Time for Mr. and Mrs. Moneybags to Pay Their Fair Share

(by Mark McCutchan)

With conservatives having successfully distracted the nation away from creating jobs by focusing on the deficit, it is important to keep in mind what caused those deficits – conservative policies on taxes and military spending, along with increases in health care spending and the GOP’s unpaid for prescription drug benefit.  As this interesting article at Talking Points Memo explains, federal government spending on non-military discretionary spending – i.e. things like education, infrastructure, environmental enforcement, etc. – has not increased at all since 2001 when inflation and population growth are taken into account.  By contrast, total tax revenues have fallen 24% compared to 2001, while military spending has increased 74% and spending on Medicare, Medicaid, Social Security, and veterans health care has increased 32%.

In light of these facts, any reasonable deficit reduction plan should focus on addressing these three causes, rather than on satisfying conservative desires to obliterate education spending, infrastructure investments, environmental enforcement, etc.  As we’ve explained previously, Medicare and Medicaid should be addressed by rationalizing health care spending rather than GOP rationing of care.  Military spending should be pared back by bringing our troops home from Iraq and Afghanistan and reducing our role as the world’s police officer.  And revenue should be increased through promoting economic recovery through additional stimulus and by asking the wealthy to pay their fair share.

While the GOP has refused to agree to any tax increases on the wealthiest Americans, a new poll commissioned by MoveOn.org and the Progressive Change Campaign Committee (PCCC) released Wednesday by Public Policy Polling shows that residents of the four swing states of Ohio, Missouri, Montana and Minnesota favor increasing taxes on the wealthy.  To avoid data overflow for our readers, I will just share the results from my home state of Ohio (full poll results here):

QUESTION: In order to reduce the national debt, would you support raising taxes on those with incomes over:

Proposal Percent Support

* $150,000/ year?                                               66%

* $250,000/year?                                                72%

* $1 million/year?                                               78%

>$1million/year taxed at 45%,

>$20 million/year taxed at 47%, and            62%

>$1 billion/year taxed at 49%

Methodology: April 29-May 1: 1,000 likely voters, 3.1% margin of error.

Voters support increasing taxes more strongly on more wealthy individuals, but when specific tax levels are proposed, support dips.  This dip could be due to less support, but more likely because too many numbers give voters math anxiety.

The last (more specific) proposal closely matches the “Fairness in Taxation Act” bill sponsored by Rep. Jan Schakowsky (D-Ill), raising marginal tax rates on the wealthy even higher than during the Clinton administration (39.6%), a period that saw vigorous economic growth.  The bill would also tax capital gains and dividend income as ordinary income for those taxpayers with income over $1 million.

Dean Baker, an economist with the Economic Policy Institute, estimated that such rates would have a huge impact on the deficit in 10 years, while leaving other taxes and rates on the upper middle class on down untouched.  “Instead of cutting Medicare and Medicaid benefits, lawmakers could pass this millionaire’s tax and raise about a trillion dollars,” Baker said.

To back their proposal to raise rates, PCCC sent an email to its members to contact their senators and tell them to back a resolution by Harry Reid – and the actual tax-hikes.

“Majority Leader Harry Reid is putting every senator on the record — he’s called for a vote in favor of raising taxes on the rich this week,” the email said.

The folks at PCCC and Moveon.org are right – taxes do need to be raised on the wealthy, and for three reasons:

1)      The wealthy have benefited the most from the tax cuts over the last 30 years (see graph below), as the top marginal tax rate was slashed from 80% to 35%, and capital gains tax dropped from 28 to 20%.  These tax cuts caused our federal deficit, and it’s time to stop digging that hole.

2)      The middle class and those making less have very little disposable income, so raising their taxes would hurt the most.

3)      The social safety net should not be cut, because it is specifically in these tougher economic times that we need to protect our most vulnerable citizens – the young, sick, poor, and elderly.

Please support the progressive efforts of PCCC and Moveon.org in this campaign to raise taxes on millionaires and billionaires – click here to get your senators’ phone numbers, and call them today using the suggested script.  Together, we can get the millionaire tax bill on the floor for a vote and made part of any deficit reduction deal, so that our senators will have to publicly show whether they stand with their own citizens, or on the side of corporations and the rich.

And while you’re clicking, how about clicking “Share” below to spread the word.  Thanks!

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