Nov 23, 2010

Columnist makes case for letting the Bush tax cuts for the super rich expire

It appears that the real winners in the Nov. 2 election are the super rich, but isn't that always the case?

New York Times columnist Frank Rich in his Nov. 13 column called “Who Will Stand Up to the Superrich?” really makes the case for letting the Bush tax cuts expire for the top 2 percent.

“The superrich who have gotten spectacularly richer over the last four decades while their fellow citizens either treaded water or lost ground. The top 1 percent of American earners took in 23.5 percent of the nation’s pretax income in 2007 — up from less than 9 percent in 1976. During the boom years of 2002 to 2007, that top 1 percent’s pretax income increased an extraordinary 10 percent every year. But the boom proved an exclusive affair: in that same period, the median income for non-elderly American households went down and the poverty rate rose.“

Rich said it will be the very top earners, “not your garden variety, entrepreneurial multimillionaires, who will be by far the biggest beneficiaries if there’s an extension of the expiring Bush-era tax cuts for income over $200,000 a year.”

It’s clear the tax cuts for the super rich will increase the budget deficit, but Rich thinks that’s not the biggest problem we face as the rich get richer. We have already seen where that means the United States now arguably has a more unequal distribution of wealth than traditional banana republics like Nicaragua, Venezuela and Guyana.
“The bigger issue is whether the country can afford the systemic damage being done by the ever-growing income inequality between the wealthiest Americans and everyone else, whether poor, middle class or even rich. That burden is inflicted not just on the debt but on the very idea of America — our Horatio Alger faith in social mobility over plutocracy, our belief that our brand of can-do capitalism brings about innovation and growth, and our fundamental sense of fairness. Incredibly, the top 1 percent of Americans now have tax rates a third lower than the same top percentile had in 1970.”

We Democrats have been accused of fostering class warfare and other ridiculous charges, but it’s simply not true.

“The most constant refrain is that small-business owners who file in this bracket would be hit so hard they could no longer hire new employees. But the Tax Policy Center found in 2008, when checking out similar campaign claims by “Joe the Plumber,” that only 2 percent of all Americans reporting small-business income, regardless of tax bracket, would see tax increases if Obama fulfilled his pledge to let the Bush tax cuts lapse for the top earners. The economist Dean Baker calculated that the yearly tax increase at the lower end of that bracket, for those with earnings between $200,000 and $500,000, would amount to $700 — which “isn’t enough to hire anyone.”

One of the favorite rightwing talking points is, “has a poor person ever given anyone a job.” True, but it appears the super rich are not either. Rich makes the factual argument that while the super rich had the benefit of the full Bush tax cuts, we lost millions of jobs every month, so why would extending them to the top 2 percent change that?

“American companies seem intent on sitting on trillions in cash until the economy reboots. Meanwhile, the nonpartisan Congressional Budget Office ranks the extension of any Bush tax cuts, let alone those to the wealthiest Americans, as the least effective of 11 possible policy options for increasing employment.”

No comments: