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One of the great lies of our time is that raising taxes on the wealthy hurts job creation and undermines economic growth. There is absolutely no evidence anywhere in the world that this claim is true. In fact, all the evidence points to the exact opposite being true: When the wealthy are taxed fairly, jobs are created and economic growth is encouraged. Back in the 1950s and 1960s, for example, when the economy boomed and the middle-class expanded, the top bracket for high-income earners was 90 percent. Today, the top bracket is at 35 percent, but the top 1 percent are paying an effective tax rate of less than 30 percent.
In 1993, when President Clinton proposed raising taxes on the wealthiest Americans, he was roundly criticized by the corporate-controlled politicians on Capitol Hill and the Wall Street barons who always oppose higher taxes on the rich. They claimed the economy would suffer and jobs would be lost. Yet, when President Clinton won that tax increase, just the opposite happened. The nay-sayers were wrong. Job creation skyrocketed and we ushered in nearly a decade of strong economic growth.
A dozen years ago, however, that growth came to a halt with Pres. George W. Bush’s program of tax cuts for the rich and the deregulation of Wall Street. Instead, we were left with the lowest job creation of any Presidency in modern times. There is a reason for this result: When the wealthy get massive tax cuts, they don’t spend the money. Neither do corporations. In fact, corporations are now sitting on more than $1 trillion in cash.
On the other hand, when working families get a tax break, they spend it – creating more demand for products and giving corporations an incentive to produce more and hire more people. That is why President Obama makes such a strong case for keeping taxes low on the working middle class while allowing the Bush-era tax cuts for the wealthy to expire. Yet the same, age-old arguments are made by the wealthy to keep their taxes low.
They’ve even got a corporate CEO-funded front group, called Fix the Debt, arguing that we need to cut programs that help the poor, seniors and the sick in order to finance more tax cuts for the richest people in the country. That kind of thinking won’t put America back to work. And it won’t finance the important investments in infrastructure and education that we need to remain competitive in the future. All it will do is give the rich a tax break that they don’t need.
That is one reason why the 2012 election was the most important one of our lifetime. Big issues were debated, including whether we would return to Bush-era policies or enact the kind of Clinton-era tax policies supported by President Obama. The voters sent a clear signal that they supported President Obama’s plan to move the country forward by raising taxes on the wealthy and protecting vitally important programs that the poor and middle-class rely upon, such as Social Security, Medicare and Medicaid.
Some on Capitol Hill – such as Sen. Lindsay Graham of South Carolina – say they will only accept a revenue increase if the President will agree to major cuts in Social Security, Medicare or Medicaid. But Congress and President Obama have already cut more than $1.5 trillion in government spending. Now, the focus must be on revenue.
More than 40 members of the House have indicated their opposition to any cuts in Social Security, Medicare or Medicaid. Sens. Jay Rockefeller and Tom Harkin underscored the opposition to unnecessary cuts in a letter they circulated earlier this week. They urged President Obama to “reject changes to Medicare, Medicaid and Social Security that would cut benefits, shift costs to states, alter the structure of these critical programs, or force vulnerable populations to bear the burden of deficit reduction.”
The taxes on the richest people in America have been too low for too long. Our economic recovery is being damaged by this fundamentally flawed policy. Just this week, billionaire Warren Buffet made this clear in an op-ed published in The New York Times. In his column, Buffet called on Congress to immediately “enact a minimum tax on high incomes.”
Buffet also suggests a 30 percent rate for income between $1 million and $10 million, and a 35 percent on amounts above that. “A plain and simple rule like that will block the efforts of lobbyists, lawyers and contribution-hungry legislators to keep the ultra-rich paying rates well below those incurred by people with income just a tiny fraction of ours,” Buffet wrote.
We need to mobilize and demand that the Congress raise taxes on the wealthy and protect vital programs. It is the only way to avoid a fiscal disaster while encouraging job creation and greater economic growth.
Photo from Moyan_Brenn licensed under Creative Commons
6 Comments
In addition to the spending cuts you cite, POTUS has already offered additional spending cuts that will bring to total up around 2 trillion.
GOP is being totally unrealistic.
First, I want to applaud your logic in so effectively presenting the fact that the “meme” that taxes on the rich hurts job creation is a fraudulent concept.
But here’s something I want to get off my chest: Saying that we should mobilize and demand something of Congress is like telling kids in an abusive home that they need to do their chores and then tell Mommy and Daddy that now that the chores are done, the abuse should end.
The strategy of “mobilizing” works in a democracy. But this nation is currently inside a system of oligarchy. The only way that mobilizing would mean a thing was if half of us were millionaires who could pledge significant monies to the bought and paid for politicians that we supposed need to mobilize.
There are two types of balance A and B.
A. (State taxes = state spending – state debt), for the states and
B. ( Federal Deficits = Net Private Savings + Net Imports,) for money creating USA.
In B, Net private savings includes all states and businesses and individuals, all money users.
from http://my.firedoglake.com/activity/p/1131662/
Why are we concentrating so much on taxes. It is deficits that matter. Only deficits exceeding net imports put money into the economy.
If nothing else, its a matter of fairness. We all use resources that depend on Government spending whether its roads, defense, air traffic control, weather services, food safety, etc. No one should get a free ride, especially “the moochers”. They probably use more Government infrastructure than anyone.
A few other revenue raisin thoughts. Let’s remove the cap on income subject to social security taxes (even though they do not affect the deficit – St Reagan even said so almost 30 years ago). Also, all income, including interest, dividends, and capital gains, should be taxed at the same rate as wages, particularly for incomes above $500k. Let’s take a look at tax loopholes and income reporting flaws to make sure the Government has visibility into all income. The rich have too many ways to hide income from fair taxation.
And by the way, there are other ways to raise revenue. Since when has it become an anathema to put import duties on overseas products especially on all that stuff coming from China? The US has some of the lowest import duties in the world. We need to increase it not only to raise income but also to make products made in US more competitive. BTW I find the arguement high labor costs and regulation make US made products non-competitive specious. How about repealing the mining act of 1873 and make mining companies pay more? Same thing on oil and gas exploration/exploitation. And let’s not forget tightening up on corperate taxes. Perhaps we need some taxes on day trading transactions, not only to raise revenue but to slow down a practice detrimental to the markets. What about a 1% sales tax on internet purchase split between the fed and states (say 75%/25% based on the state of the recipient)? How about increasing the gas tax a few pennies per gallon (and while we’re at it get rid of the 0.9 cent/per gallon pricing scheme – round it to the nearest penny)? Finally, how about a 5 year 5% surtax couched in terms of our patriotic duty to reduce the debt.
I’m sure I’ve barely scratched the surface on ways to increase revenue. And let’s not forget the CBO says you need both revenue increases and spending cuts to balance the budget. So we need to look at the spending side as well.
I wonder, why did I waste my time writing this. Things will never change as long as we have an American aristocracy rooted in that eastern power elite running Wall Street and Washington corporate owned media and their brainwashed flunkies who’ve drunk too much of the Faux News/right wing radio koolaid. *sigh*
Lots of great ideas but no real answers to the question, How? Our selected Rulers do not respond to citizens only to their financiers.
Raising taxes a few points on the rich will only justify the Grand Betrail while providing cover for the next election.
The only cure for the disease of Capitalism is radical surgery not some minor pallative that relieves some of the symptions while ignoring the spreading malignancy.
Ten Year, Ten Trillion dollar infrastructure investment program. Paid for by the rich (75% tax on incomes (salary and dividends) over 10 million, 5% asset tax on estates over $100 million, Tobin tax of 0.1% on stock transactions).
A Trillion dollars on construction projects is 17 million private sector jobs.