous percentages appear higher than they actually are.
So That’s Why They Color Republican States “Red”
The President’s proposal to let those cuts expire is a good start. High-earning households would see their capital gains rate rise to 23.8 percent and their top marginal tax rate to 39.5 percent. That’s a start – but only a start.
If lawmakers double those rates for millionaires, we’ll be able to take their deficit rhetoric seriously.
Does that sound radical? It wasn’t too radical for Dick Nixon. During Nixon’s Presidency the capital gains tax increased every year, rising from 27.5 percent to 36.5 percent. The highest tax rate for other forms of “unearned income” under Nixon was 70 percent, while the top marginal tax wage was 50 percent.
And We Like Ike: The top tax rate for everything but capital gains was 91 percent under Dwight D. Eisenhower. (The capital gains tax was a relatively modest 25 percent.)
Tax-cut advocates say we can’t raise taxes on billionaires because they’ll stop investing or hiring. Wait, let me get this straight: If an investor writes a check today and makes a billion dollars, he or she keepa 850 million dollars after taxes.
But by this wacky Randian logic, that investor won’t think it’s worth it to write the same check next year. They’ll be too demoralized and discouraged. Only $700 million in return for my signature? Ohh, no. I’ve lost my motivation. I’m collapsing into a black hole of despair and ennui. I surrender! I refuse!
I don’t think so.
The extremist of the right and the angry billionaires tell us that they’ll emulate an Ayn Rand fictional character by “going Galt,” refusing to make money the way they increasingly do – by not working for it. (Will rich kids refuse to collect their inheritances, too?)
Nobody “went Galt” in Ike’s day. Maybe we just had a better breed of millionaire back then: Tougher. More patriotic. Made of sterner stuff.
Colonel Tom Parker, Elvis Presley’s manager, said he considered it “his patriotic duty to get Elvis up into the 90 percent tax bracket.” Now that’s the kind of fiscal patriotism I believe. In fact, I’d give it a score of 91 on the “American Tax Bandstand”: It’s good for the economy, and it’s got a beat you can dance to.
Higher billionaire tax rates built America. They worked for FDR. They worked for Truman. They worked for Eisenhower. They worked for Nixon. But somehow they’re not going to work now, because billionaire investors won’t “work” at watching their money grow?
I don’t think so.
They Don’t Make Republicans Like They Used To
Romney would cut the millionaires’ and billionaires’ historically low tax rates even more, from 35 percent to 28 percent, would eliminate estate taxes (because nothing says ‘fairness’ and ‘opportunity’ like billionaire kids who don’t pay taxes) and keep the capital gains rate at its current low rate.
Romney’s tax plans aren’t just fun and games, though: He’ll really bring the hammer down on charities. While certain forms of charitable deduction need reforming, Romney’s approach is a strange way to go at it – unless you think our economic problems were caused by food banks, not Wall Street banks.
Romney’s proposals would slash revenue overall, but he says he’ll make up the difference by closing loopholes. That’s not a gag line; it’s his stated policy. No wonder Bill Clinton made so much fun of it in his speech at the Democratic Convention. He got big laughs, too.
Good one, Bill! Who in their right mind believes that you can give away more billions in breaks to billionaires, and that lawmakers will more than make up the difference by suddently getting tough on loopholes – the ones they created themselves?
Bargain Basement Deal
A lot of Democrats and so-called ‘centrists,’ that’s who, and thir most prominent spokesman is one Bill Clinton. Clinton’s been talking up the “Simpson Bowles” proposal that would do exactly that: cut the top tax rates for millionaires, billionaires, hedge funds, and corporations – then, supposedly, overcome the shortfall (and more!) by closing those same loopholes.
But seriously, folks …
Actually it is serious. The President is praising the fallacious Simpson Bowles deal. Senators in both parties are meeting to craft a bill along its lines.
Suddenly Chuck Schumer, the Wall Street-friendly New York Democrat, is now thought by some to represent the left flank of the tax argument. Schumer, who’s presumably manning the barricades with his fellow radical Warren Buffett, would use any additional revenue to cut deficits and not to provide needed services.
What makes them think of Sen. Schumer as an obstructionist lefty? He wants to keep millionaire and billionaire tax rates at their pre-Bush-tax-cut, already insufficient level. Schumer’s proposal, like Buffett’s, is a cool solution to a hot problem. But at least neither one of them has drunk the Kool-Aid.
Many of his Senate colleagues, on the other hand, have gotten intoxicated on the stuff. They want to cut billionaires’ taxes even more. And they claim they’re acting in the name of deficit reduction!
That’s how surrealistic this debate has become.
What can rational people do in the face of this collective billionaire and corporation-sponsored madness? Remain calm. Don’t become infected with the mass hallucinations surrounding you.(We’ve seen that movie already.) And stay grounded in reality.
We can do this. We’ve built a thriving, growing economy before and we can do it again. All it takes is hard work, old-fashioned American optimism – and a fair tax code.
These tax rates helped make America great. The America that Rick Perry and other conservatives wax nostalgic about was built by rich people paying their fair share. The money was used to build our schools, bridges, and highways, to educate our young people, to make us the world’s leader in the sciences, and to reach the moon.
Fair taxation works. It worked in the 1930s, 1940s, 1950s, 1960s, 1970s, and for most of the 1980s. It will work again, and we should demand no less from our leaders.
I love our “patriotic billionaires,” and look forward to hearing them demonstrate that patriotism every time they repeat these words: Double my taxes now!