Want to know why Federal and state governments are crying poverty? Just take a look at a recent article by Jesse Drucker in Bloomberg Businessweek: “Super low income taxes for richest.” He starts off by joyously proclaiming “for the well-off, this could be the best tax day since the early 1930s.”
Because for the top 400 U.S. taxpayers (according to income), the effective income tax rate plunged from 30 percent in 1995 to under 17 percent in 2007. And for the top one percent of taxpayers, the rate fell from 29 percent to 23 percent in 2008. Even so, those one percent, except for the very top 400, are losers: the top 400 pay at a lower rate than the other 1,399,600.
Of course, Drucker is careful to point out, this isn’t just a matter of chance; no, it’s the reward of “hard work.”
What sort of hard work?
Not the kind that produces any goods or services that people can use, like the work done by us working stiffs. No, the hard work that gets the real rewards under capitalism is tucking your wealth into dividends and capital gains, taxed at a much lower rate than the income that comes from work that produces anything of real value.
That’s why Warren Buffett can say that because most of his income is from dividends, his tax rate is less than that of the people who clean his office.
That’s why the rest of us have to live with government budgets that are being ruthlessly slashed – with any spending that benefits ordinary people first to get the axe.
Of course, the Republican choppers insist that taxing the rich costs jobs and lowering their taxes will create a cornucopia of new jobs.
In my home state of California, an analysis by the UC Berkeley Center for Labor Research and Education shows that a one billion dollar cut in state spending costs 246,100 jobs; raising tax revenue one billion dollars by taxing corporations and the wealthy would cost on 8,700 jobs. In other words, the net gain in jobs from raising taxes (in California alone) would be a whopping 234,700.
Polls show that a great majority of people in this country favor raising taxes on the rich. Yet it (like making substantial cuts in military spending) is not even up for discussion by the Republicans or even by many Democrats – which says something ominous about the state of our democracy.
Capitol Hill isn’t hearing the voice of the people. So it’s up to us light a fire under those politicians who are supposed to serve us – until the super rich of this world are forced to cough up more for the people’s needs than the good folk who sweep up their offices.