Paul Buchheit
NationofChange / Op-Ed
Published: Monday 16 July 2012
“There are at least five good reasons why the wealthiest Americans need government as much as the rest of us, and probably more.”

Five Reasons the Super-Rich Need Government More Than the Rest of Us

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Wealthy individuals and corporations want us to believe they've made it on their own, without the help of government or the American people. Billionaire financier Sanford Weill blustered, "We didn't rely on somebody else to build what we built." He was echoing the words of his famous predecessor, the formidable financier J. P. Morgan, who spouted, "I owe the public nothing." 

That's the bull of Wall Street. There are at least five good reasons why the wealthiest Americans need government as much as the rest of us, and probably more. 

1. Security

In his "People's History," Howard Zinn described colonial opposition to inequality in 1765: "A shoemaker named Ebenezer Macintosh led a mob in destroying the house of a rich Boston merchant named Andrew Oliver. Two weeks later, the crowd turned to the home of Thomas Hutchinson, symbol of the rich elite who ruled the colonies in the name of England. They smashed up his house with axes, drank the wine in his wine cellar, and looted the house of its furniture and other objects. A report by colony officials to England said that this was part of a larger scheme in which the houses of fifteen rich people were to be destroyed, as part of 'a war of plunder, of general levelling and taking away the distinction of rich and poor.'" 

That doesn't happen much anymore. Of course, the super-rich aren't taking any chances, with panic shelters and James Bond cars and personal surveillance drones. But the U.S. government will be helping them by spending $55 billion on Homeland Security next year, in addition to $673 billion for the military. The police, emergency services, and National Guard are trained to focus on crimes against wealth. 

In the cities, business interests keep the police focused on the homeless and unemployed. And on drug users. A "Broken Windows" mentality, which promotes quick fixes of minor damage to discourage large-scale destruction, is being applied to human beings. Wealthy Americans can rest better at night knowing that the police are "stopping and frisking" in the streets of the poor neighborhoods. 

2. Laws and Deregulations

The wealthiest Americans are the main beneficiaries of tax laws, property rights, zoning rules, patent and copyright provisions, trade pacts, antitrust legislation, and contract regulations. Tax loopholes allow them to store over $1 trillion in assets overseas. 

Their companies benefit, despite any publicly voiced objections to regulatory agencies, from SBA and SEC guidelines that generally favor business, and from FDA and USDA quality control measures that minimize consumer complaints and product recalls. 

The growing numbers of financial industry executives have profited from 30 years of deregulation, most notably the repeal of the Glass-Steagall Act. Lobbying by the financial industry has prolonged the absurdity of a zero sales tax on financial transactions

Big advantages accrue for multinational corporations from trade agreements like NAFTA, with international disputes resolved by the business-friendly World Bank, International Monetary Fund, and World Trade Organization. Federal judicial law protects our biggest companies from foreign infringement. The proposed Trans-Pacific Partnership would put governments around the world at the mercy of corporate decision-makers. 

The euphemistically named JOBS Act further empowers business, exempting startups from regulatory accounting requirements. 

There are even anti-antitrust measures, such as the licensing rules that allow the American Medical Association to restrict the number of doctors in the U.S., thereby keeping doctor salaries artificially high. Can't have a free market if it hurts business. 

3. Research and Infrastructure

A publicly supported communications infrastructure allows the richest 10% of Americans to manipulate their 80% share of the stock market. CEOs rely on roads and seaports and airports to ship their products, the FAA and TSA and Coast Guard and Department of Transportation to safeguard them, a nationwide energy grid to power their factories, and communications towers and satellites to conduct online business. Private jets use 16 percent of air traffic control resources while paying only 3% of the bill. 

Perhaps most important to business, even as it focuses on short-term profits, is the long-term basic research that is largely conducted with government money. Especially for the tech industry. Taxpayer-funded research at the Defense Advanced Research Projects Agency (the Internet) and the National Science Foundation (the Digital Library Initiative) has laid a half-century foundation for technological product development. Well into the 1980s, as companies like Apple and Google and Microsoft and Oracle and Cisco profited from the fastest-growing product revolution in American history, the U.S. Government was still providing half the research funds. Even today 60% of university research is government-supported. 

Public schools have helped to train the chemists, physicists, chip designers, programmers, engineers, production line workers, market analysts, and testers who create modern technological devices. They, in turn, can't succeed without public layers of medical support and security. All of them contribute to the final product. 

As the super-rich ride in their military-designed armored cars to a financial center globally connected by public fiber optics networks to make a trade guided by publicly funded data mining and artificial intelligence software, they might stop and re-think the old Horatio Alger myth. 

4. Subsidies

The traditional image of 'welfare' pales in comparison to corporate welfare and millionaire welfare. Whereas over 90% of Temporary Assistance for Needy Families goes to the elderly, the disabled, or working households, most of the annual $1.3 trillion in "tax expenditures" (tax subsidies from special deductions, exemptions, exclusions, credits, and loopholes) goes to the top quintile of taxpayers. One estimate is $250 billion a year just to the richest 1%. 

Senator Tom Coburn's website reports that mortgage interest and rental expense deductions alone return almost $100 billion a year to millionaires. 

The most profitable corporations get the biggest subsidies. The Federal Reserve provided more than $16 trillion in financial assistance to financial institutions and corporations. According toCitizens for Tax Justice, 280 profitable Fortune 500 companies, which together paid only half of the maximum 35 percent corporate tax rate, received $223 billion in tax subsidies. 

Even the conservative Cato Institute admitted that the U.S. federal government spent $92 billion on corporate welfare during fiscal year 2006. Recipients included Boeing, Xerox, IBM, Motorola, Dow Chemical, and General Electric. 

In agriculture, most of the funding for commodity programs goes to large agribusiness corporations such as Archer Daniels Midland. For the oil industry, estimates of subsidy payments range from $10 to $50 billion per year. 

5. Disaster Costs

Exxon spokesperson Ken Cohen once said: "Any claim we don't pay taxes is absurd...ExxonMobil is a leading U.S. taxpayer." Added Chevron CEO John Watson: "The oil and gas industry pays its fair share in taxes" But SEC documents show that Exxon paid 2% in U.S. federal taxes from 2008 to 2010, Chevron 4.8%. 

As if to double up on the insult, the petroleum industry readily takes public money for oil spills. Cleanups cost much more than the fines imposed on the companies. Government costs can run into the billions, or even tens of billions, of dollars. 

Another disaster-prone industry is finance, from which came the encouraging words of Goldman Sachs chairman Lloyd Blankfein: "Everybody should be, frankly, happy...the financial system led us into the crisis and it will lead us out." 

Estimates for bailout funds from the Treasury and the Federal Reserve range between $3 trillion and $5 trillion. That's enough to pay off both the deficit and next year's entitlement costs. All because of the irresponsibility of the super-salaried CEOs of our most profitable corporations. 

Common Sense

Patriotic Millionaires recently addressed the President and Congress: "Given the dire state of our economy, it is absurd that one-quarter of all millionaires pay a lower tax rate than millions of working, middle-class American families...Please do the right thing for our country. Raise our taxes." 

It's good to know somebody gets it right. Taxes, for the most part, are not unfair. They represent payment for society's many benefits, which get bigger and better as people get richer.



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ABOUT Paul Buchheit

Paul Buchheit is a college teacher with formal training in language development and cognitive science. He is the founder and developer of social justice and educational websites (UsAgainstGreed.org, RappingHistory.org, PayUpNow.org), and the editor and main author of "American Wars: Illusions and Realities" (Clarity Press). He can be reached at paul@UsAgainstGreed.org.

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13 comments on "Five Reasons the Super-Rich Need Government More Than the Rest of Us "

Jose_X

July 20, 2012 12:49pm

If we had to rely on private armies, we'd regress a few centuries or maybe move on par with some of these countries where a very few have lots of power and control through violence.

A few points I noticed were missing from this conversation? [I read fast so sorry if I missed it]

-- A lot of the success in the private space comes proportionally to already existing wealth diverted for that new purpose. Wealth begets wealth. This is not a fair rule I would vote for if we wanted fair opportunity for all in the private sphere. Those the most in the lead are most favored by the rules of the game (think Monopoly.. and how there is a very good reason we reset the game when it gets too unbalanced). Most power comes from those who already have wealth thanks to our military. So, for the wonderful service our gov does in keeping that wealth exclusive and safe, what wealth tax is the minority elite controlling most wealth paying? That's right, they are being subsidized in a way only a government with rules of play largely created by the wealthy could. And not only are they underpaying for their existing-wealth privileges, "they" want a flat tax on marginal yearly additional income. Have the cake (tiny wealth tax) and eat it (low tax rate on easy money deriving from that wealth). ...Puke is right.

-- Why are we favoring as a society the merchant skill and the obvious mathematical advantages of the already wealthy (leading to easy money)? Why are we allowing that group to get away with so much power and exclusive control over doctors and the many others that do the vast vast majority of the work that keeps the nation running?

-- For the libertarian: when did I give up my right to access to your property? That's right I didn't. I wouldn't except for a very large amount of money. In short, just like land was taken from the native Americans, it was also taken (thanks to our government) from you and me without our consent. So even if we want to reward the skill of "voluntary" contract negotiation above other contributions to society, most people aren't allowed to compete on a fair playing field but are forced into a position of weakness when negotiating in the private sphere. [As suggested above, I am not arguing for less government, just government more representative of the majority of a larger number of people and creator of fair rules.] To this we can ask, why don't all citizens own a single inalienable share of stock in the government, who, on our behalf, owns all land and items (or charges a very high fee for granting exclusivity) and merely leases, allowing those who create for the wider good, to have the opportunity at profit .. but always needing to come back and renegotiate most contracts with representatives of the people. Taxes/fees collected go to shareholders. The biggest beneficiaries of market rises should be the people as a whole and not the elite of today who have been given exclusive controls the majority never traded away voluntarily.

One related issue is that more people need to feel they can take over the reigns of industry titans if you want more of us to vote for fairness and against the fear that holds us hostage. For people to resist the fears, we need to have open access to information and ability for as many as possible to create, make mistakes and get more chances, etc. We should be rewarding more greatly those who share trade secrets and those who help educate others. We need to stop giving special ownership rights to those who hide secrets, leverage their power to own increasing amounts of intellectual property off limits to others trying to create or learn, limited access, etc, and instead take advantage and charge fees (tax) for those anti-social privileges of exclusivity of information and creation rights. We also need to promote to the public the necessity, if we want fairer rules, that people need to take advantage of free access and learn. More people would learn if they felt they had a decent shot at "profit" (however they define it) and weren't playing in such a lopsided field (if the profit motive is good for the elite goose, it's also good for the common gander). As shareholders, we should have a minimal stipend to make it possible always to tighten our belts a little bit and to work only a modest amount in order to have more time to learn. This is a fairness issue the wealthy already enjoy (going golf, anyone?) yet appear to love to criticize in others when others appear to be getting a little government help because of poverty. Of course motivation is so important and more should be done so that those who start off late don't live perennially in a state of inferiority. The public and private sectors should be working more on this together instead of in the adversarial roles that largely dominates lots of modern competition in a capitalistic society. Both sides have blame.

mike morell

July 17, 2012 1:08pm

Obama loves the rich; in fact we all love them; like Brits love their Queen; we're only asking that they pay Clinton-times taxes to get the nation out of the Bush's Bankruptcy.

Angerholic

July 17, 2012 5:50am

I had a very wealthy uncle who moved among all the rich and famous in Houston. He knew he didn't need his Social Security payments, and tried to send them back. They weren't accepted.
For all of you who want to contribute more to pay off the national debt, write down this address:

Department of the Treasury
Bureau of the Public Debt
200 Third Street
Parkersburg, WV 26106-2188

This is no scam. In 2001 when Bush was scattering the surplus to the winds, $600 landed in our mailbox. We endorsed it to this Bureau and mailed it to Senator Tom Daschle, who forwarded it and sent us a strong letter of appreciation.
Try it--you'll like yourself for it.

Shrub The War C...

July 17, 2012 4:12am

I totally disagree with the premise that the stinking, filthy, evil, rich need the government MORE than the rest of us.

In fact GOOD government was designed to create as level a playing field as possible for the stinking, filthy, evil, rich and the rest of us.

So in essence, even if the playing field were level, the stinking, filthy, evil, rich would still have an advantage.

Steve Moyer

July 16, 2012 7:45pm

The wealth class also uses the legal system - contracts, person to organization lawsuits, personal interest suing others. Not to mention wills, marriage per-nups and messy divorces. But as an earlier poster noted, the wealthy don't believe they need any government, and work very hard to make sure it is not working for the rest of us.

wildthang

July 16, 2012 4:09pm

The system is running itself and is heading straight for a cliff and stepping on the gas and hoping the cliff will dodge... whne the principles are all gone and wars and financial schemes are all for lies and buyer and taxpayer beware then public trust is gone and will not be coming back.. with the current system, putting gloves back on is next to impossible...

dwdallam

July 16, 2012 3:30pm

I'm always fascinated with the position that "I made it all myself and owe nothing to anyone!" Ok, let's say I agree. Then let them take care of their own roads, seaports, national security, and court system. These people are so detached from reality they're mentally ill.

Theodore Ziolkowski

July 16, 2012 3:10pm

Let’s discus Income Taxes.

Patriotic Millionaires recently addressed the President and Congress: "Given the dire state of our economy, it is absurd that one-quarter of all millionaires pay a lower tax rate than millions of working, middle-class American families...Please do the right thing for our country. Raise our taxes." The Republicans and Tea-Party will not listen, and refuse to address the Root Cause Problem.

It's good to know somebody gets it right. Taxes, for the most part, are not unfair. They represent payment for society's many benefits, which get bigger and better as people get richer.

The traditional image of 'welfare' pales in comparison to corporate welfare and millionaire welfare. Whereas over 90% of Temporary Assistance for Needy Families goes to the elderly, the disabled, or working households, most of the annual $1.3 trillion in "tax expenditures" (tax subsidies from special deductions, exemptions, exclusions, credits, and loopholes) goes to the top quintile of taxpayers. One estimate is $250 billion a year just to the richest 1%.
Senator Tom Coburn's website reports that mortgage interest and rental expense deductions alone return almost $100 billion a year to millionaires.

The most profitable corporations get the biggest subsidies. The Federal Reserve provided more than $16 trillion in financial assistance to financial institutions and corporations. According to Citizens for Tax Justice, 280 profitable Fortune 500 companies, which together paid only half of the maximum 35 percent corporate tax rate, received $223 billion in tax subsidies.

Even the conservative Cato Institute admitted that the U.S. federal government spent $92 billion on corporate welfare during fiscal year 2006. Recipients included Boeing, Xerox, IBM, Motorola, Dow Chemical, and General Electric.

In agriculture, most of the funding for commodity programs goes to large agribusiness corporations such as Archer Daniels Midland. For the oil industry, estimates of subsidy payments range from $10 to $50 billion per year.

Chris Hayes writes: The moral and spiritual damage that extreme inequality has wrought on even those who presided over and dominated by the Capitalism system. But there are actual cognitive, organizational, and social costs to such systems as well. The slave economy of the antebellum South conferred massive material gains on a very small number of extremely wealthy white plantation owners. But it also severely stunted the development of the region. It is the same system that the 1.0% would like to return the United States of America to.
Extreme inequality of the particular kind that we have produces its own particular kind of elite pathology: it makes elites less accountable, more prone to corruption and self-dealing, more status-obsessed and less empathic, more blinkered and removed from informational feedback crucial to effective decision making. For this reason, extreme inequality produces elites that are less competent and more corrupt than a more egalitarian social order would. This is the fundamental paradoxical outcome that several decades of failed meritocratic production have revealed: As American society grows more elitist, it produces a lesser caliber of elites.

Will Rogers said: “The difference between Death and Taxes is Death doesn't get worse every time Congress meets.”

Thomas Paine urged that everything "beyond what a man's own hands produce" was a gift that came to him simply by living in society, and hence, "he owes on every principle of justice, of gratitude, and of civilization, a part of that accumulation back again to society from whence the whole came."

Here are the facts. Data from Edward Wolff confirms that from 1983 to 2007 the percentages of net worth and financial wealth for the top 1% remained steady. But the percentages for the rest of the richest 5% increased by almost 20%, while the percentages for the lowest 80% of the population DECREASED by almost 20%.

These issues are difficult to address with Congress [Republicans, Tea-Party members and Blue-Dog Democrats] largely on the side of the wealthy. At the very least congress should:

(1) Eliminate the tax break on unearned income (capital gains). The richest Americans, who own most of the stocks, should not pay a smaller tax than everyone else. If an individual earns $10.00 per hour and works a 40 hour week for a year he or she shall have earned income of $20,800.00, all of which is taxable at the 35% rate. If I invest $260,000.00 in the stock market and earn 8% return, I get a check for $20,800.00 in Capital Gains and the tax rate is 15%.

(2) Implement a small Twenty-five cent financial transactions Fee. It would be easy to administer on computer trades, it would generate hundreds of billions of dollars in revenue, and it would help guard against the reckless speculation that devastated the financial markets and our country.

In case you haven't heard: Freedom isn't free. Just ask the rich Republicans who seem to think it's fair that millionaires and billionaires get big tax breaks not available to middle class working families. After all, "Earned Income" is for losers; winners have "Capital Gains" to keep them warm. And so what if losers pay a higher rate of tax than winners. Somebody has to pay for all that freedom they…uh, I mean we…enjoy.

Any Income Tax Reform that allows for Exceptions, Exemptions and Deduction will never be Fair and Equal to all. Too many loopholes exist through which the Top 1.0% of American Tax-Payers, the “Rich and Powerful” Individuals and Corporations, Companies, Institutions and Organizations squeeze through and pay NO TAXES. Even if we made the INCOME TAX RATE on every individual who made over one million dollars be 99%, with the use of the Exceptions, Exemptions and Deductions [that Congress has or would create] they would not pay any taxes.

The Entire Income Tax Code MUST be Repealed and Replaced. By the elimination of ALL the EXCEPTIONS, EXEMPTIONS, and DEDUCTIONS and by making every source of Income [Wages, Bonuses, Benefits, Interest Earnings, dividends and capital gains and any other Earnings or Gains] be subject to the same Tax Code and Rate no matter How it was earned, Where it was earned, or What it was earned from.

HERE is an Income Tax Code that is based upon Fairness and Equality, and the ability to pay, just like everything else in life. PLEASE note that the implementation of this Tax Code would significantly reduce the size of the IRS, reduce the amount of time to prepare your Taxes, and sorry to say it, but it gets rid of the need for Tax Preparation Companies.

The official numbers for people in Poverty or what is Poverty Income level don’t tell the full story and in fact is an outright lie. The situation of the poor is actually considerably worse than the Government reports. The official poverty line is calculated as simply three times the minimal food budget first introduced in 1959, and then adjusted for inflation in food costs. In other words, the American poverty threshold takes no account of the cost of housing or fuel or transportation or health-care costs, all of which are rising more rapidly than the cost of basic foods. So the poverty measure grossly understates the real cost of subsistence.

My proposed Poverty Income Taxes:
[1.0] Income earned from $.01 to $13,537.00 for a family of one would pay Zero Tax Rate.
[2.0] Income earned from $.01 to $23,689.00 for a family of two would be Zero Tax Rate.
[3.0] Income earned from $.01 to $30,478.00 for a family of three would be Zero Tax Rate.
[4.0] Income earned from $.01 to $37,267.00 for a family of four would be Zero Tax Rate.
[5.0] Income earned from $.01 to $44,056.00 for a family of five would be Zero Tax Rate.
[6.0] Income earned from $.01 to $50,845.00 for a family of six would be Zero Tax Rate.
[7.0] Income earned from $.01 to $57,634.00 for a family of seven would be Zero Tax Rate.
[8.0] Income earned from $.01 to $64,423.00 for a family of eight would be Zero Tax rate.

For those who are not in the Poverty Income Level the Tax Rates would be as follows:
[9.0] Income earned from $13,537.00 to $100,000.00 would pay a 15.0% Tax Rate. PLUS.
[10.0] Income earned from $100,000.01 to $250,000.00 would pay 17.5% Tax Rate. PLUS.
[11.0] Income earned from $250,000.01 to $500,000.00 would pay 20.0%Tax Rate. PLUS.
[12.0] Income earned from $500,000.01 to $1,000,000.00 would pay 22.5% Tax Rate. PLUS.
[13.0] Income earned from $1,000,000.01 to $100,000,000.00 would pay 25.0% Tax Rate. PLUS.
[14.0] Income earned from $100,000,000.01 to $1,000,000,000 would pay 30.0% Tax Rate. PLUS
[15.0] Income earned from $1,000,000,000.01 and up would pay 35.0% Tax Rate.

For every dollar earned by anyone the Tax Rate paid is the same. On the first $100,000.00 earned everyone pays 15%, for everyone who has earnings from $100,000.01 to $250,000.00 they pay 17.5%, etc. etc. all the way to the Richest person. The more you earn the more you pay.

U.S. Corporate Income Taxes that were actually paid (the effective rate) fell to a 40 year low of 12.1 percent in fiscal year 2011, despite corporate profits rebounding to their Pre-Great Recession heights. The United States of America both taxes its Corporations less and raises less in revenue from corporate taxes than any of its foreign competitors.

Therefore; under my Corporate Tax Rate Corporations would pay 15.0% Income Tax Rate with NO Exceptions, No Exemptions and the NO Deductions. Or they can pay the same Tax Rates as an Individual, seeing as the Supreme Court has ruled they have the same Right to Freedom of Speech, therefore they should have the same Right to pay the same Income Tax Rates.

Corporations should not make Business decisions based upon the Income Tax Loop-holes; they should be based on what is the best thing for the Corporation, Employees and the Investors. The top 500 Corporations, Companies, Institutions and Organizations within the Fortune 500, Pay No Taxes today. This Income Tax Plan would ensure that all Corporations, Companies, Institutions or for Profit Organizations that earned a Profit would PAY TAXES.

If Congress wants to provide an incentive to Corporations, Companies, Institutions or Organizations, Congress can do so by creating a Specific Tax Credit for A Specific Corporation or Company, with specified amounts and for specified time limits.

Shrub The War C...

July 17, 2012 4:23am

Theodore Z:

The main thing I disagree with you on is encouraging people to have more people. Having six children in this day and age should not be rewarded by society in any form.

In fact having tax credits for more children encourages more tax fraud as often happens in the orthodox Mormon communities.

BozoAdult

July 16, 2012 1:57pm

The free trade laws, starting with NAFTA, were an attack on the American worker just as surly as the attack on Pearl Harbor was an attack on the nation.

These corporations feel no allegiance to the flag or the nation.

elytwak

July 16, 2012 12:58pm

What is the first lesson we learned in anarchism 101?

Fascism = the merger of state and corporate/financial power!

Jeffrey Hill

July 16, 2012 12:29pm

"To Protect & To Serve" . . . the Rich & the Privileged.

Norman Allen's picture
Norman Allen

July 16, 2012 12:18pm

The super rich always needed/will need more government because they own most of the assets, products, channels of production/distribution. The poor just work in the rich men's kingdoms. The problem is the shifting of the tax burden to the poor in the last 30 years and the total lack of the super rich concern for the well being of their workers. Workers have been commoditized instead of the old serf system where the lord of the manor was responsible for their survival and welfare at all times. The super rich have abdicated their role as guardians of a tolerable social order. Some of them got excessively greedy and wrecked the banking systems, others are destroying the diversity of the crops, destroying the planet/life itself. How can we make these people responsible to the community of humans instead of manic pursuit of wealth accumulation/power concentration at all costs for no reason? There is a dire need for paradigm shift to make all systems centered around human needs of ALL instead of a few lucky ones facing each other like wolves in a world of kill or be killed mentality.