The Elephant in the Room
by Charles Lemos, Wed Apr 06, 2011 at 12:24:35 PM EDT
I remain rather incredulous how any serious deficit reduction plan doesn't include the obvious necessity of raising taxes on the wealthy. For a bunch of pachyderms, today's GOP is surely missing the elephant in the room.
If there is one truth teller in the country today, it certainly isn't Paul Ryan, it is Robert Reich, the former Labor Secretary during the Clinton Administration and currently a professor at the University of California at Berkeley. This past week, before Rep. Ryan unveiled yet another proposal to lower the top marginal rate on the supra-wealthy to just 25 percent, Robert Reich wrote in his blog on Truth Out:
Here’s the truth: The only way America can reduce the long-term budget deficit, maintain vital services, protect Social Security and Medicare, invest more in education and infrastructure, and not raise taxes on the working middle class is by raising taxes on the super rich.
Even if we got rid of corporate welfare subsidies for big oil, big agriculture, and big Pharma – even if we cut back on our bloated defense budget – it wouldn’t be nearly enough.
The vast majority of Americans can’t afford to pay more. Despite an economy that’s twice as large as it was thirty years ago, the bottom 90 percent are still stuck in the mud. If they’re employed they’re earning on average only about $280 more a year than thirty years ago, adjusted for inflation. That’s less than a 1 percent gain over more than a third of a century. (Families are doing somewhat better but that’s only because so many families now have to rely on two incomes.)
Yet even as their share of the nation’s total income has withered, the tax burden on the middle has grown. Today’s working and middle-class taxpayers are shelling out a bigger chunk of income in payroll taxes, sales taxes, and property taxes than thirty years ago.
It’s just the opposite for super rich.
The top 1 percent’s share of national income has doubled over the past three decades (from 10 percent in 1981 to well over 20 percent now). The richest one-tenth of 1 percent’s share has tripled. And they’re doing better than ever. According to a new analysis by the Wall Street Journal, total compensation and benefits at publicly-traded Wall Street banks and securities firms hit a record in 2010 — $135 billion. That’s up 5.7 percent from 2009.
Yet, remarkably, taxes on the top have plummeted. From the 1940s until 1980, the top tax income tax rate on the highest earners in America was at least 70 percent. In the 1950s, it was 91 percent. Now it’s 35 percent. Even if you include deductions and credits, the rich are now paying a far lower share of their incomes in taxes than at any time since World War II.
Congressman Ryan calls his budget proposal the "Path to Prosperity"; a more apt title is the "Road to Ruin" or perhaps the "Path to Perdition." This is a budget that seeks to remedy our fiscal problems by increasing the tax burden on the dwindling middle class while callously and immorally destroying the last vestiges of our rather limited to begin with social safety net for the poor and elderly while granting the supra-wealthy yet another tax break. It's time to address the elephant in the room and return to a more equitable progressive tax scheme.