Time to Stop The Redistribution Of Wealth
Politicians often accuse one another of trying to “redistribute wealth” by taxing the rich and giving money to the poor. Over the past few decades there has indeed been a redistribution of wealth in America based on changing tax rates
When Exxon/Mobil recently announced their all time world record $10.7 billion profits in just three months (that’s $5 million per hour), some members of Congress said maybe it’s time Exxon/Mobil should start paying taxes. Maybe the most profitable company in history doesn't need huge tax subsidies anymore and should contribute a little toward paying down our national debt.
Why Are We Giving Money to The Most Profitable Companies on the Planet?
But others in Congress said Exxon/Mobil needs those tax subsidies. Rep. Joe Barton actually claimed that the big oil companies will go out of business if we take away their tax subsidies.
So the most profitable company in world history will continue to get huge tax subsidies while some in Congress propose to reduce the deficit by “curbing entitlement programs” like Medicare and Social Security.
So that begs the question, how much did spending on Social Security and Medicare contribute to our budget deficit last year?.
Reagan: "Social Security has nothing to do with the deficit"
How Much Does Social Security Add to The Deficit?
The answer? Zero. Social Security and Medicare spending adds nothing to the deficit. If you eliminated Social Security and Medicare immediately, it would not have any impact at all on the size of our deficit.
While refusing to tax the biggest, most profitable corporations on Earth, some members in Congress insist that our nation’s elderly should take huge cuts in their health care and retirement benefits, which will do nothing to reduce the deficit.
The Wall Street Journal
- Richest Americans See Their Income Share Grow
The richest 1% of Americans saw their adjusted gross income grow rapidly as their average tax rate fell, the IRS said.
Richest 1% Get Richer While Paying Less in Taxes
The Wall Street Journal stated that the wealthiest 1 percent of Americans have seen their income rise faster than any other group of earners in the country, yet their tax rate has fallen faster than anyone else’s.
According to Nobel Prize winning economist Paul Krugman Republican budget proposals will cut up to $3 trillion over the next ten years in programs designed to help people. But those cuts won’t reduce our debt because they’re offset by $3 trillion in tax cuts for corporations and the very wealthy during that same time.
How Much Should the Wealthiest Americans Pay?
Back in the 1950s, the top tax rate on the wealthiest Americans was around 90%. in the 1960s it was lowered to about 70%. In the 1980s it dropped to 50%. Today the top tax rate on the wealthiest Americans is 39%, although nobody actually pays that much. So the tax rate is far less than half of what it once was and we’re still being told that the solution to every problem is to further reduce taxes for the rich.
- Richest 400 Earn More, Pay Lower Tax Rate - Forbes
The wealthiest 400 Americans pay a much lower tax rate than average working class Americans.
You Pay a Higher Tax Rate Than Most Billionaires
According to Forbes magazine, the wealthiest 400 Americans paid 30% of their income in taxes in 1995, but only 23% in 2002. By 2008, the top 400, who collectively made over $105 billion, paid only 17% in taxes, roughly half the rate most Americans pay.
That huge tax cut for the very rich is partly because much of their income is derived from investments which are taxed at a much lower rate.
- Republicans have a new plan to cut taxes for the top 0.2 percent - The Washington Post
Republicans propose eliminating the Capital Gains Tax - a $246 billion gift to America's billionaires.
Republicans Propose Eliminating Taxes on The Very Rich
If Republicans have their way, this tax on capital gains will be eliminated altogether, so the wealthiest people on Earth could soon be paying zero percent taxes.
During this same time, our country has seen a shortfall in tax revenue that has directly contributed to a huge budget deficit and a national debt that is approaching $15 trillion. Yet if anyone suggests that maybe we should increase taxes just a smidge on the wealthiest Americans, they’re accused of trying to redistribute wealth from the rich to the poor.
In fact, there is a redistribution of wealth occurring in the United States, but it has been a steady and consistent redistribution from the middle class to the wealthy.
Nobody objects to the rich getting richer, but it should not be at the expense of the other 95% of Americans. Most of us would be happy to see the income of the wealthiest Americans grow at a rate similar to the rest of America. When the economy grows, it should benefit all Americans, not just the wealthiest.
How Do Tax Cuts Affect The Economy?
During the Clinton years, we didn’t rely on tax cuts for the rich as the primary means of boosting the economy. In fact, Clinton raised taxes on the wealthiest 1.2% of Americans, and the wealthy prospered. But more importantly, the middle class and the poor prospered too as we added 22 million new jobs. According to the Census Bureau, the percentage of Americans living in poverty fell every year during the Clinton years – from 13.6% to 9.6%.
During the Bush years, the primary means of growing the economy was tax cuts that mostly went to the wealthiest Americans. During that time, the wealthy prospered but we added only about 3 million new jobs and the percentage of Americans living in poverty increased for six of the 8 years Bush was in office, from 9.6% to 12.6%.
Here's Why The Top 1% Owns Congress
There's a reason why our system works to benefit the very wealthy and to cut programs that benefit everyone else. Our electoral system currently allows the very wealthy to spend almost unlimited amounts of money to elect their preferred candidates to Congress.
In order to get elected, politicians now have to pander to the few people, the wealthiest 0.01% who control the purse strings and can help them get elected. To stay in office, those politicians have to keep working to benefit the very rich.
There are 535 members of Congress but there are literally thousands of lobbyists who work full time to persuade Congress to weaken regulations and steer more money to big corporations.
There are no billionaires spending tens or even hundreds of millions of dollars to elect politicians to work for you. There is nobody spending millions of dollars on lobbyists to wine and dine members of Congress to help the poor or the middle class.
So We Keep Redistributing More Wealth to the Very Wealthy.
The rich aren't getting richer because they're working harder. The rich are getting subsidies, bailouts and special tax cuts that the rest of us aren't getting. And yet that still isn't enough. Republicans are proposing to eliminate what few taxes that the very wealthiest Americans pay.
The American people are more productive than ever, but all the new wealth created by that productivity goes to the top 1% and not to working class Americans.
History has shown that cutting taxes for the rich is not an effective way to stimulate the economy or create jobs. It just makes rich people richer while the poor get poorer. A minor tax increase (and an end to tax subsidies) on the very wealthiest is the single most important step we can take to cut our deficit, stop the redistribution of wealth, and balance the budget.