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A good fight to have

Robert Reich, professor of public policy | September 20, 2011

So the really big fight — perhaps the defining battle of 2012 — won’t be over Medicare. It won’t even be over Obama’s jobs program.

It will be over whether the rich should pay more taxes.

The President has vowed to veto any plan to tame the debt that doesn’t increase taxes on the rich. The Republicans have vowed to oppose any tax increases on the rich.

It’s a good fight to have.

In a Rose Garden ceremony this morning, Obama proposed new taxes on the wealthy — including a special new tax for millionaires, the closing of loopholes and deductions for people making more than $250,000 a year, and an end to the portion of the Bush tax cut going to higher incomes.

Republicans accuse the President of instigating “class warfare.” But it’s not warfare to demand the rich pay their fair share of taxes to bring down America’s long-term debt.

After all, the richest 1 percent of Americans now takes home more than 20 percent of total income. That’s the highest share going to the top 1 percent in almost 90 years.

And they now pay at the lowest tax rates in half a century — half the rate they paid on ordinary income prior to 1981.

(Unfortunately, the President isn’t proposing to raise the capital-gains tax — which, now at 15 percent, creates a loophole large enough for the super-rich to drive their Ferrari’s through. About 80 percent of the income of America’s richest 400 comes in the form of capital gains. Here’s where billionaire hedge-fund and private-equity fund managers make out like bandits. As I’ve noted, I also wish he aimed higher — for more brackets and higher rates at the very top. But at least he’s drawn a line in the sand. The veto message is clear.)

Anyone who says the American economy suffers when the rich pay more in taxes doesn’t know history. We grew faster the first three decades after World War II than we have since.

Trickle-down economics has been a cruel joke.

On the other hand — given projected budget deficits — if the rich don’t pay their fair share, the rest of us will have to bear more of a burden. And that burden inevitably will come in the form of either higher taxes or fewer public services.

If anyone’s declared class warfare it’s the people who inhabit the top rungs of big corporations and Wall Street (and who comprise a disproportionate number of America’s super rich). They’ve declared it on average workers.

The ratio of corporate profits to wages is higher than it’s been since before the Great Depression. And even as corporate salaries and perks keep rising, the median wage keeping dropping, and jobs continue to be shed.

You’ve got the chairman of Merck taking home $17.9 million last year. This year Merck announces plans to boot 13,000 workers. The CEO of Bank of America takes in $10 million, and the bank announces it’s firing 30,000 workers.

Maybe I’m old-fashioned, but the way I see it we’ve got a huge budget deficit and a giant jobs problem. And under these circumstances it seems to me people at the top who have never had it so good should sacrifice a bit more, so the rest of us don’t have to sacrifice quite as much.

According to the polls, most Americans agree.

Cross-posted from Robert Reich’s blog.

Comments to “A good fight to have

  1. I agree, ”Obama is the right president at the right time to prevent Bush’s tax larceny for the rich against the middle class from causing the most catastrophic economic and social consequences since the Great Depression.”
    This is so true.

  2. There’s a young man on a corner in San Francisco. He has very little education and is hungry. He has a gun. He points it at you John and demands the contents of your wallet. Fearing for your life you give him all your money. Congratulations, you’ve just been taxed because of your class.

  3. This just proves that we never, ever learn the lessons of history well enough to keep from creating the same social, political and economic disasters over, and over, and over again.

    As far as democracy goes, class warfare goes back at least to 6th century BC Athens when Supreme Archon Solon created the Rule of Law, making him the first champion of the people to prevent revolution against the aristocracy back then.

    Today, Obama is the latest champion of the people to have to prevent the republican oligarchs from destroying the American middle class, producing out of control poverty already. Obama is the right president at the right time to prevent Bush’s tax larceny for the rich against the middle class from causing the most catastrophic economic and social consequences since the Great Depression. Bush’s tax cuts for the republican oligarchs have resulted in the worst problems threatening American Democracy and quality of life today.

  4. I agree, Is it not fair to pay whats proportional to your earnings? The old “rich are creating jobs” thing is a cop-out – they may create jobs, but they have a lot left over for huge houses, expensive cars, tax breaks, etc. I think it’s only fair that they get taxed at more than what the middle class does and cut the middle class to make it even.

    The middle class is shrinking into the lower class, not rising into the upper class for the most part, so give the middle class a break, after all the middle class is the “buffer” between upper class and poor, so it should be in the upper classes interest to keep the middle class alive.

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