Most of us filed our income taxes this week, but the inevitable Republican presidential nominee Mitt Romney wasn’t one of us.
He asked for an extension, no doubt because he would be mortified politically by showing that he likely paid a lower tax rate on tens of millions of dollars of income than a police officer or a teacher (those leaches on society) or a bus driver, and how much cash he stashed in the Caymans.
In 2009, 1,470 people who made more than $1 million paid $0 in federal income tax; 22,000 earning more than $1 million in income paid less than 20 percent, the rate that billionaire Warren Buffet’s secretary would likely pay.
Over the past 30 years, this country has endured tax policies that have effectively reversed the gains that built a middle class and made America the strongest economy in the world and, in the process destroyed the American Dream of being able to work hard and rise up.
In 2010 the net worth of the Forbes 400 was $1.37 trillion, exceeding the net worth of the “bottom” 60 percent of the whole country. That’s 400 people whose wealth exceeds the combined wealth of 155 million Americans.
The Bush tax cuts were a textbook demonstration of the supposed “trickle down” economics. Shifting wealth to the wealthiest was supposed to benefit the rest.
“Instead, during the last decade, we had the slowest job growth in half a century. And the typical American family actually saw their incomes fall by about 6 percent, even as the economy was growing,” President Obama told the Associated Press luncheon on April 3.
“We were promised that these tax cuts would lead to faster job growth,” Obama said. “They did not…The income of the top 1 percent has grown by more than 275 percent over the last few decades, to an average of $1.3 million a year. But prosperity sure didn’t trickle down.”
As a result, there is the largest chasm between rich and poor in this country than has existed since the Gilded Age of the Vanderbilts, Astors and Whitneys – before income taxes, before the Great Depression, before labor laws, before unions when the top 400 had more money than the U.S. Treasury.
“Since 1980, about 5 percent of annual national income has shifted from the middle class to the nation’s richest households. That means the wealthiest 5,934 households last year enjoyed an additional $650 billion – about $109 million apiece – beyond what they would have had if the economic pie had been divided as it was in 1980, according to Census Bureau data,” Bloomberg’s David J. Lynch reported (Oct 13, 2011).
“ A widening gap between rich and poor is reshaping the U.S. economy, leaving it more vulnerable to recurring financial crises and less likely to generate enduring expansions.
“Left unchecked, the decades-long trend toward increasing inequality may condemn Wall Street to a generation of unimpressive returns and even shake social stability, economists and financial-industry executives say.”
In fact, the wealthiest 1 percent may think they are getting away with a killing, but will find that because there are few who can purchase goods or services and instead may be desperate for government assistance, their bottom lines will actually be hurt by a perennially weakened economy. And just wait for the next bridge to collapse.
The growing chasm between the haves/have mores and the rest of us and the related shift in political power threatens the very essence of democracy, and has already turned the “American Dream” into a fantasy.
“Can we succeed as a country where a shrinking number of people do exceedingly well, while a growing number struggle to get by?” Obama asked at the Associated Press conference. “Or are we better off when everyone gets a fair shot, and everyone does their fair share, and everyone plays by the same rules? ….
“…I believe deeply that the free market is the greatest force for economic progress in human history. ..But I also share the belief of our first Republican president, Abraham Lincoln — a belief that, through government, we should do together what we cannot do as well for ourselves….”
Obama has been sounding a theme of “fair shot, fair share” to address this income inequality and has proposed the Buffett Rule – named for the billionaire who objected to the fact that he is able to have a lower tax rate than his secretary.
Interestingly, President Ronald Reagan – that iconic hero for Conservatives – raised the same objections in 1985, when he sought a fairer tax code, so that a millionaire didn’t pay a lower tax rate than the bus driver.
Under the Buffett Rule, income tax rates would gradually rise after the first $1 million in adjusted, taxable income, up until $2 million in adjusted, taxable annual income which would be taxed at 30 percent. That means you get to keep the ridiculously low rate on the first $1 million – only the dollars after that would be taxed at the marginally higher rates (actually, just 2 points higher than Romney is proposing secretly to his wealthy donors).
Republicans have recoiled at the notion of the Buffett Rule as well as any attempt whatsoever to raise taxes on the uber-rich. Even as they rail and threaten to shut down government and destroy the “full faith and credit of the United States” because of debt and deficit, they insist that you can’t squeeze a single dollar more out of a millionaire or a billionaire, who, in the Orwellian speak of our day, are called “job creators.”
If in fact not taxing the wealthiest 1 percent is how you get jobs, then frankly, we should have been at full employment the day that Bush vacated the White House.
Instead, on that day, we were experiencing the collapse of the financial market and the loss of 750,000 jobs a month – a pattern of job losses that had begun years before.
But what we also know is that under President Clinton, when tax rates were higher, we had the longest business boom in American history; 22 million jobs were created and Clinton bequeathed to Bush a $500 billion surplus. You had Fed Chairman Alan Greenspan worrying what would happen if the U.S. government actually paid off all its debt – something that hasn’t happened since the U.S. was founded – how horrible that would be.
The vast majority of Americans – 72 percent – support the Buffett Rule.
But Senate Republicans have used the filibuster to block the Buffett Rule from an up-or-down vote, in effect, making 60 votes, instead of 51, necessary to pass as defying the will of the majority of Americans.
Instead of the Buffett Rule, which would at least restore some sense of fairness to the tax code, Republicans want to double-down on the Bush tax cuts, which have resulted in $1 trillion deficit a year.
The Ryan budget (which Romney embraces) would reduce tax revenues by $4.6 trillion more, with more than $1 trillion of that going to that tiny slice of Americans who make more than $250,000 a year. That’s an average of at least $150,000 more – on top of the $200,000 they got from the Bush tax cuts – for every millionaire and billionaire in the country.
“Here’s what $150,000 that each millionaire and billionaire would get, on average,” Obama told Florida Atlantic University students. “This could pay for a tax credit that would make a year of college more affordable for students like you. Plus a year’s worth of financial aid for students like you. Plus a year’s worth of prescription drug savings for one of your grandparents. Plus a new computer lab for this school. Plus a year of medical care for a veteran in your family who went to war and risked their lives fighting for this country. Plus a medical research grant for a chronic disease. Plus a year’s salary for a firefighter or police officer — $150,000 could pay for all of these things combined. Think about that.”
Republicans cast tax fairness as destruction of capitalism, opportunity, and freedom itself. Obama is castigated as a tax hiker even though he has cut taxes more for all Americans than any other President (Reagan, recall, raised taxes 11 times). Tax rates are now at the lowest they have been in 50 years, and tax revenue is now at a lower percentage of GDP, 15 percent, than at any time in 60 years, back when Eisenhower was president.
In fact, total revenue as a share of gross domestic product has now been under 15 percent for three straight years – the first time that has happened since before World War II, according to the Center for American Progress, while spending is at 24 percent of GDP, an unsustainable equation.
We hear Republicans charging that the wealthiest pay the biggest chunk of taxes – that may be true, except if you consider that the top 1 percent collect 33.8 percent of nation’s income, but pay only 28.3 percent of all taxes; the top 5 percent reap 60 percent of the nation’s income, but pay only 44.7 percent of all taxes. That’s the budget deficit right there.
The Buffett Rule would not close the budget deficit alone, but would certainly be a step in the right direction. Getting rid of oil subsidies and corporate welfare, eliminating tax incentives for companies to export jobs would go far. A financial transaction tax would have the dual benefit of eliminating a lot of the speculation that has been roiling the markets that has been so destructive to most of us, while raising something like $80 billion. And frankly they should rein in deductions, such as multiple homes (think of the deduction Romney must get on property taxes for five multi-million dollar homes).
Letting the Bush Tax cuts sunset and ending the war in Afghanistan would save $2 trillion a year and actually erase the budget deficit altogether, if anyone were actually serious about doing that.
The Republicans are not really interested in erasing the budget deficit or addressing debt, but rather, in using the fiscal straits as a weapon to eradicate the social safety net and any regulatory powers of the federal government, which are despised. They have no interest in supporting public education (there are those teachers unions, after all), or invest in infrastructure (House Republicans are holding up the bipartisan Transportation bill which could put 3 million people to work), in science and technology breakthroughs or clean/renewable energy because that might shake up the status quo of the entrenched interests who are their donors.
So instead of having money to invest in education and infrastructure, our tax dollars are channeled to the wealthiest 1 percent. And how do they use it? Do they make purchases that support jobs? Only for political strategists and media, perhaps, because they seem to be using that $1 million taxpayer-subsidized windfall to invest in elections – in effect, the best government that money can buy.
Maplight, which follows campaign finance, reported that just 117 multi-millionaire donors so far have bankrolled the Superpacs of the 3 leading Republicans and Obama.
Romney is the vanguard of the anti-tax movement, which amazingly, benefits himself personally (imagine if Obama would do anything as craven).The $250 million man, who made his money the old fashioned way – inheritance and with Other People’s Money, by shuttering factories, firing workers and exporting jobs – has embraced the Paul Ryan budget which doubles-down on the Bush tax while destroying Medicare and eviscerating every program that helps ordinary people.
At the same time, Republicans are really, really upset that 46 percent of Americans do not earn enough to pay federal income taxes (though they pay more in payroll taxes, as a percentage of income than Romney). They want even the poorest among us to pay some minimum tax, let’s say $100 apiece.
The hypocrisy displayed in tax policy (taxes paid by poor people, good; taxes paid by rich people, bad) is comparable to his hypocrisy in insisting upon the dignity of hardworking stay-at-home mothers, who just three months ago Romney said should be forced to work rather than get government assistance, so that they would know the “dignity of work.”
The Buffett Rule would have been an important step toward restoring the progressive engine to our tax code that enabled American society to, well, progress.
Republicans have used the filibuster, yet again, to prevent a the Buffett Rule from even coming for a vote, as they have every effort to restore fairness to the tax code.
Obama commented, “Senate Republicans voted to block the Buffett Rule, choosing once again to protect tax breaks for the wealthiest few Americans at the expense of the middle class.
“The Buffett Rule is common sense. At a time when we have significant deficits to close and serious investments to make to strengthen our economy, we simply cannot afford to keep spending money on tax cuts that the wealthiest Americans don’t need and didn’t ask for. But it’s also about basic fairness – it’s just plain wrong that millions of middle-class Americans pay a higher share of their income in taxes than some millionaires and billionaires. America prospers when we’re all in it together and everyone has the opportunity to succeed.
“One of the fundamental challenges of our time is building an economy where everyone gets a fair shot, everyone does their fair share, and everyone plays by the same rules. And I will continue to push Congress to take steps to not only restore economic security for the middle class and those trying to reach the middle class, but also to create an economy that’s built to last.”
Karen Rubin
