The rich are getting richer. The middle class and poor are getting poorer. What is the Republican solution to the deficit crisis? More tax breaks for millionaires and billionaires. Savage cuts in programs that are desperately needed by working families.
—Senator Bernie Sanders
We have a deficit crisis because our politicians spend our tax dollars to increase the wealth of corporations rather than the well being of the nation as a whole. Vast amounts are spent every year feeding the bloated military/security complex, and in subsidizing the obscenely profitable oil and gas industries. Our politicians refuse to close their lucrative tax loopholes and rein in the use of tax havens. They look the other way as corporations and some wealthy individuals pay no tax at all. This, while our infrastructure crumbles, and middle class jobs disappear overseas.
The deficit crisis reflects problems with spending priorities, but also with a lack of adequate revenue. The rich do not pay nearly enough taxes.
There are specific reasons why we have a major deficit crisis today. To mention a few:
- George W. Bush, his radical neoconservative friends launched a war in Iraq. That war will end up costing us at least $3 trillion.
- The ongoing wars in Iraq and Afghanistan under President Obama are draining our treasury, not to mention the newly minted war in Libya.
- Republicans, and our current Democratic president and Democrats in Congress, have given tax breaks for the wealthiest people, thus reducing revenue for those things that would benefit children, the elderly and working families
- Under President Bush and a Republican-run House, Congress passed a $400 billion-plus Medicare prescription drug program, which was written by insurance and drug companies. By barring the government from negotiating better prices, it drove up drug costs, increased drug company profits and also added to the deficit.
- Congress voted for a massive bailout of Wall Street. That cost at least $700 billion, although the amount is probably much higher. Having destroyed the economy through their reckless and illegal behavior, we bailed out the bankers and gave them our money to speculate with once again.
Rather than raise taxes on the wealthy Republicans are choosing to harm working families
Republicans want to reduce the deficit they created on the backs of working people. In the proposed Republican budget, Head Start programs are on the chopping block as are Pell Grants for low-income college students, administrative staff for Social Security, the Community Services Block Grant Program, and funding for community health centers. Add to that slashing the EPA funding by 30% and cutting back the WIC Program that provides supplemental nutrition for women, children and infants. Republicans propose cutting $5 billion from the Department of Education. The austerity they champion is austerity only for the poor and middle classes.
For decades, the wealthy have been extracting wealth from the country instead of creating wealth. The shortsightedness and greed of the elite and their political retainers, if not stopped, will hollow out the middle and working classes, leaving the country impoverished. Without a renewed, vibrant and healthy working and middle class, the United States will continue to deteriorate.
The idea of raising taxes on the wealthy to help reduce the deficit, and contribute to the wellbeing of working families has not been on the table because the wealthy fund Republican (and Democratic) reelection campaigns. All Republicans and many Democrats serve their interests of their wealthy individual and corporate donors before working families. Wealthy donors do not want their taxes raised, so the politicians they support do not raise them.
Two (real) Democrats offer bills to raise taxes on the wealthy
According to Rep. Jan Schakowsky (D-Ill.) and Sen. Bernie Sanders (D-VT) it is time the wealthiest people in this country, who are now doing phenomenally well, to help with deficit reduction. To that end each have introduced bills to raise taxes on the rich.
On March 10, Senator Bernie Sanders introduced the Emergency Deficit Reduction Act, which would place a 5.4 percent emergency surtax on income over $1 million. The revenue would go into an Emergency Deficit Reduction Fund which will bring in up to $50 billion a year.
According to Senator Sanders, an NBC News/Wall Street Journal poll recently asked the American people about the best ways to reduce the deficit. Eighty-one percent responded that it is totally acceptable or mostly acceptable to impose a surtax on millionaires to reduce the deficit. Senator Sanders’ bill would also eliminate tax loopholes that enable the big oil companies to avoid their fair share of taxes. This would bring in an additional $3.5 billion in revenue per year.
Rep. Jan Schakowsky (D-Ill.) has also announced a new bill, The Fairness in Taxation Act, that would create new tax brackets for earners who make significantly more than the baseline for the current top income bracket.
Currently, the top marginal tax rate of 35 percent applies to income starting at $373,650, but the tax code fails to distinguish between earners making a few hundred thousand dollars a year and those making a few hundred million dollars, or even a billion dollars a year.
According to Rep.Schakowsky: “In the United States today, the richest 1 percent owns 34 percent of our nation’s wealth—that’s more than the entire bottom 90 percent, who own just 29 percent of the country’s wealth,” she said during her prepared remarks at a press conference. “And the top one-hundredth of 1 percent now makes an average of $27 million per household per year. The average income for the bottom 90 percent of Americans? $31,244.”
Schakowsky’s bill would create new tax brackets for earners making between $1 million and $1 billion annually, with tax rates starting at 45 percent with the millionth dollar and increasing on a sliding scale. The legislation would also tax capital gains and dividend income as ordinary income for those earning over $1 million in a given year. A full list of the new brackets appears below:
$1-10 million: 45%
$10-20 million: 46%
$20-100 million: 47%
$100 million to $1 billion: 48%
$1 billion and over: 49%
If enacted in 2011, Schakowsky’s Fairness in Taxation Act would raise an estimated $78.9 billion in its first year, according to Citizens for Tax Justice, a liberal lobbying group.
According to Citizens’ for Tax Justice:
Millionaires make up about 0.2 percent (that’s the richest one fifth of one percent) of taxpayers, and yet they received about 17.6 percent of the income tax cuts that were extended at the end of last year. (And millionaires certainly benefitted disproportionately from the estate tax cut that was part of that compromise.) And yet, none of the Republican spending proposals would require this group of taxpayers to share in the sacrifice that they claim is needed to reduce the budget deficit. Congresswoman Schakowsky’s proposal demonstrates that there is a fairer way to reduce the deficit.
Ultimately, of course, we need fundamental tax reform that eliminates loopholes, raises revenue and makes the system fairer and simpler. Until that happens, the only fair alternative is to require the best off Americans to contribute at a higher rate than they do today.