Biden is now promoting a tax on the top 0.01% and billionaires are already fuming. It’s a start to what’ll be necessary to bring back a functioning democracy & middle class
The headline says it all: “‘Fuming’ Billionaires Issue Profane Denunciation of Biden’s New Minimum Tax Plan.“
President Biden yesterday rolled out his new $5.3 trillion 2023 budget for the United States.
Not only would it cut the Trump Deficit by over a trillion dollars, but it would do much of that by creating a 20% unavoidable income tax on the top 0.01 percent of Americans worth over $100 million, the group that’s generally most successful at avoiding paying any income taxes at all. There’s also a small tic up on income taxes above $400,000, still not entirely reversing Trump’s tax cuts for the rich.
It’s a great start.
There are three reasons why we must raise the top tax rates on corporations and the morbidly rich:
- Low income taxes at the top encourage oligarchy, where politicians become mere front men for great wealth, and democracy is left in the dust.
- Low income taxes at the top encourage an explosion of wealth among the already-morbidly rich, accompanied by a collapse of the middle class.
- Low income taxes at the top deprive government of the revenue it needs to maintain the foundations of life for small businesses and working class people.
Back in the 1935-1981 era, when corporate taxes topped out at 48% and the top personal income tax bracket ran between 74% and 91%, CEOs only took out of their companies about 30 times what they paid their workers.
The American middle class was growing faster than any other time in world history, and it was government policies protecting working people and small businesses (particularly high taxes on the very rich) that facilitated much of that growth.
Americans understood, as Supreme Court Justice Louis Brandeis famously said:
“We must make our choice. We may have democracy, or we may have wealth concentrated in the hands of a few, but we can’t have both.”
America chose democracy, and elected FDR to the White House four times, then followed that with Harry Truman and Dwight Eisenhower, all who advocated and maintained that top 91% personal and 48% corporate income tax rate.
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Throughout those 46 years, Congress passed laws that reflected what the average working people of our nation wanted, and paid for it all, in part, with those taxes:
- Social Security
- the minimum wage
- unemployment insurance
- world class public schools
- nonprofit requirements for hospitals and health insurance companies
- free to very inexpensive state colleges
- the right to unionize
- civil rights and voting rights legislation
- publicly-owned utilities
- new highways and airports
- quality mass transit
- anti-trust laws to maintain competition and protect small businesses
- The EPA
- school lunch programs and “food stamps”
- workplace nondiscrimination for women and racial minorities
- tax-deductibility for interest payments on car loans and credit cards
- federal deposit insurance to protect people from bank failures
- Head Start
- literally hundreds of laws that protected consumers and the environment from corporate predation and dangerous products.
As Michael Hiltzik notes in his book The New Deal: A Modern History, just one of FDR’s programs, the Works Progress Administration (WPA), used that top 91% personal and 48% corporate income tax bracket to rebuild America from top to bottom:
“The WPA produced, among many other projects, 1,000 miles of new and rebuilt airport runways, 651,000 miles of highway, 124,000 bridges, 8,000 parks, and 18,000 playgrounds and athletic fields; some 84,000 miles of drainage pipes, 69,000 highway light standards, and 125,000 public buildings built, rebuilt, or expanded. Among the latter were 41,300 schools.”
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Republicans, representing the interests of the morbidly rich, opposed all of it.
Since the Reagan Revolution of the 1980s, the top income tax bracket has so collapsed and been shot-through with holes that the average billionaire is paying somewhere between 3 and 8 percent tax on his income. America’s richest man, Jeff Bezos, paid less than 1 percent.
When that revenue shrank under tax cuts from Reagan, Bush, and Trump, so did many of the programs listed above.
But an even worse side-effect of cutting the top tax rates has been the explosion of great wealth at the top that has directly pushed the collapse of the American middle class and the weakening of American democracy.
Congress no longer passes legislation the majority of Americans want: the Supreme Court ruled in Citizens United that corporate “persons” and the new billionaires created after Reagan’s tax cuts can own their very own politicians, and those wholly owned politicians, in gratitude, block anything of consequence that might require new taxes.
The middle class has fallen from about two-thirds of us to fewer than half of us, and even at that it takes two incomes to maintain a lifestyle a single income could support before Reagan.
As the headline at TIME Magazine reads:
The Top 1% of Americans Have Taken $50 Trillion From the Bottom 90%—And That’s Made the U.S. Less Secure
Inequality has exploded: the morbidly rich now have so much cash slopping around that they’re using their pocket change to shoot themselves into outer space and build luxury survivalist bunkers that resemble small underground cities.
Which brings us back to Brandeis’ assertion.
With the election of 1980, Americans — most unknowingly — chose great wealth over democracy, oligarchy over a middle class, billionaires over working people.
As working class Americans got poorer and poorer, the GOP had to come up with increasingly outrageous pitches to keep their votes.
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Attacking racial minorities and women in the workplace (“Feminazis”) worked well for them for the better part of the first 20 years, and in the past 20 years they’ve added Muslims, immigrants, and trans people to their hate-acceptable hit list.
Now they’re increasingly relying on Qanon conspiracists, neo-Nazis, and prepper gun nuts to fill out the edges of the voting bloc that keeps them in power.
Which puts the survival of our democratic republic itself at risk. We’re following a path Russia trod in the late 1990s when, pressured by George HW Bush and Bill Clinton, they slashed taxes and regulation and used Milton Friedman’s neoliberal “shock therapy” to sell off and privatize huge swatches of the government’s functions.
And the American oligarchs’ pet politicians on the right are sounding more and more like Putin every day, from banning books to trashing LGBTQ+ folks to promoting a white “Christian” ethno-state to raving about minority immigrants.
Democrats and the Biden administration are now trying to re-strengthen the American middle class, promoting that income tax on those whose net worth exceeds $100 million.
It’s a start — and Republicans are already squealing — but nothing close to what’ll be necessary to restore a functioning democracy and a vibrant middle class.
And Republicans in Congress continue to block things average Americans want and countries like Canada, Australia and all of Europe already have, with free or affordable college and medical care at the top of that list.
That will require overturning Citizens United and raising income taxes on the morbidly rich and corporations back to where they were when Reagan took office and began his infamous War On Working People.
While that’s going to be a hell of a lift, it’s the first step to unwinding the American Oligarchy that Reaganism has created. Without it, we could easily see Trump or somebody like him in the White House in 2024, meaning the end of what’s left of democracy in America.
Originally posted at The Hartmann Report
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- As I See It: Class Warfare: The Only Resort To Right Wing Doom