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 email@example.com