Tuesday, September 02, 2014 / PROGRESSIVE JOURNALISM FOR POSITIVE ACTION
Get Email Updates | Log In | Register

Article image
Robert Reich
NationofChange / Op-Ed
Published: Friday 25 January 2013
We’ve been unwilling to pay for what we want government to do for us, and we are now reaching the day of reckoning.

How To Avoid Raising Taxes on the Middle Class or Cutting Programs the Middle and Poor Depend On

Article image

Brace yourself. In coming weeks you’ll hear there’s no serious alternative to cutting Social Security and Medicare, raising taxes on middle class, and decimating what’s left of the federal government’s discretionary spending on everything from education and job training to highways and basic research.

“We” must make these sacrifices, it will be said, in order to deal with our mushrooming budget deficit and cumulative debt. 

But most of the people who are making this argument are very wealthy or are sponsored by the very wealthy: Wall Street moguls like Pete Peterson and his “Fix the Debt” brigade, the Business Roundtable, well-appointed think tanks and policy centers along the Potomac, members of the Simpson-Bowles commission. 

These regressive sentiments are packaged in a mythology that Americans have been living beyond our means: We’ve been unwilling to pay for what we want government to do for us, and we are now reaching the day of reckoning.  

The truth is most Americans have not been living beyond their means. The problem is their means haven’t been keeping up with the growth of the economy — which is why most of us need better education, infrastructure, and healthcare, and stronger safety nets.

The real median wage is only slightly higher now than it was 30 years ago, even though the economy is twice as large.

The only people whose means have soared are at the very top, because they’ve received almost all the gains from growth. Over the last three decades, the top 1 percent’s share of the nation’s income has doubled; the top one-tenth of 1 percent’s share, tripled. The richest one-tenth of 1 percent is now earning as much as the bottom 120 million Americans put together.

Wealth has become even more concentrated than income (income is a stream of money, wealth is the pool into which it flows).  

The richest 1 percent now own more than 35 percent of all of the nation’s household wealth, and 38 percent of the nation’s financial assets – including stocks and pension funds.

Think about this: The richest 400 Americans have more wealth than the bottom 150 million of us put together. The 6 Walmart heirs have more wealth than bottom 33 million American families combined.

So why are we even contemplating cutting programs the middle class and poor depend on, and raising their taxes?

We should tax the vast accumulations of wealth now in the hands of a relative few. 

To the extent they have any wealth at all, most Americans have it in their homes – whose prices have stopped falling in most of the country but are still down almost 30 percent from their 2006 peak.

Yet homes are subject to the only major tax on wealth — property taxes.

Yale Professor Bruce Ackerman and Anne Alstott have proposed a 2 percent surtax on the wealth of the richest one-half of 1 percent of Americans owning more than $7.2 million of assets.

They figure it would generate $70 billion a year, or $750 billion over the decade. That’s more than the fiscal cliff deal raises from high-income Americans.

Together, the two sets of taxes on the wealthy — tax increases contained in the fiscal cliff agreement, and a wealth tax such as Ackerman and Alstott have proposed — would just about equal the spending cuts the White House has already agreed to,totaling $1.5 trillion (or $1.7 trillion including interest savings).

That seems about right.

This article was originally posted on Robert Reich's blog.



Author pic
ABOUT Robert Reich

 

ROBERT B. REICH, one of the nation’s leading experts on work and the economy, is Chancellor’s Professor of Public Policy at the Goldman School of Public Policy at the University of California at Berkeley. He has served in three national administrations, most recently as secretary of labor under President Bill Clinton. Time Magazine has named him one of the ten most effective cabinet secretaries of the last century. He has written thirteen books, including his latest best-seller, “Aftershock: The Next Economy and America’s Future;” “The Work of Nations,” which has been translated into 22 languages; and his newest, an e-book, “Beyond Outrage.” His syndicated columns, television appearances, and public radio commentaries reach millions of people each week. He is also a founding editor of the American Prospect magazine, and Chairman of the citizen’s group Common Cause. His widely-read blog can be found at www.robertreich.org. Robert Reich's new film, "Inequality for All" is available on DVD
and blu-ray, and on Netflix in February.

Don't worry folks, Obama has

Don't worry folks, Obama has your back. It's a new thing called trickle-down economics. Oh, you didn't know? The repeal of the Bush tax cuts on incomes over $400K preserves TWO THIRDS of the huge cut the wealthy got with Reagan in 1980. The wealthy have been accumulating that money for only 32 years. Thank God Obama figured out that we need to give it another 18 years, then for sure it will start to trickle down.

If it's a war they want, a

If it's a war they want, a war they'll get if the R's/ feds mess with SSI!

Don't worry folks, Obama has

Don't worry folks, Obama has your back. It's a new thing called trickle-down economics. Oh, you didn't know? The repeal of the Bush tax cuts on incomes over $400K preserves TWO THIRDS of the huge cut the wealthy got with Reagan in 1980. The wealthy have been accumulating that money for only 32 years. Thank God Obama figured out that we need to give it another 18 years, then for sure it will start to trickle down.

If the GOTP continue to

If the GOTP continue to insist that the debt be balanced without raising taxes and only by slashing entitlements, then the obvious place to start is with the largest entitlement spending, which is that of the military/intelligence/industrial complex. If we brought the troops home immediately and ended all our overseas wars and "actions", we'd have sufficient funds to balance the debt in one fell swoop, without devastating the country's safety net for vulnerable citizens, ie the 47%. But of course the proponents of entitlement cuts do not mean their own favorite entitlements to be on the chopping block, so if they get their way we will continue to have endless wars and their corporate cronies will continue to have endless profits of blood money, while the vulnerable become less a financial burden to the nation by reason of conveniently expiring.

I've never heard that

I've never heard that explanation, Jamste, but it certainly does make sense. Never really was able to get into Objectivism enough to gain a thorough understanding, but that's because I haven't been able to penetrate the armor of stupidity surrounding it.

Save the middle class -- what

Save the middle class -- what a joke. Where are the middle class really hurt? Property taxes and if your a renter you pay them through the rents. These are the insidious taxes that govnt unions are draining the ability of the middle class to get ahead. Its a back door tax "for the children" teachers - safety fire & police - highways roads local bureaucracies that just grow and grow. And their pensions... Think of the taxes that are in your food .. land, gas/ diesel, labor, the viscous circle of take and take....

Apparently, you don't

Apparently, you don't understand the purpose of property taxes. You see, all that money doesn't just disappear down a hole, like the Defense budget. You get things from it, all of the things that you mentioned, education, public safety, infrastructure. Now, if you don't like those things, please move to Somalia or some other place where is there is no parasitic government to steal your wealth and waste it on silly things 'for the public good.' Furthermore, the actual tax rates aren't the problem, but the wage stagnation, when adjusted for inflation, as mentioned in the article.

Transactions tax. Carbon tax.

Transactions tax. Carbon tax. Halve the "defense" budget. (Why are we now occupying Australia?) We need a political party that can express these kinds of thoughts. I voted Green in November.

Come on Robert. The sovereign

Come on Robert. The sovereign issuer of fiat currency is not constrained in spending by taxes collected or funds borrowed. It is the fiat issuer of currency and is only constrained by real resources available and labor to implement policy.
Why don't you come out and admit this and support High Value Platinum Coin Seigniorage as a way to demonstrate this fact?

One would think the

One would think the wealthiest would be willing to contribute a little more to keep this top heavy economy from collapsing from the over concentration wealth in hands of a few. When the middle class disappears there will be no one left to be consumers and the economy can't function without consumers. How about a little enlightened self interest.

Tony: Greed trumps logic,

Tony:

Greed trumps logic, which is what you're arguing angainst and to ME yopur argument makes perfect sense, BUT its as Bill Mahar said several months ago. "Too often we imagine the wealthy as a big pinata filled with goodies that will one day shower down upon us. The thing to remember is that in order to get the pinata to release those goodies, YOU HAVE TO HIT IT WITH A BAT ! People SHOULD do the right thing, but for too many, they can never possess enough, they always have to have MORE. They lack self-control and unfortunately, short of the the aforementioned BAT, regulation via taxation is the only way to curb that greed and bring more of that wealth back into circulation. We all have the right to "life liberty and the pursuit of happiness" but nowhere does it imply that one person's "rights" can be exercised at the expense of the lives, liberty and opportunity to pursue happiness of others. Keep the faith. UNCLE FOX

The wealthiest live in a

The wealthiest live in a bubble where the only information they receive is from Fox "News" and the WSJ. They never get alternate points of view.

In the objectivist worldview,

In the objectivist worldview, data means exactly the same thing to each person. A million dollars means exactly the same thing to a billionaire and to a homeless person. The objectivist can't imagine another person perceiving and experiencing the world in a different way, because the world is objective and means the same thing to everybody. This constrains their thinking to either-or, all or nothing choices -- the mentality of the bunker.

I'm sure Obama is listening.

I'm sure Obama is listening.

First Mortgage forgiveness on

First Mortgage forgiveness on every citizens primary home. Punish the criminals and inject money directly into main street.

Not all financial

Not all financial institutions were evil, there are credit unions owned by all their middle class member/customers who also had loaned mortgage$ to their members who wanted to buy their home. Typically they don't loan to people who didn't have the income to repay loans, and they don't indulge in widely variable rate mortgages, and if a loan recipient is in distress, they will work with them personally to reconfigure the mortgage to avoid a default. The credit unions didn't get bail outs, but nevertheless managed to survive the mortgage crisis without foreclosing on all their members. It would not be fair to punish credit unions (which would be punishing the members/ customers) who'd stayed on the straight and narrow by wiping out their mortgages in your zeal to punish the private speculators on Wall Street.

Excellent points.

Excellent points.

If we'll PUNISH and FINE the

If we'll PUNISH and FINE the criminals, the money can GO back to main street. JUSTICE is by definition, swift and certain and for big corporations and banks, it has become neither, and without JUSTICE, NO form of government can stand. I say that we experiment with the concept of "TOO BIG TO FAIL" - no theory is true until its tested. Let's start with that bank that was laundering drug cartel; money and work our way all the way back to the guys who invested Adjustable Rate Mortgages.

Comment with your Facebook account



Comment with your Disqus account

Top Stories

NationofChange works to educate, inform, and fight power with people, corruption with community.

If you would like to stay up to date with the best in independent, filter-free journalism, updates on upcoming events to attend, and more, enter your email below:

The most complete GMO-free living guide.

Your GMO guide is here

Click here to sign up to receive the NationofChange e-newsletter and receive our complimentary guide, "No GMO", NationofChange's guide for GMO-free living.