Monday, March 1, 2010


The richest people in this country pay less in federal taxes than anyone else. That's not

the way it used to be, but the rich and their politician friends have changed all that. It's old

news for those who stay informed. Shocking maybe, but don't feel bad, there's a reason for

your blissful ignorance: corporate media and punditocracy have spent years convincing you

that rich Americans are already taxed beyond reason. Really? As myths go, this one is as

persistent and powerful as any in America, including the myth of the rugged individual who

pulls himself up by his bootstraps and becomes a rousing success. Pure myth.

Over the years, I can't count the number of calls I took from people telling me they pay

as much as half their income in taxes. When I asked them how much they made, inevitably

it was in the mid to high six figures. And every time I called them a liar, I was right. The more

money you make in this country, the smaller the percentage of taxes you pay. Way back, when

we had a progressive tax system, it was intended to produce the opposite outcome. In theory,

the more you make, the higher a percentage of taxes you should pay. In theory, a progressive

tax system was suppose to help balance out our individual incomes so that no single person

or group of individuals could gain the extreme kinds of power that extreme wealth often

confers. It was to prevent the creation of an American aristocracy.

In 1960, when the top tax rate for the richest Americans was 90%, the formula changed.

President Kennedy passed a tax cut through Congress which reduced the top rate from 90%

to about 70%. Today, the top rate on paper at least, is about 38%. Since 1960, the richest

Americans have seen their taxes cut by 65%. Since 1960, have your taxes been cut by 65%?

Add to this massive reduction in income taxes a 50% reduction in capital gains taxes due to

recently passed legislation. Also, the estate tax has been totally eliminated. Right now,

Bill Gates or Warren Buffett (if they were to die) could pass on billions of dollars in wealth

to their children free and clear. No death tax, no inheritance tax! That's an unbelievably

sweet deal! Meanwhile, the average middle class taxpayer is paying upwards of 25-35% of

their income in taxes when you add up state, federal, Social Security, and Medicare taxes.

The Center for Budget and Policy Priorities reported that in 2007, the top-earning

households made nearly $345 million, which is a 31% increase from the year previous.

The 400 highest earning households more than doubled their income from 2001-2006, an

increase of nearly $140 million. Did your income double between 2001 and 2006? In 2001,

Congress passed tax cuts pushed through by President George W. Bush. The vast majority

of the benefit went to the wealthiest one-tenth of one percent of Americans. Yes, money is

indeed a political issue. Trust me when I say that these tax rollbacks for the rich were the

result of long years of strategic planning and, of course, the usual well placed politicized

misinformation. So, while the wealthy were more than doubling their household income,

what was happening to their taxes? Popular fiction holds they were taxed unreasonably.

The rhetoric from Hanbaugh and the corporate media was about the terrible tax burden

imposed on the rich by "tax and spend" liberals. No wonder Hanbaugh, etc. wanted Bush

elected; the taxes they would normally pay on their multi-million dollar salaries dropped

through the floor. They only pay Social Security taxes on the first $100,000 of income no

matter how much income they received and their real tax rate was only 16.6% in 2007.

This is the lowest rate for the richest Americans since the IRS began tracking in 1992! Also,

in 1992, President Clinton increased taxes on the richest 1% of taxpayers. And even though

not a single Republican voted for the increase, it set the stage for the largest economic

expansion in modern history. When he left office, Clinton left a budget surplus. In the next

year, 1993, the tax rate on the richest Americans was 29.4%.

Since 1992, the top 400 richest households saw their income increase by 500% while

their tax rate was cut by 50%. It doesn't take a rocket scientist to do the math and see where

the immense budget deficits have come from over the last ten years. At the same time, taxes

on the majority of Americans have continued to rise.

Over the last few weeks, pundits and regressive politicians and the corporate media have

been warning that the only way to bring deficits under control will be by imposing new massive

tax increases. President Obama wants to restore income tax rates on the richest households

back to the rates of the Clinton years. He also wants to raise the capital gains tax, since 75%

of the richest earner's income comes from capital gains and dividends.

So, in 1960, the richest of the rich had a top tax rate of 90%. As of 2007, almost 3/4 of

those same top earning households paid a total effective tax rate of under 20%. Over 45 years,

they have seen their income rise by more than 500% while their taxes were cut by 80%.

Warren Buffett says there has been an ongoing class war in this nation and his class is winning.

He is absolutely right. He expressed amazement that he pays a lower tax rate than his


The problem is that most Americans have no idea how little the rich pay in taxes. The

tax code is designed to enable the rich to shelter more of their income from taxes. Over 80%

of all taxpayers could do their taxes on the back of a postcard. Figure income earned...income

withheld...standard deductions...and you are done. The supposed "complicated" tax code is

only "complicated" for the highest earning households as they strive to protect as much of

their income from being taxed as possible. The richer you get, the lower your tax rate because

the easier it is to shelter your income. Far be it from me to feel empathy for a household

earning $500,000 a year, but the reality is that those households are paying tax rates as high

as 30%; but once you cross into seven figure incomes, the tax rate goes into free fall. Who

would have thought just the right amount of well-placed political influence could pay out such

rich rewards? And all of this is perfectly legal.

There should be a debate about taxes in this country. We cannot continue to run the

deficits we are running. While Bush was cutting taxes for the richest 1%, he started two wars,

passed a Medicare prescription drug benefit, and dramatically increased military and home

security spending without proposing how to pay for any of it. Add a bank bailout to the tune

of $750 billion and an economic stimulus package of around $800 billion, and it's not hard

to see where our devastating budget deficits originate. Spending must be decreased! One of

the reasons for our desperately needing to reform healthcare is to reduce government spending

on Medicare, veteran's healthcare, and children's healthcare. Simply put, it's time for the rich

to once again pay their fair share of taxes. So, the next time you hear Hanbaugh or Beck or

O'Reilly moaning and groaning about the possibility of a tax increase, remember how little

they are currently paying. Remember that they have had big tax cuts over the last ten years;

and they will fight and lie to make sure the good times never end.

Our nation's progressive income tax system has been effectively destroyed over the last

45 years. The middle class have seen their taxes increased while the richest 1% have watched

their taxes decrease. The average family has watched their tax burden become oppressive,

while the richest of the rich found new ways to pass their wealth on to their children and pay

no tax on it at all.

Yes, yes, I know no one wants to pay taxes. Show me a person who enjoys paying taxes

and I'll show you a saint. But...isn't it time we exposed our saintly potential just a bit? There's

a reason for people paying taxes to their government. There's a reason for a progressive

income tax system. Possibly here is where the citizen and his government reach an impasse.

When a citizen sees his tax dollars thrown into the money pit of war or financial bailouts for

the rich etc., etc...he gets frustrated...and angry. Why pay taxes if my hard-earned dollars are

squandered? And why pay taxes if we are not all taxed equitably and with an eye to preventing

outrageous accumulations of wealth and power by the few? Yes, there needs to be a debate

about the state of our nation. An equitable tax system and a balanced budget are essential

for a healthy nation and...right now...we have neither. What do you think? I welcome your

comments and rebuttals. Please send them to


  1. I think in Obama's administration the out-of-control American rich dragon will throw us a few trinkets but a real debate or change will never happen.

  2. Bernie .. all good points. Stay sharp!

  3. very good thoughts bernie.
    yes still sharp as ever