Robert Reich: “There should be a surtax on the super rich”

It’s nothing we haven’t discussed here at least a hundred times before, but it’s always nice to happen across a new, persuasive article on the subject of America’s super-rich, and how critical it is that we begin taxing them at a level befitting a first world nation… It would be nice, though, if it wasn’t always Robert Reich saying it… Here’s a clip.

…Given this unprecedented concentration of wealth – and considering what the nation needs to do to rebuild our schools and infrastructure while at the same time saving Medicare and reducing the long-term budget deficit – shouldn’t we be aiming higher than a “Buffet tax” on the incomes of millionaires?

There should also be a surtax on the super rich.

Yale Professor Bruce Ackerman and Anne Alstott have proposed a 2 percent surtax on the wealth of the richest one-half of 1 percent of Americans owning more than $7.2 million of assets. They figure it would generate $70 billion a year, or $750 billion over the decade. That’s half the savings Congress’s now defunct Supercommittee was aiming for.

Instead of standing empty-handed while Santorum and Romney dominate the airwaves with their regressive Social Darwinism, Democrats need to be reminding Americans of what’s happening in the real economy – and what needs to happen.

The wealth gap is widening into a chasm. A surtax on the super rich is fair — and it’s necessary…

Everything I have to say on the subject, for those of you who are interested, can be found here.

And, speaking of this growing divide between rich and poor in our country, here are four facts about poverty in America from Sid Mohn, the President of the Heartland Alliance:

Our kids are poor.
At some point in their lives, half of all U.S. children will be on food stamps. This suggests problems of poverty AND hunger. Half — 50 percent of American children. Right now, a family of three that nets more than $1,545 per month is NOT eligible for the program. It seems unimaginable that fully half of all American children will start their lives like this, but it’s true. This cycle must be broken — for their good and ours.

Our adults are poor.
Half of American adults will experience poverty by the time they turn 65. That means half of our neighbors will experience having an income of $22,000 or LESS for a family of four. Adults living in poverty often have a disability or are weathering extremely difficult times — single moms struggling to raise families, or someone who’s contracted a serious disease.

Our elderly are poor.
One of every six elderly Americans live in poverty. It’s not just about gross income. Many times social security and pension income raise income above the poverty level. But when you take into account how much of their disposable income they spend on health care costs, particularly medication, and housing, they drop below the poverty line.

Too many of our workers are poor.
One quarter of the workforce earns poverty level wages. Right now, for a family of four, that’s $23,050 per year. These aren’t just part-time workers who can’t find full-time work. In Illinois nearly 100,000 full-time, year round workers still fall below the poverty line. These are folks who put in a long day at work, yet still can’t afford to put a roof over their heads and food on the table, always just one unexpected expense from catastrophe.

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23 Comments

  1. j
    Posted March 15, 2012 at 5:09 am | Permalink

    The problem is not the lack of good policy solutions. At some point, continuing to discuss policy alternatives is no longer naive, but a part of the problem as it obfuscates the powerful forces arrayed against us.

  2. Maggot Brain
    Posted March 15, 2012 at 7:41 am | Permalink

    Corporations run the show now…. rich people run/own corporations…. I see little to think things will change more than superficially. More importantly, we are destroying the planet and all people seem to care about is money and what woman do with their bodies? Maybe if we bomb Iran then things will be better……

  3. Edward
    Posted March 15, 2012 at 8:19 am | Permalink

    We need to remove the loopholes, tax inherited wealth, and establish a clear, fair tax code under which the rich pay their fair share. Unfortunately we’re fighting against an army of well trained, extremely bright lobbyists who want to keep the tax code murky, as it benefits their clients. The poor, however, have no lobbyists.

  4. Eel
    Posted March 15, 2012 at 8:55 am | Permalink

    The poorest states are in the south, which consistently vote Republican.

    Here, with more on that, is something from Tina Dupuy.

    Here’s what the nation ignores unless there’s a disaster (or an election which could also qualify as a disaster): Of the bottom 10 poorest states in the union – nine of them are Southern states east of Texas. Mississippi is the poorest state of all. Child poverty. Unemployment. Under-employment. Lack of education. Lack of resources. The nation’s highest obesity rates are found south of the Mason-Dixon line.

    Despite the conservative bona fides, the South isn’t pulling herself up by her bootstraps … mainly because she can’t see her toes she’s about to lose to diabetes. These are deeply and consistently Republican voters – but being poor and Republican is like being a cow and pro-leather. The South is a parable as to why that is: Their prejudices are being exploited to prod them into being against their own best interests.

    In the South there’s been a long (and storied) resentment of outsiders coming in and telling them how to run their lives. But without fail, when the economy is bad anywhere – historically the first group to be blamed are the noobs. Hence why a new wave of anti-immigrant legislation has been pouring out of the southern region of the U.S.

    Last year, Alabama passed HB 56 or Hammon-Beason Alabama Taxpayer and Citizen Protection Act which led to a mass exodus of labor in the state. There were reports of crops rotting in the fields and an estimated cost to the state in the billions. Now the governor of Mississippi has endorsed a similar plan. Capitalizing politicians will say these heavy-handed laws are to keep out illegal immigrants but in practice it’s anyone who looks vaguely foreign being forced to show their paperwork.

    http://www.cagle.com/2012/03/how-the-south-can-rise-again-immigrants/

  5. John Galt
    Posted March 15, 2012 at 9:14 am | Permalink

    My favorite part of the Bible is the part where Jesus accosts the welfare queens, telling them that, if they were worth a damn, they’d be money lenders.

  6. EOS
    Posted March 15, 2012 at 9:54 am | Permalink

    Yes, by all means, punish the productive so that we have even more disincentives for individual effort! Let’s tax the rich and bleed them till they close all their businesses.

  7. Mr. X
    Posted March 15, 2012 at 2:56 pm | Permalink

    What’s wrong with taxing people at the same rate that they were taxed under Reagan? How’s that un-American? And why shouldn’t the rich pay taxes? They, after all, benefit greatly from public spending. Their trucks use the US highway system. They hire graduates of our public schools. They demand the certainty of a functioning power grid to run their factories. These things cost money. If anything is un-American, it’s people and company avoiding their responsibilities. Non-payment of taxes is, in my opinion, treasonous.

  8. Meta
    Posted March 15, 2012 at 3:34 pm | Permalink

    From Rachel Maddow’s blog:

    Freshman Republican Rep. Rick Crawford will propose a surtax on millionaires Thursday morning, a crack in the steadfast GOP opposition to extracting more money from the nation’s top earners.

    The Arkansas Republican will unveil the plan during a local television interview Thursday morning, and plans to introduce legislation when the House returns next week, according to sources familiar with his thinking.

    Crawford will propose the additional tax — expected to be north of 2.5 percent — on individual income over $1 million as part of a broader fiscal responsibility package.

    To say this is unusual is an understatement. Thanks in part to Grover Norquist’s pledge, Republican anti-tax rigidity has been unyielding for many years. GOP officials are occasionally comfortable recommending federal tax increases on low-income families who are not currently eligible to pay a federal income tax; and will sometimes consider new “revenue” so long as taxes remain unchanged; but for a Republican to ask the wealthy to pay a little more is unheard of in recent decades.

    It makes Crawford’s proposal a breakthrough moment — or at least, a possible breakthrough moment. There are a couple of catches to keep an eye on.

    The first is that the Arkansas congressman is willing to support a millionaires’ surtax, not to create jobs, but to lower the deficit. In the context of a fiscal debate, Crawford’s measure would, in fact, be a sensible part of a debt-reduction package, but most Democrats — as well as most economists — believe economic growth and job creation are far more important than bringing the budget closer to balance.

    In this sense, the freshman’s idea may have merit, but he intends to apply the new revenues to the wrong problem.

    Second, before we can evaluate Crawford’s idea, it’s important to know what he expects in return for the surtax. The article said this would “part of a broader fiscal responsibility package,” but the devil’s always in the details. Could Democrats go along with a plan that includes a 2.5% surtax on millionaires and billionaires? Sure. Would they trade the surtax for Medicare privatization? Of course not.

    This is a worthwhile concession, but if it comes with too great a cost, any hopes for a deal will fall apart quickly.

    And finally, other congressional Republicans haven’t exactly thrown their support behind Crawford’s measure. The Arkansan hasn’t faced GOP excommunication just yet, but if his fellow Republicans stick to the usual script — no tax increases on anyone at any time by any amount for any reason — then his offer will have symbolic significance, but no practical effect.

    More:
    http://maddowblog.msnbc.msn.com/_news/2012/03/15/10703832-a-crack-in-the-gops-anti-tax-wall

  9. dirtgrain
    Posted March 15, 2012 at 3:39 pm | Permalink

    Since when are rich people necessarily productive?

  10. anonymous
    Posted March 15, 2012 at 4:23 pm | Permalink

    I for one long for the day when the United States is a true low-tax libertarian paradise, like Uganda.

  11. Posted March 15, 2012 at 7:02 pm | Permalink

    Uganda’s taxes are actually quite high because there are so few people on the cash economy from which to draw revenue from.

    The tax free population is only such because they have no cash to tax.

  12. Posted March 15, 2012 at 7:07 pm | Permalink

    Perhaps you are interested in Uganda’s tax structure:

    http://www.doingbusiness.org/data/exploreeconomies/uganda/paying-taxes/

  13. SparkleMotion
    Posted March 15, 2012 at 8:13 pm | Permalink

    “A surtax on the super rich is fair..”

    -To whom?

    “Our kids are poor. Our adults are poor. Our elderly are poor. Too many workers are poor.”

    -How is this the fault of “the rich”?

    You are being played. The government makes the rules, and those that benefit the most from said rules wind up being blamed. How’s this. Swallow your pride and at the next election, vote the living fuck out of every incumbent. Disregard weather you agree with them or not, as we all know those social issues we pretend to care so deeply about will never get solved as long as we keep voting in the same people who have shown they don’t give a damn about them if there’s a dollar to be made elsewhere. BUT – if we are active and willing enough to clean sweep washington, maybe we can turn this ship in the right direction.

  14. wetdolphinmissile
    Posted March 16, 2012 at 6:18 am | Permalink

    EOS- The deal is the super rich do not even pay their fair share. They suck up corporate welfare. And productive? NOT. Most do not clean, make, or produce stuff, they make money from their money and pushing it around. And where do the push their money around to? Lobbyist and PACS… they just buy up what they want and we all down here just keep paying up more and more and more.

  15. Posted March 16, 2012 at 7:38 am | Permalink

    “-How is this the fault of “the rich”?”

    Because they don’t proactively create domestic jobs that pay well in 2012. Granted, there are important global economic factors which contribute to this phenomenon, but that’s the simple truth.

    Wealth doesn’t appear out of nowhere. It comes by minimizing expenses and maximizing profit. Part of “minimizing expenses” includes reducing wages and supply costs.

  16. SparkleMotion
    Posted March 16, 2012 at 8:17 am | Permalink

    You know why people don’t make those jobs here? By and large because we don’t want to pay for resultant pay increases. Case in point – go to Walmart and count the number of “Out of a job yet? Keep buying foreign!” bumper stickers. If we were willing to pay more (we’re not. we say we would but we’re not) it would only make sense to make those jobs here – more loyal customers, reduced shipping costs, no international trade worries. Now I place the blame for this attitude not on one political party, but on the thought process of the entitlement generation known as the Baby Boomers. We will be better off when they die off and can no longer hold power.

  17. Brainless
    Posted March 16, 2012 at 10:19 am | Permalink

    EOS, I’m calling total bullshit on your “rich are productive” statement. There isn’t a whit of truth to it. The rich are lucky, for the most part. ALL the research backs this up. It’s the average worker, thanks mostly to technology and his/her own wits, who has become productive beyond what anyone formerly thought possible. The lucky pimps at the top, meanwhile, take all the money.

    So yeah, keep defending the lucky. I’m sure Jeebus said something about that in one of his letters to the falafels.

  18. Posted March 16, 2012 at 11:21 am | Permalink

    It’s not that easy. I realize it’s easy to blame the consumer, but the story is more compicated than that.

    For example, cars in 2012 are cheaper and last longer than cars in 1950. For me, that’s a plus. I can spend my money on things other than cars.

    The problem though, is that companies are beholden to stockholders, who demand significant dividends, more significant than in the past. Cars, for example, could just as cheap as they are right now, and workers could be paid more, but stockholders (rich people) want an increasingly large share of the pie.

    So, yes, I blame the rich. If they are unwilling to sacrifice to create better product, determine the long term health of things like the domestic auto industry, and pay better wages that will ultimately go to local schools and services through local property and income taxes, then we need to redistribute their concentrated wealth through taxation programs.

    Also, I don’t really thinks there is any correlation between taxes and investment. Sweden has an incredible tax rate, yet it is one of the most economically healthy places I’ve ever been.

  19. anonymous
    Posted March 16, 2012 at 12:38 pm | Permalink

    I don’t know that cars are cheaper. I’d have to check my numbers, but I was under the impression that the Model T was more affordable than your average car these days, but I don’t see how that’s relevant. The thing is, the rich have been slowly moving the line for decades. We used to tax inherited wealth at a really high rate. Now we don’t. We used to tax the rich at levels much higher than we do today. Just look at the tax rates under the Eisenhower administration. Those were boom years for America, and the middle class flourished. What we’re putting in place now is an American aristocracy.

    I don’t want handouts for the poor. I was decent education, health care and jobs programs. The rich, if they were smart, would want the same thing.

  20. Posted March 16, 2012 at 2:43 pm | Permalink

    @anonymous: Peter wrote, “For example, cars in 2012 are cheaper and last longer than cars in 1950.” Ford stopped making the Model T in 1927.

    But, speaking of the Model T (according to Wikipedia):

    The standard 4-seat open tourer of 1909 cost $850 (equivalent to $21,987 today), when competing cars often cost $2,000–$3,000 (equivalent to $51,733–$77,600 today); in 1913, the price dropped to $550 (equivalent to $12,933 today), and $440 in 1915 (equivalent to $10,108 today).

    If you don’t care how it looks (“any color as long as it’s black”), don’t care how it rides (wooden wheels), and don’t care about going fast (top speed of about 45 mph), you can probably find a comparable car today, with the added bonus that you’ll probably get seat belts, air bags, a radio, and maybe air conditioning.

  21. wetdolphinmissile
    Posted March 16, 2012 at 4:12 pm | Permalink

    Sparkles…I see your generation sucking up all the crappy goods at Forever 21 by the truckloads. Ageism is just as ugly as a racism and sexism.

  22. Posted March 16, 2012 at 10:54 pm | Permalink

    Well, I wasn’t talking about Model T’s but the discussion got me looking.

    So I’m wrong. The price of a car today is more than in 1950, actually more than twice as much. The average lifetime of a car in 2012 is about 1.5 times that of a car in 1950 and cars get approximately 10 miles more to the gallon in 2012 compared with 1950. Gas right now is approximately twice what it was in 1950.

    So yes, when you boil it down, we pay twice as much as we did overall in 2012 compared with 1950, though we get a safer car. Highway deaths are way down, and have been sinking for decades.

    That wasn’t the point though. Somebody mentioned that we should pay more money for stuff. It’s clear that, at least for cars, we already do and these extra costs do not translate into real wages.

    My point about stockholders driving up prices, and cutting labor costs to increase profits stands. The wealthy, in this case, disintrested stockholders, are busy “working hard” at doing only one thing: fleecing workers and the American public at the same time.

    Should they be punished? YES. These aren’t the owners of your corner hardware store who is invested in the community. These are stockholders, who could care less what their stock is in, as long as it turns them a buck.

  23. SparkleMotion
    Posted March 17, 2012 at 10:44 am | Permalink

    @wetdolphinmissile – The baby boomers are currently running the show, and we see where that’s gotten us. I stand by my comments. The younger generation is more aware of economic interconnectedness since many of us have been directly impacted by it, be it in the form of not being able to find a job despite having a college degree (remember when all you boomers told your kids that college was absolutely necessary as you moved all the jobs overseas?), having to put off education or marriage or children due to to their financial situation, having a family member suddenly laid off after 20+ years of service, etc.
    Look at companies that are being start up by people under 40. You find a higher level of community involvement, interest in sourcing locally and/or domestically, environmental responsibility, and a general sense of social responsibility in their mission statements. Just in Ypsi, Beezy’s and the Wurst Bar come to mind. Hell, even Forever 21 that you mention conducts 3rd party audits on their suppliers to prevent child slavery. Now they’re not new (founded in 1984) and their core demographic are mall dwelling girls ages 13-25. And they’ve adopted social responsibility clauses as part of their business. Why? Because that’s what younger people are demanding of the businesses they frequent.
    This criticism obviously doesn’t apply to all people of the Boomer generation. They trailblazed the start of the modern environmental movement and social responsibility. But when I’m certain that when the history articles are written 100 years from now, I think that it will mention that my generation’s accomplishments included trying to repair the damage that the Boomers did.

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