The Truth About Taxes

Robert Reich
NationofChange / Video Report
Published: Thursday 14 June 2012
“Three reasons why taxes have to be raised on the richest Americans.”

“Here are three reasons why taxes have to be raised on the richest Americans: 1. We have budget deficits. If the rich don't pay their fair share than the rest of us will either have to do with less Medicare and Medicaid, fewer public investments, infrastructure and education. Or we will have to pay even more in taxes to make up for what the rich do not pay. 2. Top tax rate is at historic lows. Because so much of their income is in the form of capital gains, the very wealthy pay far less. 3. The rich can afford to pay more. The wealthy are taking home a larger share of total income than they have in 80 years.” 

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



Get Email Alerts from NationofChange
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.

Top Stories

9 comments on "The Truth About Taxes"

oldhat

June 15, 2012 1:29pm

swimmer things like depreciation encourage buying of plants and machines, capital gains encourage risk taking

Swimmer

June 15, 2012 12:02pm

How do tax breaks for the wealthy create jobs for the middle class???? I must be extremely slow and a little bit dim witted, but how does the 2 items have any relevance?? Look at the wall street, all exchanges are on there highest within 10% of all time. A record number of shares are traded everyday. As consumers and middle class members we have told that if the top earners make more money they will invest into there businesses and hire additional people. I woke up from that dream in 83. That does not work and we are living with the results of the biggest scam that has been enabled by our congress and local elected officials. I'm done with a 2 party system that allows both parties to continue this taxation without representation! They represent Wall Street, and Wall Street only. I had a congressman who always ran on how he was a job creator, and for 20 years he watch our regions largest manufacturer and government contractor move jobs out of the country every year! Who did he work for??????????????

Brian Glennie

June 14, 2012 9:28pm

Taxes don't have to be raised for the upper class, just close the loopholes, tax breaks, and any other way they have of not paying taxes and let the upper class pay their fair share like every one else. Its nicer that way.

Theodore Ziolkowski

June 14, 2012 3:12pm

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 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.

(2) Implement a small .25 cents financial transactions tax. 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.

Everyone wants to talk about the problem with the Federal and State Income Tax programs, however, I have not heard what the real problem is-----not from one single source.

So I will tell you all why the present Income Tax System is so unfair. Because the "Rich and Powerful" have bought the Greedy and Corrupt members of the United States of America's Congress they have gotten the greatest number of Income Tax Exceptions, Exemptions and Deductions. Due to that simple Fact it doesn't matter what the Tax Rate is on those who earn more than $250,000.00 a year, if they have a good Tax Accountant and Attorney they will pay no Income Taxes.

The only way to fix this problem is to repeal the entire Income Tax Codes. and implement the following Income Tax System:

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. 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.

Existing 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 $500,000.00 would pay 17.5% Tax Rate. PLUS.
[11.0] Income earned from $500,000.01 to $1,000,000.00 would pay 20.0%Tax Rate. PLUS.
[12.0] Income earned from $1,000,000.01 to $50,000,000.00 would pay 25.0% Tax Rate. PLUS.
[13.0] Income earned from $50,000,000.01 to $1,000,000,000.00 would pay 30.0% Tax Rate. PLUS.
[14.0] Income earned from $1,000,000,000.01 and up would pay 35.0% Tax Rate.

I would also create a Financial Transaction Fee of $ .25 on each and every Financial Transaction, to generate from $2 to $3 Trillion in Revenue to “Reduce the Deficit and to Invest in our future, our Infrastructure and our middle class.”

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 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.

pitch1934

June 14, 2012 2:02pm

We have had ten years of the gwb tax cuts. (every dem who voted for them should roast in hell) By the repugnant reasoning the economy should have grown at an astounding rate. Even when it was going well under gwb it just barely reached B.O.'s standards.

BozoAdult

June 14, 2012 6:17pm

A lot of Democrats voted for the tax cuts on the promise that they would expire in 2010. And they would have had Obama not capitulated when he still had a lame duck majority. This combined with the lack of a public option in HCR is when Obama lost me.

Jeffrey Hill

June 14, 2012 12:36pm

But didn't Unbridled GREED and Selfishness make Amerika great?!

TAX the RICH! TAX the RICH! TAX the RICH! TAX the RICH!
They can afford it but simply don't want to pay their fair share.

Theodore Ziolkowski

June 14, 2012 3:15pm

Everyone wants to talk about the problem with the Federal and State Income Tax programs, however, I have not heard what the real problem is-----not from one single source.

So I will tell you all why the present Income Tax System is so unfair. Because the "Rich and Powerful" have bought the Greedy and Corrupt members of the United States of America's Congress they have gotten the greatest number of Income Tax Exceptions, Exemptions and Deductions. Due to that simple Fact it doesn't matter what the Tax Rate is on those who earn more than $250,000.00 a year, if they have a good Tax Accountant and Attorney they will pay no Income Taxes.

Sageman69

June 14, 2012 11:43am

Hear, hear!! This message needs to be widely distributed, discussed and emphasized in order to counter the right-wing media lies and misinformation that is promoted as simply "media reporting." We live in a propaganda age. Reich's work, Krugman's work, and information from the Economic Policy Research Institute needs to be more widely known and understood.