Tax the Rich, Then Tax Them Again
For Congressional Republicans, it is a thing untouchable: tax rates for the wealthy. The United States might be sent over a so-called “fiscal cliff” at the end of this month,. primarily because most of them—and their leadership—are refusing to budge on any increase in tax rates for the rich.
President Barack Obama wants an increase back to the top tax levels of 36% and 39.5% that existed when Bill Clinton was president.
What is hardly being mentioned as the GOPers battle with the Obama administration is that tax rates for the rich have been dramatically dropping for decades—in what Professor Richard Wolff accurately describes as being part of “class war policies.”
The “tax rates on the richest Americans fell from 91 percent in the 1950s and 1960s, and 70 percent in the 1970s, to the current low rate of 35 percent,” notes Dr. Wolff, professor emeritus of economics at the University of Massachusetts, Amherst who is currently a visiting professor at New School University in New York City. h
The “richest Americans won that spectacular tax cut” while, he notes, “middle- and low-income Americans won no such cuts.”
This has been paralleled by how “big business and conservatives have worked to undo the regulations and taxes imposed on them in the wake of the Great Depression of the 1930s.”
“Since the end of the Great Depression—and especially since the 1970s—the class warfare waged by business and its allies, most conservatives in both parties, was successful,” says Wolff, a Harvard graduate with his Ph.D. in economics from Yale.
He notes how, at the end of World War II, “for every $1 Washington raised in taxes on individuals, it raised $1.50 in taxes on business profits. In contrast, today, for every dollar Washington gets in taxes on individuals, it gets 25 cents in taxes on business. Business and its allies successfully shifted most of its federal tax burden onto individuals.”
“In plain English,” says Dr. Wolff, “the last 50 years saw a massive shift of the burden of federal taxation from business to individuals and from rich individuals to everyone else.”
Involved have been “class war policies” in a “war that victimized the vast majority of working Americans.” And “today, business and the rich are waging class war yet again to avoid even a small, modest reverse in the huge tax cuts they won in that war over the last half-century.”
Now there are some arguing that even with their steeply reduced tax rates, the rich are paying more in taxes. Robert Frank of CNBC said earlier this year: “Despite the oft-repeated fact that tax rates for the wealthy are at an all-time low, which is true, it’s also true that the actual amount paid in taxes by the wealthy is higher than before the recession.”
Yes, because of inflation, despite the tax rate declines for the rich they are paying more in dollars—but so are middle- and lower-income Americans. And they, because they’ve not had such a dramatic tax rate decline, are paying proportionally more in terms of their income.
And there are those who say the rich are being unjustly attacked. “I believe the president has vilified this so-called 2 percent,” Representative Darrell Issa, a Republican from California, said last week. “Vilifying people and then punitively taxing them is un-American,” he declared.
It’s nothing personal. The bottom line is that there has been a successful effort in the U.S. to alter the progressive income tax system that is based on individuals who earn more, paying higher taxes. The tax rates for the wealthy have been reduced precipitously.
And it’s high time the wealthy again pay their fair share of taxes.
Karl Grossman, professor of journalism at the State University of New York/College of New York, is the author of the book, The Wrong Stuff: The Space’s Program’s Nuclear Threat to Our Planet. Grossman is an associate of the media watch group Fairness and Accuracy in Reporting (FAIR). He is a contributor to Hopeless: Barack Obama and the Politics of Illusion.