It is very hard nowadays to discuss raising taxes. The right and the various anti-tax think tanks like Tax Foundation, Cato, Norquist's group and others immediately start talking about "class warfare". (Note that they never use the term when the government is considering cutting taxes for the wealthy even though cutting taxes for the wealthy is a form of class warfare against the ordinary Americans who will either lose services or ultimately pay. And of course the anti-tax right constantly talks about needing to cut entitlements, but elite classwarfarists don't really want to cut all entitlements, since they don't talk about the corproate and wealthy welfare in the system but only about unemployment assistance, and social security and medicare/medicaid. Isn't that in itself class warfare? So the folks that accuse people who support raising taxes as commitment of classwarfare are generally the very folks that have been engaging in class warfare ever since "trickle-down" and "supply-side economics" entered the American vocabulary.)
David Sirota makes this point well (without using the term class warfare to address it) in "The rich have never had it so good: Taxing the wealthy could help the poor? Not if Congress has anything to do with it," Salon.com, July 25, 2009. He is dealing with the proposal for a surcharge on those with income in excess of $280,000--the "1-percenters", i.e., those in the top one percent of the income distribution in this country. He starts out noting the magnitude of goodies for the wealthy in our current economy.
1-percenters' share of America's total income is the highest it's been since 1929, and their tax rates are the lowest they've faced in two decades. Through bonuses, many 1-percenters will profit from the $23 trillion in bailout largesse the Treasury Department now says could be headed to financial firms. And most of them benefit from IRS decisions to reduce millionaire audits and collect zero taxes from the majority of major corporations.
The fact that the ultra wealthy are garnering a much larger share of America's total income means that even with reduced tax rates they still pay a lot in taxes. But they're not really paying their fair share, since they are benefiting from both specific code provisions giving them a tax break (consider the 0-15% rates on capital gains and the 15% rate on dividends or the fact that they get to deduct the fair market value of art works that they contribute to museums, rather than the amount they paid for them (their basis), which gives them a windfall reduction in taxes that is hard to justify under any coherent conception of the charitable contribution deduction) and specific decisions about how to administer the tax laws (the Bush Administration's focus of audit energy on the pittance being lost from inappropriate unearned income tax credit filers and lack of focus on wealthy return filers; the giveaways managed by bureaucratic edict in favor of corporations, such as the Bush Treasury's notice refusing to enforce the anti-abuse rule on use of purchased losses when big banks got bigger by swallowing littler banks with losses). Remember, too, that letting corporations deduct any business expense "paid" with their own stock (whether getting to depreciate business property bought with stock or getting to deduct salaries to executives paid with stock) is a windfall giveaway from the git-go: a corporation has no after-tax investment in its newly issued own stock (although it can have some in the case of treasury stock that it has repurchased from shareholders). And this group of 1-percenters fared extraordinarily well under the many Bush tax cuts (even better when you realize that they own a considerable portion of the corproate stock and that the corporate tax cuts also had the effect of giving them more after-tax income).
So how hard a blow would the small surcharge proposed by the House be on the wealthy? Enough to defeat entrepreneurialism and ruin small businesses, as the right would have us think?
This surtax would graze just 5 percent of small businesses and would recoup only part of the $700 billion the 1-percenters received from the Bush tax cuts. In fact, it is so minuscule, those making $1 million annually would pay just $9,000 more in taxes every year--or nine-tenths of 1 percent of their 12-month haul.
This is an important point. This surcharge isn't life-threatening to the wealthy, it isn't confiscatory, it isn't even steep taxation. It is a partial return to the slightly higher rates that applied just a short while ago when we actually managed to have a much more prosperous economy than we have today.
Sirota notes that the "Land Rover Liberals", for all their claim to be lefties supporting the public good, are really busy "driving their luxury cars over middle-class economic interests." With them are the "Corrupt Cowboys" like Max Baucus and the others who are funded by the big corporations while playing their "just folks from back home" game to the tv crowds and killing helath care to get the money to get reelected. All is topped off by the Millionaire Media--elite opinion-mongers who either represent media conglomerates or are themselves filthy rich and manage to ignore data and legitimize the arguments of the wealthy.
Either we acknowledge that we are all in this community together, and that taxation is the way we fund our community's goals, or we perish as a viable democracy.
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