Raising Taxes on the Wealthy During a Recession

[Time for change]

I am so sick and tired of hearing the presstitutes of our national corporate news media talk about how unwise it would be of our new President to make good on his campaign promise of reversing the Bush tax cuts on the wealthy. Oh my, we can’t have a tax increase during a recession, they say – as if it is common knowledge that increasing taxes on the wealthy during a recession or depression means certain death to the economy.

And now we hear that Obama is considering going along with that advice. How disappointing.

We should look at this in an historical context. There was one time in our nation’s history when our government raised taxes on the wealthy substantially during a serious recession or depression. That was during the Presidency of Franklin Delano Roosevelt, who took office in the midst of the worst depression in our nation’s history and who is generally ranked by presidential scholars to be the second greatest President in our nation’s history. Before taking a look at how FDR’s tax increases on the wealthy worked out, let’s consider his attitude towards the subject.


FDR’s attitude towards great concentrations of wealth

FDR did not feel that there was anything sacred about people piling up vast economic fortunes during times when so many other people were starving or homeless. He did not see that phenomenon as something that propelled our economy. In fact he saw it as a big part of the problem, something that prevented other people from obtaining their fair share of our nation’s resources. This is what he had to say on the subject at the 1936 Democratic National Convention:

Out of this modern civilization economic royalists carved new dynasties. New kingdoms were built upon concentration of control over material things. Through new uses of corporations, banks and securities, new machinery of industry and agriculture, of labor and capital – all undreamed of by the fathers – the whole structure of modern life was impressed into this royal service.

There was no place among this royalty for our many thousands of small business men and merchants who sought to make a worthy use of the American system of initiative and profit. They were no more free than the worker or the farmer. Even honest and progressive-minded men of wealth, aware of their obligation to their generation, could never know just where they fitted into this dynastic scheme of things.

It was natural and perhaps human that the privileged princes of these new economic dynasties, thirsting for power, reached out for control over Government itself. They created a new despotism and wrapped it in the robes of legal sanction. In its service new mercenaries sought to regiment the people, their labor, and their property. And as a result the average man once more confronts the problem that faced the Minute Man.

The hours men and women worked, the wages they received, the conditions of their labor – these had passed beyond the control of the people, and were imposed by this new industrial dictatorship…

Those who tilled the soil no longer reaped the rewards which were their right. The small measure of their gains was decreed by men in distant cities. Throughout the Nation, opportunity was limited by monopoly. Individual initiative was crushed in the cogs of a great machine. The field open for free business was more and more restricted. Private enterprise, indeed, became too private. It became privileged enterprise, not free enterprise…

FDR also believed that the enormous income inequality that existed at the time was deleterious to democracy itself:

An old English judge once said: "Necessitous men are not free men." Liberty requires opportunity to make a living – a living decent according to the standard of the time, a living which gives man not only enough to live by, but something to live for.

For too many of us the political equality we once had won was meaningless in the face of economic inequality. A small group had concentrated into their own hands an almost complete control over other people's property, other people's money, other people's labor – other people's lives. For too many of us life was no longer free; liberty no longer real; men could no longer follow the pursuit of happiness.

An historical perspective on taxing the wealthy in the United States

Increasing taxes on the wealthy was not the only thing that FDR did in his attempt to decrease income inequality and bring us out of the Great Depression. But it certainly was one of his major actions. One reasonably good indicator of taxing the wealthy is the “top marginal tax rate”, which is the highest tax rate paid on income above a certain level.

The 16th Amendment to our Constitution, the Progressive Income Tax Amendment, ratified in 1913, opened the door to our nation’s ability to tax the wealthy disproportionately. It was first used to raise money for the costs of World War I, the top marginal tax rate peaking at 77% in 1918, and then gradually decreasing after the war was over, to 25% by 1925, where it stood when FDR took office.

Consistent with his vow to reduce income inequality, FDR progressively raised the top marginal tax rate, as can be seen in this graph, to 63% in 1932, to 79% in 1936 to 88% in 1942, and to 94% in 1944.

It then continued at high levels, 70% or more, for several decades after FDR’s death, until it declined precipitously at the start of the Reagan presidency in 1981. It continued to decline during the Reagan and Bush I years, then rose moderately during Bill Clinton’s presidency, before substantially declining again under Bush II.


How did FDR’s tax increases on the wealthy work out?

From listening to today’s right wing conservatives and the blathering talking heads of our corporate news media you’d expect catastrophic consequences to our economy from any attempt to increase taxes on the wealthy, even to the relatively moderate levels that existed just prior to the Bush II presidency. From these warnings you would think that the extremely high rates of taxation on the wealthy beginning with FDR’s presidency and lasting for half a century would have ruined our economy for many years to come.

Many people consider median income to be a more accurate indicator of economic well being than gross national product, since it is an indicator of the economic health of the average citizen, whereas sometimes a high GNP can coexist with economic hardship for much of the population if wealth is grossly unequally distributed towards the top.

I could not find statistics on median income in the United States prior to 1947. However, the fact that FDR was re-elected to three consecutive Presidential terms, all by large margins, concurrent with the largest top marginal tax rate in our nation’s history, is a pretty good indication that we weren’t doing too badly during this period.

In any event, the high top marginal tax rates continued for several decades after FDR died, at 70% or more (far higher than what Obama is proposing increasing it to), until the Reagan Presidency starting in 1981. This chart shows median family income levels, beginning in 1947. With the top marginal tax rate approaching 90% at this time, median family income rose steadily (in 2005 dollars) from $22,499 in 1947 to more than double that, $47,173, in 1980. Then, for the next 25 years, except for some moderate growth during the Clinton years, there was almost no growth in median income at all, which rose only to $56,194 by 2005 (85% of that growth accounted for during the Clinton years).

However one wants to interpret those numbers, nobody could possibly conclude that they indicate overall bad financial consequences accruing from high tax rates on the wealthy. To the contrary, as Nobel Prize winning economist Paul Krugman notes, this period coincides with “the greatest sustained economic boom in U.S. history”.


Income inequality and depression

An article by Gabriel Thompson’s in The Nation contains a graph titled “Plutocracy Reborn – Re-creating the Gap that Gave us the Great Depression”. Here it is:



This chart plots income inequality, measured as the ratio between the average income of the top 0.01% of U.S. families, compared to the bottom 90%. Note that preceding the great stock market crash of 1929, which plunged us into depression, the ratio rose from about 250 at the start of the 1920s to a peak of about 900 by 1929. The ratio then plunged, and by the start of WW II it had declined to about 200, where it remained with some relatively minor ups and downs until the beginning of Ronald Reagan’s Presidency. It then began another precipitous climb, with a sharp decline beginning during the last year of Clinton’s Presidency, but then another sharp increase beginning at about the time that the Bush tax cuts for the wealthy first went into effect, so that by the end of 2006 we’ve exceeded even the peak ratio of 1929 that preceded the Great Depression. The three green bars in the chart represent the stock market crash of 1929, the last pre-Reagan year, and the present.

The chart below this one (Click on “Full size chart”), titled “Our Incredible Shrinking Top Marginal Rate”, which is close to the mirror image of the top chart, shows that our top marginal tax rate has historically been inversely proportional to income inequality in our country.

I should note that Thompson wrote this article several months ago, to sound a warning. The point was that record breaking levels of income inequality, associated with a very low top marginal tax rate, immediately preceded the Great Depression – and now we have very similar levels of income inequality, along with an historically low top marginal tax rate. Since that time, Thompson’s warning seems to be bearing out.


Implications for our situation today

We have now reached a level of income inequality not seen in our country since just prior to the onset of the worst depression in our history – and it appears that history may be repeating itself. Today the top 1% of U.S. households owns more than the bottom 90% of our population combined. The Bush administration has done everything in its power to encourage that income inequality, not least of all through the lowest sustained marginal tax rates for the wealthy that we’ve had since the 1920s.

Recent statistics show: 47 million Americans without health insurance, associated with the first rise in infant mortality in our country in 40 years; an unemployment rate of 6.5% and rising rapidly; 35.5 million Americans living in food insecure households; approximately 3.5 million homeless Americans in any given year, including 1.35 million children; a poverty rate of 12.5%, up from 11.7% in 2001. All of these statistics are getting worse.

Senator Obama’s Presidential campaign included comprehensive plans to ameliorate the economic distress of our nation’s people, including: a health care plan to make health insurance affordable and accessible to all Americans; plans to tackle poverty; reversal of the Bush tax cuts for the wealthy, and; tax breaks for middle and working class Americans.

The reversal of the Bush tax cuts for the wealthy was a crucial part of Obama’s plan because, not only would that directly reduce income equality, but it would make the other parts of his plan affordable without necessitating crippling additions to our national debt. Without them, how is President Obama going to proceed with his other economic plans?

Now we have the conservative elites of our country, including our national corporate news media, trying to pressure President-Elect Obama to cancel his plans to reverse the Bush tax cuts for the wealthy, using the phony excuse that increasing taxes on the wealthy during a recession is not sound economic policy. But there is no historical basis for that conclusion, and in fact it flies in the face of our historical experience.

Continuing the worst of the failed Bush policies would not only do nothing to reverse the toxic trends in income inequality in our country, but it would greatly hamper the initiation of plans to provide relief to the vast majority of our citizens and get our economy back on track. I fervently hope that President Obama decides to proceed with his plans as originally formulated.

[mrreowwr_kittty]

1. K and R. nt

[DissedByBush]

83. I'll counter with a Lincoln

"That some should be rich, shows that others may become rich, and hence is just encouragement to industry and enterprise. Let not him who is houseless pull down the house of another; but let him labor diligently and build one for himself, thus by example assuring that his own shall be safe from violence when built."

But he had some more wise words relating to the bailout:

"These capitalists generally act harmoniously and in concert to fleece the people, and now that they have got into a quarrel with themselves, we are called upon to appropriate the people's money to settle the quarrel."

[Two Americas]

108. the second quote

The second quote is from Lincoln's first recorded speech, during a debate in the Illinois legislature in 1837.

Here is the context -

"Some gentlemen have their stock in their hands, while others, who have more money than they know what to do with, want it; and this, and this alone, is the question, to settle which we are called on to squander thousands of the people's money. What interest, let me ask, have the people in the settlement of this question? What difference is it to them whether the stock is owned by Judge Smith or Sam Wiggins? If any gentleman be entitled to stock in the bank, which he is kept out of possession of by others, let him assert his right in the Supreme Court, and let him or his antagonist, whichever may be found in the wrong, pay the costs of suit. It is an old maxim, and a very sound one, that he that dances should always pay the fiddler. Now, sir, in the present case, if any gentlemen whose money is a burden to them, choose to lead off a dance, I am decidedly opposed to the people's money being used to pay the fiddler. No one can doubt that the examination proposed by this resolution must cost the State some ten or twelve thousand dollars; and all this to settle a question in which the people have no interest, and about which they care nothing. These capitalists generally act harmoniously and in concert to fleece the people; and now that they have got into a quarrel with themselves, we are called upon to appropriate the people's money to settle the quarrel."

[mrreowwr_kittty]

116. Raising some millionaire's marginal tax rate by 3% is hardly tearing his house down

Rich people might want to consider making some relatively painless concessions now to avoid having to endure the kind of "redistribution of wealth" that happens when a big enough mass of poor people gets pissed off enough. Most people on DU who refer to bringing back the guillotine are only half kidding.

[DissedByBush]

119. That's exactly what Lincoln was talking about

The desire to tear down the successful.

[Two Americas]

123. hardly

This section of that speech has always been taken out of context by right wingers and used to represent Lincoln as having said the exact opposite of what he did in fact say.

[Two Americas]

124. Lincoln on labor and capital

From his address to the Wisconsin State Agricultural Society
Milwaukee, Wisconsin
September 30, 1859

The world is agreed that labor is the source from which human wants are mainly supplied. There is no dispute upon this point. From this point, however, men immediately diverge. Much disputation is maintained as to the best way of applying and controlling the labor element. By some it is assumed that labor is available only in connection with capital -- that nobody labors, unless somebody else, owning capital, somehow, by the use of that capital, induces him to do it. Having assumed this, they proceed to consider whether it is best that capital shall hire laborers, and thus induce them to work by their own consent; or buy them, and drive them to it without their consent. Having proceeded so far they naturally conclude that all laborers are necessarily either hired laborers, or slaves. They further assume that whoever is once a hired laborer, is fatally fixed in that condition for life; and thence again that his condition is as bad as, or worse than that of a slave. This is the "mud-sill" theory.

But another class of reasoners hold the opinion that there is no such relation between capital and labor, as assumed; and that there is no such thing as a freeman being fatally fixed for life, in the condition of a hired laborer, that both these assumptions are false, and all inferences from them groundless. They hold that labor is prior to, and independent of, capital; that, in fact, capital is the fruit of labor, and could never have existed if labor had not first existed -- that labor can exist without capital, but that capital could never have existed without labor. Hence they hold that labor is the superior -- greatly the superior -- of capital.

They do not deny that there is, and probably always will be, a relation between labor and capital. The error, as they hold, is in assuming that the whole labor of the world exists within that relation. A few men own capital; and that few avoid labor themselves, and with their capital, hire, or buy, another few to labor for them. A large majority belong to neither class -- neither work for others, nor have others working for them. Even in all our slave States, except South Carolina, a majority of the whole people of all colors, are neither slaves nor masters. In these Free States, a large majority are neither hirers or hired. Men, with their families -- wives, sons and daughters -- work for themselves, on their farms, in their houses and in their shops, taking the whole product to themselves, and asking no favors of capital on the one hand, nor of hirelings or slaves on the other. It is not forgotten that a considerable number of persons mingle their own labor with capital; that is, labor with their own hands, and also buy slaves or hire freemen to labor for them; but this is only a mixed, and not a distinct class. No principle stated is disturbed by the existence of this mixed class. Again, as has already been said, the opponents of the "mud-sill" theory insist that there is not, of necessity, any such thing as the free hired laborer being fixed to that condition for life. There is demonstration for saying this. Many independent men, in this assembly, doubtless a few years ago were hired laborers. And their case is almost if not quite the general rule.

The prudent, penniless beginner in the world, labors for wages awhile, saves a surplus with which to buy tools or land, for himself; then labors on his own account another while, and at length hires another new beginner to help him. This, say its advocates, is free labor -- the just and generous, and prosperous system, which opens the way for all -- gives hope to all, and energy, and progress, and improvement of condition to all. If any continue through life in the condition of the hired laborer, it is not the fault of the system, but because of either a dependent nature which prefers it, or improvidence, folly, or singular misfortune. I have said this much about the elements of labor generally, as introductory to the consideration of a new phase which that element is in process of assuming. The old general rule was that educated people did not perform manual labor. They managed to eat their bread, leaving the toil of producing it to the uneducated. This was not an insupportable evil to the working bees, so long as the class of drones remained very small. But now, especially in these free States, nearly all are educated -- quite too nearly all, to leave the labor of the uneducated, in any wise adequate to the support of the whole. It follows from this that henceforth educated people must labor. Otherwise, education itself would become a positive and intolerable evil. No country can sustain, in idleness, more than a small per centage of its numbers. The great majority must labor at something productive. From these premises the problem springs, "How can labor and education be the most satisfactory combined?"

By the "mud-sill" theory it is assumed that labor and education are incompatible; and any practical combination of them impossible. According to that theory, a blind horse upon a tread-mill, is a perfect illustration of what a laborer should be -- all the better for being blind, that he could not tread out of place, or kick understandingly. According to that theory, the education of laborers, is not only useless, but pernicious, and dangerous. In fact, it is, in some sort, deemed a misfortune that laborers should have heads at all. Those same heads are regarded as explosive materials, only to be safely kept in damp places, as far as possible from that peculiar sort of fire which ignites them. A Yankee who could invent strong handed man without a head would receive the everlasting gratitude of the "mud-sill" advocates.

But Free Labor says "no!" Free Labor argues that, as the Author of man makes every individual with one head and one pair of hands, it was probably intended that heads and hands should cooperate as friends; and that that particular head, should direct and control that particular pair of hands. As each man has one mouth to be fed, and one pair of hands to furnish food, it was probably intended that that particular pair of hands should feed that particular mouth -- that each head is the natural guardian, director, and protector of the hands and mouth inseparably connected with it; and that being so, every head should be cultivated, and improved, by whatever will add to its capacity for performing its charge. In one word Free Labor insists on universal education.

I have so far stated the opposite theories of "Mud-Sill" and "Free Labor" without declaring any preference of my own between them. On an occasion like this I ought not to declare any. I suppose, however, I shall not be mistaken, in assuming as a fact, that the people of Wisconsin prefer free labor, with its natural companion, education.

[StClone]

96. K R

[Xipe Totec]

2. No better time to do it.

If they're making money in a recession. Fuck them.

If they're losing money, like the rest of us, then they won't pay anything (you only pay if you earn).

[OhioChick]

3. Agreed. n/t

[Blue Meany]

4. I don't think it would hurt the economy to do this at this

point, since capital has essential fled from investing in productive enterprises, at least those represented by the stock market and bank products. Raising capital gains taxes might encourage them to keep their funds invested, so in this way it might help.

[ThomWV]

5. Resend every tax cut Bush put in place the first week in office

[NYVet]

41. The President doesn't have that power.

To repeal the law that cut the tax rate would require a majority of both houses, and I don't see the house OR senate doing that...

[Time for change]

43. I very much disagree

One of Obama's primary campaign pledges was to rescind the Bush tax cuts for the wealthy. He was elected with an electoral landslide on that platform. He also has large Democratic majorities in both houses. I don't see any reason why the House and Senate won't support him on this if he chooses to proceed with what he pledged to do during his campaign.

[PassingFair]

65. Why not, we have majorities in both houses.

AND the will of the people.

What's stopping us?

[NYVet]

111. cowardice

You and I both know that the current leadership in the Senate and House have the backbone of jellyfish, and they are afraid of giving the repubs anything that they can use against them in the next election cycle.

[PassingFair]

115. Cowardice or self-interest?

We shall soon see.

It may have been very brave of them, indeed, to
stand up and vote a cushier life for themselves
over the best interests of their constituents.

[NMDemDist2]

45. .......

rescind

verb
cancel officially; "He revoked the ban on smoking"; "lift an embargo"; "vacate a death sentence"

[tclambert]

86. Rescind

[TahitiNut]

6. The chart deserves its own display.

[Time for change]

31. Thank you for posting this

I tried to post it in the OP, but it was so big that I was afraid that it would make the OP more difficult to read.

[Xithras]

7. True, but Cal is showing us today that you don't want to become too dependent on the rich either.

A big chunk of California's current financial problems are the result of an overdependence on income taxes for the rich. The rich in California pay over 60% of the total taxes taken in, and they tend to make a disproportionate amount of their yearly income from stocks, real estate transactions, and other investments. Even though the rich here still own tens of billions of dollars worth of assets, our taxing structure only demands that INCOME be tapped.

With the current problems in the stock and real estate markets, the rich are seeing serious hits to their income this year. I was listenting to a guy at the state Franchise Tax Board discuss the problem, and he gave a great example of one taxpayer who paid in over $2 million to the state last year, but who will probably not be paying a penny this year. Why not? No new money was generated, so there is no income to be taxed.

And so, you have a paradox in our concepts of taxation. On one hand, we all want to relieve the tax burden on the poor and increase taxes on the rich. On the other hand, taxing the rich only works if we allow them to keep getting richer. If the incomes of the wealthy stagnate, so do tax receipts.

[Time for change]

9. Obama's campaign pledge was to reverse the Bush tax cuts for the rich back to tax rates that existed

during the Clinton presidency.

I don't think that would qualify as becoming "overdependent on income taxes for the rich". And our economy did pretty well during Clinton's presidency.

As far as the rich seeing hits to their income this year, they would only have to pay income taxes on the income that they make.

[SammyWinstonJack]

13. If Obama doesn't reverse these tax cuts and instead lets them expire...

a whole lot of us are going to be pissed off, don't you think? I know I will be. x(

[Time for change]

44. Yes, I certainly do think so

Just about everyone I've talked to about it is very upset about this -- and rightfully so, in my opinion.

[Xithras]

15. I was speaking to the general point of your post and not to Obama's plan specifically.

I do agree that the tax cuts should be permitted to either expire, or they should be repealed entirely.

My point was that simply that a tax hike on the rich in a recession is no panacea. A 25% income tax on a billionaire who's yearly income was $0 is $0. A 50% income tax on a billionaire who's yearly income is $0 is $0. While it's improbable that a billionaire could actually go a year with zero income, MANY of America's wealthiest people saw large percentages of their net worth evaporate this year. Those losses can be deducted, resulting in no tax liabilities.

An overdependence on income taxes weighted toward the wealthy can have some very negative consequences in downmarket years when the wealthy see little or no gain in their net worth. California is reeling from this problem right now because we've become very dependent on income taxes from our wealthiest citizens over the past decade, and since their incomes evaporated this year, they have little or no tax liability. That's caused state revenues to plunge.

I guess my post was intended as a counter to yours. It's extremely easy to say "Tax the rich", but the reality is a bit more complicated. Taxing hell out of the rich is only a good solution in an economy that is humming along nicely and where the rich are getting richer. With only a few exceptions, that isn't happening today.

[Time for change]

23. I didn't mean to imply that reversing the Bush tax cuts is a panacea or that it is the only thing

that we need to do. I'm just saying that I think that it's ONE very important thing that needs to be done.

I see your point that a billionairre who makes $0 in a year won't pay any taxes. But I don't see that as a reason not to increase the top marginal tax rate. 50% of 0 is 0, but so is 20% of 0. So, how could it hurt?

And then also there is the inheritance tax, which should also be brought back up to pre-Bush levels -- though I don't recall Obama talking about that one.

[Two Americas]

25. false premise

Let me use the rural county I am in as an example. We grow enough food to feed everyone in the county. We have every service needed. we could easily feed the local doctor, and the local construction people could keep the doctor housed. We have well drillers, carpenters, nurses and police. The county could be self-sufficient, and everyone would have more than enough of everything they need. Fuel is the one exception, though we could go back to mules, especially if the pressure to produce and ship to market was no longer there. As it is, we buy fuel through a co-op.

Let's say we have scraps of paper to keep track of the transactions - we could call them dollars. No matter how many "dollars" there are, there is enough of everything for everyone in the county. Now let's say a middle man handles those "dollars" for us. Within a short period of time, we discover that no one has enough - enough food, enough housing, enough medicine, whatever. The farmer cannot afford health care, and the health care worker cannot afford food. What happened? The same wealth is being produced. The same resources are there. Everyone is working as hard or harder. Where did the value go?

[Xithras]

47. Apples and oranges.

You're talking about a completely new economic system. Everyone else is talking about taxation within the existing system.

[Two Americas]

52. no I am not

I am talking about a different "economy" than you are, a different America, yes. But is is the economy and the America that moist of the people live in. What I am describing is how things work, the foundation of our prosperity. The "economy" the MSM is always talking about is the fortunes and well being of the view, the investing class, the speculators and money manipulators.

The question here is which "system" do we support and defend? That of the working people, or that of the wealthy and powerful few?

[JDPriestly]

99. I agree with you, Two Americas

The real economy is the economy that provides goods an services, not the economy of the wealthy investors. The wealthy investor class is taking far too big a share of the amounts paid for goods and services. Health insurance companies and their enormous bureaucracies are an excellent example. The sub-prime mortgage fiasco is an excellent example of the kind of transactions that are better conducted by people in the same community who understand local conditions. Mortgages should be bought and sold locally and held by local lenders.

My mother has told me that they used a kind of script during the depression. It was not the dollar but it represented value and was accepted for its value. They also traded one type of product for another in a kind of barter system.

[Two Americas]

107. yes

I was talking to an apple grower a month ago or so, and he told me his grandmother issued scrip during the depression and it was the accepted and preferred currency in the community for years.

[Hannah Bell]

61. no, he's asking a question, which is why is everybody so "poor" & insecure when

we produce so much wealth?

good question.

[Duende azul]

36. "A billionaire who's yearly income was $0"? Fine. Still a billionaire. Tax the billions.

Tax inheritance.Whatever.
Or for more immediate effect also the transfers he makes to transform his wealth from one "safe haven" to another.

When he goes from cash to commodities: tax.
When he goes from one currency to another:tax

Should have some redistributive effect.

[Xithras]

50. I know a few very rich people.

No billionaires, but several people with many, many millions (I own a small business and they're clients). The thing is, NONE of them have giant safes where they hoard cash. Most truly wealthy people have their money invested in assets that can remain untouched for decades.

We DO already tax the transfers of that sort of wealth. They're called capital gains taxes, and they're levied on everything from property sales to stock swaps. If you REALLY want to tax the hell out of the rich, it's quite easy. Eliminate capital gains exemptions and prevent deductions or losses from being weighted against capital gains.

[JuniperLea]

69. I've worked for several billionaires...

And without exception, they do hoard large sums of cash... in offshore accounts.

The extremely wealthy should pay the same percentage of income tax that the rest of us do... for me it's approx. 35%... I say that's fair as hell.

[Dumak]

121. The rich people I know hoard properties as an investment

This has the effect of raising real estate prices to such an extent that a medium-income person can scarcely afford one home to live in. What is needed is a federal residential property tax on homes that are not the owner's primary residence, and it needs to be high enough to make property investments a poor choice. Better yet, make it a tax on everyone, but provide an exemption for the first 500-1000 sq feet. Allow everyone to own one modest residence without being taxed.

[PassingFair]

68. Immediate reinstatement of the inheritance tax would help.

Whether or not their "income" falls.

[JDPriestly]

92. We need to restore the balance in our economy as well as our control

over it as a nation by re-introducing some tariffs, more import taxes. That is the best way to put the American economy back on its feet. We should not import huge amounts of products we can produce ourselves.

[JDPriestly]

91. I understood him to say that he would not renew them.

Did he make two conflicting pledges on this? Or did I misunderstand him? Does anyone have a quote?

[Two Americas]

18. no

If the incomes of the wealthy stagnate, there is more income in the lower brackets, more tax revenue there, and less need for public services.

Capital does not produce wealth, labor does. Your effect would only be true if it were capital that produces wealth. This is easy to understand. If all of the capitalists and investors disappeared, the rest of us would keep working and would survive. If, on the other hand, all of the workers disappeared, the investors and financial people would not survive (unless they went to work). No workers, no wealth produced for the investors and capitalists to play with.

We, the workers, the producers, are not dependent upon the wealthy. The wealthy are dependent upon us.

[Xithras]

20. Did you even read my post?

Wealth may be created by the workers, but if your tax structure shifts the majority of the income tax burden onto the wealthy AND your social or economic changes starve the wealthy of the ability to increase their wealth (income), you've created a serious revenue problem for the government.

You say that the workers are not dependent on the wealthy. That's untrue if the workers are dependent on social programs (like national health care) funded by the wealthy. If the wealthy aren't expanding their wealth (via added income), there is no tax base to operate those programs. At that point, those programs must either be eliminated, or massive tax increases must be laid onto lower-income people who really can't afford them. This is the situation California is in today.

[Two Americas]

24. yes

Yes, I did read your post.

If all wealth is created by workers, there can be no shortage created by starving the wealthy of the ability to increase their wealth. Taxing the wealthy is returning wealth to the community. If it is not in their hands, it is in ours.

The situation in California is that wealth is being drained out of state, and out of country. That is a separate issue. When the wealthy are taxed, they attempt to move it offshore. In the case of the state, they can move their residence to another state. This is solved by closing the loopholes.

[Two Americas]

27. I will try again

If the wealthy few do not have the wealth - th value - then that means the value is still in the community still in the hands of the workers. It was not extracted into the hands of the few. If the wealth is still in the community, still in the hands of the working people, then there would be no need for massive public services to make up for the extracted wealth, and no need to chase after the wealthy few to get it back through taxes and redistribute it into the community. Capital does not create value. It is value created in the communities and extracted from them.

Any other view of this is contradictory to the fundamental principles and ideals of the Democratic party and the Labor movement.

[Xithras]

49. You're wrong on that.

Neither the Democratic Party nor the American labor movement are anti-capitalist. There may be some elements within both that support anticapitalist ideals, but both (within the USA anyway) typically strive to strike a fair balance between capital/wealth growth, progressive (not redistributive) taxation to aid those less fortunate, and fair compensation for those involved in creating wealth (the workers).

The United States doesn't have any socialistic political parties of consequence. Only Republicans think our Democratic party qualifies for that moniker. We know better.

[Two Americas]

51. nor am I

You are red baiting. Giving Labor the higher consideration than capital, placing people above profits, establishing public infrastructure and protecting public resources is all very much in keeping with the traditional principles and ideals of the Democratic party and the Labor movement. Saying this mean "destroying capitalism" is the perennial argument of the political right wing.

I agree with Lincoln on this. Do you?

"It is not needed nor fitting here that a general argument should be made in favor of popular institutions, but there is one point, with its connections, not so hackneyed as most others, to which I ask a brief attention. It is the effort to place capital on an equal footing with, if not above, labor in the structure of government. It is assumed that labor is available only in connection with capital; that nobody labors unless somebody else, owning capital, somehow by the use of it induces him to labor. This assumed, it is next considered whether it is best that capital shall hire laborers, and thus induce them to work by their own consent, or buy them and drive them to it without their consent. Having proceeded so far, it is naturally concluded that all laborers are either hired laborers or what we call slaves. And further, it is assumed that whoever is once a hired laborer is fixed in that condition for life."

"Now there is no such relation between capital and labor as assumed, nor is there any such thing as a free man being fixed for life in the condition of a hired laborer. Both these assumptions are false, and all inferences from them are groundless."

"Labor is prior to and independent of capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration."

http://www.presidency.ucsb.edu/ws/index.php?pid=29502

Abraham Lincoln
First Annual Message to Congress
December 3, 1861

The world is agreed that labor is the source from which human wants are mainly supplied. There is no dispute upon this point. From this point, however, men immediately diverge. Much disputation is maintained as to the best way of applying and controlling the labor element. By some it is assumed that labor is available only in connection with capital -- that nobody labors, unless somebody else, owning capital, somehow, by the use of that capital, induces him to do it. Having assumed this, they proceed to consider whether it is best that capital shall hire laborers, and thus induce them to work by their own consent; or buy them, and drive them to it without their consent. Having proceeded so far they naturally conclude that all laborers are necessarily either hired laborers, or slaves. They further assume that whoever is once a hired laborer, is fatally fixed in that condition for life; and thence again that his condition is as bad as, or worse than that of a slave. This is the "mud-sill" theory.

But another class of reasoners hold the opinion that there is no such relation between capital and labor, as assumed; and that there is no such thing as a freeman being fatally fixed for life, in the condition of a hired laborer, that both these assumptions are false, and all inferences from them groundless. They hold that labor is prior to, and independent of, capital; that, in fact, capital is the fruit of labor, and could never have existed if labor had not first existed -- that labor can exist without capital, but that capital could never have existed without labor. Hence they hold that labor is the superior -- greatly the superior -- of capital.

They do not deny that there is, and probably always will be, a relation between labor and capital. The error, as they hold, is in assuming that the whole labor of the world exists within that relation. A few men own capital; and that few avoid labor themselves, and with their capital, hire, or buy, another few to labor for them. A large majority belong to neither class -- neither work for others, nor have others working for them. Even in all our slave States, except South Carolina, a majority of the whole people of all colors, are neither slaves nor masters. In these Free States, a large majority are neither hirers or hired. Men, with their families -- wives, sons and daughters -- work for themselves, on their farms, in their houses and in their shops, taking the whole product to themselves, and asking no favors of capital on the one hand, nor of hirelings or slaves on the other. It is not forgotten that a considerable number of persons mingle their own labor with capital; that is, labor with their own hands, and also buy slaves or hire freemen to labor for them; but this is only a mixed, and not a distinct class. No principle stated is disturbed by the existence of this mixed class. Again, as has already been said, the opponents of the "mud-sill" theory insist that there is not, of necessity, any such thing as the free hired laborer being fixed to that condition for life. There is demonstration for saying this. Many independent men, in this assembly, doubtless a few years ago were hired laborers. And their case is almost if not quite the general rule.

The prudent, penniless beginner in the world, labors for wages awhile, saves a surplus with which to buy tools or land, for himself; then labors on his own account another while, and at length hires another new beginner to help him. This, say its advocates, is free labor -- the just and generous, and prosperous system, which opens the way for all -- gives hope to all, and energy, and progress, and improvement of condition to all. If any continue through life in the condition of the hired laborer, it is not the fault of the system, but because of either a dependent nature which prefers it, or improvidence, folly, or singular misfortune. I have said this much about the elements of labor generally, as introductory to the consideration of a new phase which that element is in process of assuming. The old general rule was that educated people did not perform manual labor. They managed to eat their bread, leaving the toil of producing it to the uneducated. This was not an insupportable evil to the working bees, so long as the class of drones remained very small. But now, especially in these free States, nearly all are educated -- quite too nearly all, to leave the labor of the uneducated, in any wise adequate to the support of the whole. It follows from this that henceforth educated people must labor. Otherwise, education itself would become a positive and intolerable evil. No country can sustain, in idleness, more than a small per centage of its numbers. The great majority must labor at something productive. From these premises the problem springs, "How can labor and education be the most satisfactory combined?"

By the "mud-sill" theory it is assumed that labor and education are incompatible; and any practical combination of them impossible. According to that theory, a blind horse upon a tread-mill, is a perfect illustration of what a laborer should be -- all the better for being blind, that he could not tread out of place, or kick understandingly. According to that theory, the education of laborers, is not only useless, but pernicious, and dangerous. In fact, it is, in some sort, deemed a misfortune that laborers should have heads at all. Those same heads are regarded as explosive materials, only to be safely kept in damp places, as far as possible from that peculiar sort of fire which ignites them. A Yankee who could invent strong handed man without a head would receive the everlasting gratitude of the "mud-sill" advocates.

But Free Labor says "no!" Free Labor argues that, as the Author of man makes every individual with one head and one pair of hands, it was probably intended that heads and hands should cooperate as friends; and that that particular head, should direct and control that particular pair of hands. As each man has one mouth to be fed, and one pair of hands to furnish food, it was probably intended that that particular pair of hands should feed that particular mouth -- that each head is the natural guardian, director, and protector of the hands and mouth inseparably connected with it; and that being so, every head should be cultivated, and improved, by whatever will add to its capacity for performing its charge. In one word Free Labor insists on universal education.

I have so far stated the opposite theories of "Mud-Sill" and "Free Labor" without declaring any preference of my own between them. On an occasion like this I ought not to declare any. I suppose, however, I shall not be mistaken, in assuming as a fact, that the people of Wisconsin prefer free labor, with its natural companion, education.

Abraham Lincoln
Address before the Wisconsin State Agricultural Society
September 30, 1859
Milwaukee, Wisconsin
http://showcase.netins.net/web/creative/lincoln/speeches/fair.htm

I am glad to see that a system of labor prevails in New England under which laborers can strike when they want to, where they are not obliged to work under all circumstances, and are not tied down and obliged to labor whether you pay them or not! I like the system which lets a man quit when he wants to, and wish it might prevail everywhere. One of the reasons why I am opposed to slavery is just here. What is the true condition of the laborer? I take it that it is best for all to leave each man free to acquire property as fast as he can. Some will get wealthy. I don't believe in a law to prevent a man from getting rich; it would do more harm than good. So while we do not propose any war upon capital, we do wish to allow the humblest man an equal chance to get rich with everybody else. When one starts poor, as most do in the race of life, free society is such that he knows he can better his condition; he knows that there is no fixed condition of labor, for his whole life. I am not ashamed to confess that twenty five years ago I was a hired laborer, mauling rails, at work on a flat-boat -- just what might happen to any poor man's son! I want every man to have the chance -- and I believe a black man is entitled to it -- in which he can better his condition -- when he may look forward and hope to be a hired laborer this year and the next, work for himself afterward, and finally to hire men to work for him. That is the true system.

Abraham Lincoln
Speech at New Haven
March 6, 1860

[leftstreet]

56. Now THIS is some "Lincoln" Obama should be reading!

:thumbsup: :thumbsup: :thumbsup:

[Two Americas]

57. it is amazing

You cannot take the positions of Lincoln on economic issues - let alone the positions of the great Labor leaders - without being accused of being some far left, purist, radical, fringe, dreamer, lunatic and every other smear and insult under the sun.

As the election approached, I spoke with and to hundreds and hundreds of working people in conservative rural areas. what I heard again and again was "we need another New Deal." The people are finally rejecting the right wing economic politics. Yet you would never know that by reading the threads here. The conservatives among us are waging a frantic and desperate rear guard action, I believe, against any and all expressions of economic populism, left wing politics or pro-Labor ideas. It is stunning to watch the public move to the Left as the activists, pundits, insiders are moving to the right.

[Time for change]

72. Very interesting speeches by Lincoln

Difficult to put my mind around, but very interesting nonetheless. And worth thinking about.

It seems to me that public talk like that today from a prominent figure would quickly draw the label of "socialist" or "communist".

And Lincoln is judged to be our greatest president.

[Two Americas]

75. beyond that

Beyond that, Lincoln connected opposition to slavery to support for Labor and to the fight for freedom itself.

Talking about slavery in the Lincoln-Douglas debates, Lincoln said that slavery is either right or it is wrong, and there is no middle ground as Douglas was proposing, nor was it something that did not involve and threaten all of us.

"That is the real issue. That is the issue that will continue in this country when these poor tongues of Judge Douglas and myself shall be silent. It is the eternal struggle between these two principles - right and wrong - throughout the world. They are the two principles that have stood face to face from the beginning of time; and will ever continue to struggle. The one is the common right of humanity and the other the divine right of kings. It is the same principle in whatever shape it develops itself. It is the same spirit that says, 'You work and toil and earn bread, and I'll eat it.' No matter in what shape it comes, whether from the mouth of a king who seeks to bestride the people of his own nation and live by the fruit of their labor, or from one race of men as an apology for enslaving another race, it is the same tyrannical principle."

[foxer]

98. A healthy economy depends on the middle class

If the workers actually made more than it cost to live, actually had disposable income, they would have the ability to save, to invest, to consume.
Money in the middle class circulates, people would have money to go out to eat, go to the theater, send the kids to college. If there was a robust
middle class tax revenue would be greatly enhanced, the middle class pays their taxes, their not happy about it, but their proud to do it. Money in the middle class doesn't "trickle down" to the poor, it mixes. A strong middle class would pull up the poor, there would be less need for government programs, there would be less crime, less hunger, less desperation.
The notion that the government depends on the rich is fantasy. They claim they pay most of the taxes, but they use most of the services. The Defense Department never had to send in the marine because I kept my Oil under someone else's sand. The Treasury Department never had to bail me out because I invented "new" investment vehicles. Nor have I ever received a no-bid contract. They think they're economic genius's because they outsource labor to third world countries to increase profits to obscene levels and to pressure domestic wages till workers have no disposable income. Works for a little while, kind of like letting the air out of a balloon. Trickle down economics would work a lot better if money didn't trickle up (econ 101, first day).
If you listen real close when they tell you the moneys about to trickle down, you'll hear a zipper.........

[TheFarseer]

104. how will you make any money

when there is no one to buy your products anymore? They're building houses and manufacturing cars, computers - whatever and there's not enough people to buy them. Everyone's job has been outsourced to Mexico or China or India. OK, not eveyone's but enough to put a dent in profits and increase mortgage defaults, credit card defaults and car repos to untenable levels. Did they think Chinese and Indians would make up for this shortfall in consumers with money? Did they think we could just borrow forever? Then they try to tell us the stock market is tanking because they are afraid Obama will raise taxes - OMG!!!!

[JDPriestly]

101. The wealth of the wealthy can only increase if less wealthy people

have plenty of money to buy the products produced by the companies that the wealthy invest in. The problem right now is that the wages of ordinary people have not kept pace with the increases of wealth of the wealthy. You are right, xras. Theoretically, it could theoretically be possible that wealthy people could bear such a high tax burden that they would become too poor to invest. But we are no where near that point at this time.

As I pointed out above, the problem with your theory also lies in the fact that many of the best innovations do not come from big companies funded by the wealthy but from garage workshops and middle class people who establish small businesses that grow. The investor class only moves in when an idea proves profitable. The wealthy may support business with their money and investments, but they don't contribute the kinds of creative ideas that solve problems or help the economy grow.

[JDPriestly]

90. The rich are being hit, but the middle class is also being hit.

The middle class is taking serious hits in terms of investments -- declining home equities, losses in 401(K)s. The worst is yet to come for the middle class because the decreases in pension fund payments, the job losses and all the other losses are going to hit them after they hit the stock market and the wealthy who rely on investment income for their livelihoods.

The reason you have to increase the taxes for the wealthy but not the middle class and poor is that the margin of discretionary spending that the wealthy enjoy is greater. If the tax burden is shifted to the middle class and to the poor, it will mean a great deal of misery. Whereas if the tax burden of the wealthy is increased, it will simply mean less discretionary spending on luxuries, not less spending for necessities.

The argument that the taxes of the wealthy should not be increased because their money is the engine of the economy because they invest in business is also true to some extent, but not persuasive. The real engine of the economy is the demand of the middle class. If the demand is there, business will produce and sell products and services and capital will chase the profits and fund the production of the products or services. But if the demand is not there, companies fail.

I heard someone from Google on the Rachel Maddow Show today. He stated that the real engine for creating jobs and innovative products is small business. I agree. But small businesses can only thrive if the middle class has enough money to buy their products and make the production of the products possible on a scale (measured by numbers of products or services produced and sold) that makes the production economically feasible. Also, small businesses tend to be started by middle class entrepreneurs. So, once again, the key to jump-starting the economy is in protecting the middle class, not in saving the skins of the rich. To paraphrase Thomas Jefferson (liberally paraphrase Thomas Jefferson): We don't need to worry about the rich. They will take care of themselves. They always do.

[unpossibles]

8. K&R! nt

[ihavenobias]

10. K & R. This is very interesting, well thought out and well researched.

:)

[SammyWinstonJack]

11. K&R!

[Azlady]

12. K & R

[crazylikafox]

14. Great information. Thanks. k&r & bookmarked

[MikeNearMcChord]

16. Also increase the inheritance tax.

If the right wing calls it the death tax counter it with what Thom Hartman calls the "Paris Hilton" Tax. Say no to Plutocracy!

[FormerDittoHead]

114. ..and foundations and trusts which do the same thing... n/t

[bertman]

17. K & R. Thanks for this thread. Very interesting and informative graphs.

[The Wizard]

19. But if the wealthy have to pay higher taxes

they won't be able to send jobs to India and China.

[antimatter98]

21. Obama has already lost his nerve--we've got a Pelosi president elect.

Obama lied to get elected--nothing new for a politician---but surprising because
he seemed 'believable.'

But, we're seeing a Pelosi presidency emerge---climb downs, triangulation, lack of
resolve, no ethics, no respect for law, or the Constitution, but infinite deference
to the GOP, to the banks, to the telecoms.

I would have expected a HRC presidency to be like this, but not Obama.

I'm truly surprised at how quickly he's climbing down on 'important' issues he
raised during the campaign.

Clearly, 'they' got to him, or he was never a real Democrat to start with.

We're being punked.

[Pastiche423]

22. You got that right

The whole country got punked.

:grr:

[anonymous171]

26. Should've voted for McKinney.

:rofl:

[Pastiche423]

28. Laugh all you want

But that is exactly who I was going to vote for. At least Cynthia tells the truth and tries to help the people, not the corporatins.

I trust her a hell of a lot more than I do him. It's kinda hard to trust liars.

[JDPriestly]

102. Should've voted for Edwards (I did but then got mad at him), but that is for another day.

[TheKentuckian]

29. Cynthia ain't getting elected. Maybe not even if she got the votes

[Two Americas]

109. that is not how democracy works

Democracy is not a shopping expedition, where we make our personal choices from the merchandise arrayed on the shelves.

Our system is founded upon a theory of self-government. Electing representatives is one small part of that. It is no longer democracy if we see it as a matter of selecting rulers - as if we could, and is if we are actually being ruled today by our elected officials.

For McKinney to be elected presupposes public support for the ideas she represents, and it is public support that is important, not the qualities or shortcomings of the particular personality, as though they were products we were assessing and then buying or not.

Clearly, if there were public support for the message of McKinney, other personalities would emerge to represent those ideas.

However, that is not the issue. There can never be public support for the message of someone like McKinney if people cannot hear any such message. Too many here argue that we should not spread the message, because some personality associated with the message is supposedly a loser of unpopular - Kucinich, Nader, McKinney.

That is a dishonest approach, but sadly a very common approach. It is backward. Saying that the message is discredited because "Dennis lost" so therefore we should reject the message is to advocate promoting the very ideas that ensure that his message cannot get to the public. He loses because the message doesn't get to the public, and the message does not get to the public because the pundits, insiders, and activists are always discrediting the message by discrediting the messenger.

People will say "don't get me wrong, I agree with Dennis, BUT..." and then trot out the "can't win" and "be realistic" and "the public is conservative" and all of the rest of the "common wisdom," followed by "so there is no sense spreading his message." But those are not observations of reality, they are advocacy, they are creating the reality.

If we truly "agree with Dennis," that says that there are ideas we have in common with him. We should be promoting those ideas. If we are not promoting our ideas, what are we doing? Betting on a horse race? Watching a sports contest? Were we to promote those ideas, they would get to the public, they would be supported, and Dennis - or others who share his views - would be elected. That is how it works. If, on the other hand, we are not promoting his ideas, or discouraging others from doing that, supposedly for reasons of practicality - he can't win, the public won't support him - we are fooling ourselves and each other, abandoning any pretense to moral integrity, and sabotaging and undermining the democratic process.

[Idealism]

30. Something to bring to your attention

Well written article, I enjoyed it, but your assumption that top marginal effective rate is actually what people paid may be misleading. No one paid 77% of their total income to taxes, yes it was a higher percent than it has been in real receipts in correlation with the total pay per year, but there were huge tax loops and breaks that allowed the wealthy to escape the higher tax rate. These loopholes and breaks were taken out of the tax code by JFK, it was estimated $1 billion dollars per year was saved (in 1960 dollars) by lowering the top effective tax rate, but eliminating the vast amounts of write offs the wealthy were allowed. Many conservative talking heads use this point to show how "lowering taxes on the wealthy actually raises tax revenues" and to sell supply-side economics. This is of course patently false, and they don't mention the $1 billion dollars in tax breaks that got taken out of the code. But again, good article, thanks for your contribution

[Time for change]

73. Yes, loopholes are inportant

So is the the income level at which the top marginal tax rate starts, and probably a lot of other things as well.

But it does seem to me that, all other things being roughly equal, that reversing the Bush tax cuts on the rich will bring in a great deal of money -- in the hundreds of billions -- just as initiating them in the first place cost our government quite a bit of money (though I don't claim that the top marginal tax rate is what people actually pay) -- don't you think?

[Idealism]

74. Of course repealing the Bush tax cuts will

raise tax receipts considerably. When they were initiated in 2001, they led to roughly a $300 billion loss in revenue. In 2011, when their natural course gets ran, they will be estimated to bring in anywhere from $150 billion to $250 billion extra per year. Another important aspect of the Bush tax cuts were capital gains taxes. Clinton set them scaled to your income, with a maximum of 25% tax on those gains, but Bush lowered the top rate to 15%. In my opinion these people need to be paying more, considering the pain they can cause with their speculation and rampant profiteering. I wasn't ever of the position that the Bush tax cuts were logically sound; supply-side economics is a complete joke, period (as the public is waking up to only after 28 years of this nonsense).

[Time for change]

76. Yes, the capital gains taxes -- and the inheritance taxes too

I very much do hope that these are all brought back to the levels they existed at during the Clinton presidency.

[Idealism]

113. If it's going to get done it has to be early in the term

Rethugs bitched about having 5% of the population's taxes possibly being raised 3% and called it socialism, I am not terribly optimistic that we will be able to raise capital gains and estate taxes to what they were at. Our society doesn't believe in taxes or the civilization they pay for apparently, its no wonder we have over $10.4 trillion dollars of debt :/

[GOPBasher]

32. Rec'd. I completely agree with you, but, I wouldn't mind too much

if the repeal of the Bush tax cut on the top marginal rate has to wait a year or two -- as long as it doesn't become permanent. Paul Krugman recently stated that he doesn't think it would be such a bad thing to run a deficit of $1 trillion this year, as long as we get back to fiscal responsibility once the economy rebounds.

[tclambert]

87. Politically, it's dangerous to wait a year or two. It might not happen.

Historically, new Presidents get a honeymoon period, often referred to as the first hundred days, in which they get to implement a lot of their policies. After that, the opportunity for new initiatives quickly decays until they end up spending all their energy defending their old initiatives. Delaying a project for later on usually ends up with the project never happening.

[hfojvt]

33. I also think this is the strongest time politically

let Republicans try to fillibuster it, what would that show? That they were holding up a recovery package in order to protect those making over $250,000 a year - no more than 5% of the population. That's putting "wealthy first" instead of "country first".

Secondly, like you said, it's key that we do not create unsustainable deficits and the earlier we start taking in more revenue, the better on that score.

[ColbertWatcher]

34. What's happening to the filthy rich is not a tax increase ...

... what's happening to the filthy rich is that bailout they received in the form of a tax cut is being rescinded.

Great post, btw, thank you for posting it.

[Judi Lynn]

35. Thank you for this important thread. Very worthwhile, valuable information. K & R.

:kick: :kick: :kick: :kick:

[Norrin Radd]

37. kr

[ProfessorGAC]

38. Good Post

Not only are the things you've gathered true, but it's also true that if one looks at increases on high income earners and does a sound analysis, there has never been a time wherein such an increase causes any economic downturn! None!
The Professor

[4_TN_TITANS]

39. K & R.... brilliant analysis.

Why the hell isn't this kind of insight coming from every credible commentator on the networks? Oh...never mind.

With each passing day, it becomes more obvious that it's class warfare.

[humbled_opinion]

40. Additionally,

Obama campaigned on the issue that he would in fact Raise Taxes. I loved the truthfullness of this approach. Statistically he received more votes from the "RICH" then McCain who promised more of the same failed Bush tax cuts. So in effect The American Rich are voting for the very increases that Obama campaigned on. GIVE THE PEOPLE WHAT THEY WANT.

[acmavm]

42. We gotta get some money from somewhere. What's so damn

mystifying about getting it from the one's that have it all?????

[L0oniX]

46. K & R

Fuck rich people!

[AzDar]

48. K & R ...

[Poiuyt]

53. Thom Hartmann pointed out the other day that every time there has been a tax cut,

there has been a bubble, and then a crash. When taxes are increased, there is sound economic growth. He then proceeded to give examples. Sorry, no link.

[mrreowwr_kittty]

117. Right, because no one ever pays the top marginal tax rate when it's very high

You deduct whatever you invest back in your business. That's why the economy grows when tax rates are high. When they are cut, there's less incentive to invest in actual, tangible businesses. What you get is rich people sitting on their money and/or investing in the kind of fly-by-night schemes that create bubbles.

[MasonJar]

54. I do not get it either. This is not a campaign promise to renege on.

[valerief]

55. Fairness aside, the wealthy are the only people left to tax. Everyone else is broke and jobless.

Or soon will be.

[Runcible Spoon]

58. excellent-thank you for this.

KnR

[democracy1st]

59. How do you know Obama taking advice from MSM ?

[Time for change]

62. I don't

Did I give the impression that I did?

I do not know why he decided to float the fact that he is considering going back on his campaign promise to reverse the Bush tax cuts on the wealthy.

I do know that the corporate news media is trying to sway the American people to accept the idea of leaving the Bush tax cuts right where they are. It seems obvious to me that they are doing so in order to pressure politicians, including Obama, to go along with that idea. To what extent Obama is influenced by them I cannot say, however.

[Greyhound]

60. Top 1% also has 40% of the money. When the top 1% is examined

we find the disparity continues to grow. Once we get to the top .01% the illusion completely breaks down and it becomes clear who is really in charge.

http://www.lcurve.org/#">Here's a graphic representation.

The data is a bit dated but it is still representative.
:kick: & R

[Time for change]

63. An L curve!

I don't believe I've ever seen one of those. It's pretty hard to imagine that it could be that bad. And it's also hard to imagine how wealth could be distributed in that manner without widespread foul play.

[Greyhound]

78. Just takes time and a compliant group of gatekeepers, who believe that

they will someday be on the goal line.

Of course they won't, but by the time they figure that out, it's too late.

That's why I think it's really too late to do anything about the current situation short of just scrapping the whole thing and starting over. The human mind, literally, cannot grasp the scale of the disparity.

OTOH, most people would be happy to just have the screws loosened a half-turn, so that's about as much as we can hope for.

[hangman86]

64. Can someone please explain this to me.

Why is Obama considering going back on his promise just now? For months we've been told that our economy was bad and is going to get worse no matter what we do but Obama never mentioned that he might have to change his economic policy. What happened between Nov 4th and now that's making him do this?

[Time for change]

71. I wish I could

If I could, I would have explained it in the OP.

There are so many possible explanations. Some people have said that the people who rule our country have "gotten to Obama". I'm not sure what that means. Does it mean that they'll ruin his presidency if he goes against their wishes? Have they threatened him -- perhaps as they threatened JFK? Or is Obama just trying to position himself to the center, to make sure that he gets re-elected in 2012? Or, does he really believe this stuff that our corporate media is trying to push. Perhaps the best explanation is one offered recently by HamdenRice in this post:



"It's as though the lunatic right wing has anticipated everything President Obama will have to do to clean up George Bush's complete and total catastrophe, and pre-defined it as treason."

In other words, perhaps Obama knows that he'll be met with fierce opposition if he goes through the reversing the Bush tax cuts, and he doesn't want to deal with it. So maybe he's just floating out this idea to see how much opposition comes from the other (our) side.

[JDPriestly]

103. First they come for your blackberry . . . .

[Greyhound]

80. He was sat down and got this "talk".

http://www.youtube.com/watch?v=CeCMSLP3Wy8

[leftstreet]

82. "You have meddled with the primal forces of nature, Mr. Beale!"

Yep

[Greyhound]

95. Something along the lines of, "You have such a lovely family here, it would be a shame is anything

unpleasant were to happen to them"...

"Now, let me tell you it will be..."

[hangman86]

89. Though that is very sad

As a movie buff I really appreciate you using "Network" to speak to me. Great film is a language I understand. :)

[Greyhound]

93. 32 years and a front row seat ago and we still pretend it ain't so. Paddy Chayefsky

wrote what is arguably the most prescient screenplay (I would put Rollerball right in there with it) of our time.

Ms. Greyhound and I both noticed a distinct turn-about in Barack's vision about hours after his DNC speech in 2006, did you see it too?

[hangman86]

97. I don't quite remember that speech

Please explain.

[Joe Chi Minh]

66. I posted this on another thread, but it seems at least as apposite here:

It is puzzling. Even before Bush's tax cuts, tax rises on the very rich would have had a negligible impact on them. And ther's no way the rest of the country will be able to provide the wherewithal.

Brown's raising of income tax on the "£150,000 plus" earners frm 40% to 45% in the UK shows he stll doesn't realise that super rich foreginers who exploit the congenital cheapness of our leaders and consequently the country, are no friends of our economy. Though they might be of help in various ways to their own "low-rent", short-term interests.

Thing is, an awful lot of liquidity funds has been stock-piled by all 5% of them (Polly Toynbee gives intesting figures in her article in todays' Guardian), just waiting to be trickled down on the rest of us, but nobody's wanted to take the initiative. The last act in the turnkey construction of this major dam still awaits some worthy in our government, who will cut the ribbon and actually open the dam's well... let's not say "floodgates"; "appreciable aperture", perhaps.

Though she didn't put it quite like this, I think Polly Toynbeee is right to stress that our managerial class don't seem to understand how they have been well and truly done. They literally don't know any better. That is, for us, a major and tragic, difference between UK and US politics.

http://www.guardian.co.uk/commentisfree/2008/nov/24/pre...

http://www.guardian.co.uk/commentisfree/2008/nov/25/pre...

It's ironic that NuLab(c) has taken the worst of Old Labour, the creeping secularism and galloping anomie, and abandoned its original priority - as envisaged by its founder, Keir Hardie - of economic justice.

[JuniperLea]

67. Those tax cuts did America no good whatsoever, in fact...

They are part of the problem that got us in this mess! They need to go! Now! There is no good reason to keep them... they have not done us any favors at all. They have not boosted our economy at all!

I'm so sick of this bullshit, I could just spit!!!

[Lasher]

110. We just need to ask ourselves this:

We have just gone through 8 years of Saint Ronnie on steroids, as far as tax cuts are concerned. If tax cuts for rich people is so good for the economy, how can it be that we find ourselves in the worst mess since the Great Depression?

Supply-side economics was never anything more than an attempt to find moral justification in taking from the poor to give to the rich.

[JuniperLea]

118. Bingo!

Well said! Now, do your duty and go to change.gov and tell Obama what you just said here! It was perfect!

:patriot:

[KansDem]

70. I might feel a little sorry for the ueber-rich...

...if they hadn't been so fucking busy stuffing their wealth away in the Cayman Islands, Switzerland, and Lichtenstein! :grr:

And I said, "a little sorry."

[McCamy Taylor]

77. JP Morgan Jr paid NO taxes during the Hoover Depression for several years. This revelation may have

increased public interest in seeing the wealthy pay their fair share.

[OwnedByFerrets]

79. Thom Hartman discusses this almost daily.....

every time taxes are raised, the economy grows.

[Zhade]

81. It's a lie that raising taxes on the rich hurts the economy - the rich don't boost the economy.

The real motivator of economic growth is increased poor and middle class consumer spending - not uberwealthy leeches hoarding their usually-unearned riches.

It's Econ 101.

[tclambert]

88. Agreed.

[fascisthunter]

84. The "Rich" Sponge Wealth off the Production of workers

we are ahead for some really tough times, all because of mean, ignorant wealthy assholes. Our forefathers were against aristocracy not for it.

[foxer]

100. Their more like leaches

[KG]

85. any time is a good time to raise taxes on the wealthy

[lelgt60]

94. Yes - but not just an income tax - a wealth tax

We need a complete progressive federal property tax. As many have pointed out, "income" can be zero for a wealthy person and not crimp their style a bit. Besides, once they have everything, a true wealth tax is the only way to recover it.

Interestingly, one of the arguments against focusing on taxing the income of the wealthy is that it won't produce much tax revenue because their aren't enough wealthy people. If that's true, then it won't have an effect on the economy either. It will just be more fair.

[whistle]

105. Y E S! Tax them hard and spend it on what is badly needed

[wundermaus]

106. Taxing the rich more than the poor...

is the right thing to do. Think about it.

[glowing]

112. He said he's considering it.. not actually doing it.

[TexasObserver]

120. Obama is using a strategem that is wise.

He wants to get his economic package through quickly. He wants to get his middle class tax cut done early, too. That means he cannot get bogged down fighting with the top 5% and their congressional lackeys over bumping their taxes 3% on everything above $250,000 a year.

Obama doesn't have to do everything on his agenda in the first three months he's in office. His job is to lead the country, not check off items on his "to do" list. It would be politically stupid of Obama to do as you wish, which is sink his early opportunities by pushing something that will only marginally affect the Treasury's bottom line, even if it is passed. It will not result in significant additional revenues to the Treasury for at least a year, even if passed.

It's not important to the economic battle Obama is presently fighting.

[Joe Chi Minh]

122. They're doing it in their pants! Partly, because they know the only way the

US can survive is by retrieving from them their ill-gotten gains, to finance recovery.

[WilliamHenryMee]

125. I am not an economist but have been called upon to play one....

That's right in my state government job I was tasked with making economic projections and in understanding where revenues and expenditures were going in the future. The crystal ball kind of a thing....

Its hard work but it seems that Time for Change has the magic to pull it all together. He has put together an awesome article. I am reminded of the call to our Highway Department economist Henry Norris to "use your voodoo and doo what you do so well....."

I have seen the charts and links before in this article but to have them all in one place is a great job. Time for Change has 8,700 posts since 2004, quite an achievement.

This "redistribution of wealth" issue is probably the biggest thing America needs to do. It was done by FDR with the WPA and Truman with the G.I. Bill. Getting the middle class to expand and getting all their kids to college is what drives American consumerism---this is the best way to make the rich richer; and it is a moral way to do it.

"Behind every great fortune there is a great crime," is a quotation of Honor'e de Balzac (May 20, 1799 – August 18, 1850)in the book Le Père Goriot (1835) http://en.wikiquote.org/wiki/Honor%C3%A9_de_Balzac.