On July 10, 2012, University of California at Berkeley Professor Robert Reich writes:
To hear the media report it, President Obama is proposing a tax increase on wealthy Americans. That’s misleading at best. He’s proposing that everyone receive a continuation of the Bush tax cuts on the first $250,000 of their incomes. Any dollars they earn in excess of $250,000 will be taxed at the old Clinton-era rates.
Get it? Everyone is treated exactly the same. Everyone gets a one-year extension of the Bush tax cut on the first $250,000 of income. No “class warfare.”
Yet regressive Republicans want Americans to believe differently. The editorial writers of the Wall Street Journal say the President wants to extend the Bush tax cuts only “for some taxpayers.” They urge House Republicans to extend the Bush tax cuts for “everyone” and thereby put Senate Democrats on the spot by “forcing them to choose between extending rates for everyone and accepting Mr. Obama’s tax increase.”
Pure demagoguery.
Regressives also want Americans to think the President’s proposal would hurt “tens of thousands of job-creating businesses,” as the Journal puts it.
More baloney.
A small business owner earning $251,000 would pay the Bush rate on the first $250,000 and the old Clinton rate on just $1,000.
Congress’s Joint Tax Committee estimates that in 2013 about 940,000 taxpayers would have enough business income to break through the $250,000 ceiling – and, again, they’d pay additional taxes only on dollars earned above $250,000.
All told, fewer than 3 percent of small business owners would even reach the $250,000 threshold.
A third lie is Obama’s proposal will “increase uncertainly and further retard investment and job creation,” as the Journal puts it.
Don’t believe it.
The real reason businesses aren’t creating more jobs is American consumers — whose purchases constitute 70 percent of U.S. economic activity — don’t have the money to buy more, and they can no longer borrow as before. Businesses won’t invest and hire without consumers. Even as executive pay keeps rising, the median wage keeps dropping — largely because businesses keep whacking payrolls.
The only people who’d have to pay substantially more taxes under Obama’s proposal are those earning far in excess of $250,000 — and they aren’t small businesses. They’re the fattest of corpulent felines. Their spending will not be affected if their official tax rate rises from the Bush 35 percent to the Bill Clinton 39.6 percent.
In fact, most of these people’s income is unearned — capital gains and dividends that are now taxed at only 15 percent. If the Bush tax cuts expire on schedule, the capital gains rate would return to the same 20 percent it was under Bill Clinton (the Affordable Care Act would add a 3.8 percent surcharge).
Funny, I don’t remember the economy suffering under Bill Clinton’s taxes. I was in Clinton’s cabinet, so perhaps my memory is self-serving. But I seem to recall that the economy generated 22 million net new jobs during those years, unemployment fell dramatically, almost everyone’s income grew, poverty dropped, and the economy soared. In fact, it was the strongest and best economy we’ve had in anyone’s memory.
In sum: Don’t fall for these big lies — Obama wants to extend the Bush tax cut “only for some people,” small businesses will be badly hit, businesses won’t hire because of uncertainty this proposal would create, or the Clinton-era tax levels crippled the economy,
A ton of corporate and billionaire money is behind these lies and others like them, as well as formidable mouthpieces of the regressive right such as Rupert Murdoch’s Wall Street Journal editorial page.
The truth is already a casualty of this election year. That’s why it’s so important for you to spread it.
We will not solve our severe predicament by taxing our way out of the concentrated ownership of wealth that our system has perpetrated and redistributing those earnings through government expenditures. This is not to say that EVERY citizen should not pay their fair share of the tax burden.
If we continue with the past’s unworkable trickle-down economic policies, the government will have to continue to use the coercive power of taxation to redistribute income that is made by people who earn it and give it to those who need it. This results in ever deepening massive debt on local, state, and national government levels, which leads to the citizenry becoming parasites instead of enabling people to become productive in the way that products and services are actually produced.
There are actionable policies that will dramatically impact the market economy and strengthen the middle class in a positive and sustainable way, while expanding the base of private capital ownership and thus strengthening the way consumers make the money to purchase the products and services made possible by the new capital formation. The result will be to expand production and bring more wealth to the economy, which will provide not only growth in expanded ownership of productive capital but also in expanded employment opportunities as the economy revs up to meet expanded consumer demand. Furthermore, the more broadly real capital is acquired by individuals throughout our society with the earnings of capital, the more we will profitably employ unused capacity and promote economic growth. With greater earnings from capital worker investment, people will be able to support and pay for products resulting from “greener” technologies that today people cannot afford. Such policies are perfectly in tune with the natural incentive of business corporations to broaden ownership so that the market for their products will increase. Such policies will liberate the economy.
If we do not succeed at putting our nation on a path to prosperity, opportunity, and economic justice through significant broadened private, individual ownership of future productive capital economic growth, then prepare for our nation being thrown back into recession, if not depression.
The BIG ISSUE is not being presented or discussed!!
Both Obama and Romney should realize that the continual focus on full employment means, “full toil and waste for all forever.” They need to address the question of how are all individuals to be adequately productive when a tiny minority (productive capital owners) produce a major share and the vast majority (labor workers), a minor share of total products and services, and thus, how do we get from a world in which the most productive factor—physical capital—is owned by a handful of people, to a world where the same factor is owned by a majority—and ultimately 100 percent—of the consumers, while respecting all the constitutional rights of present capital owners?
The problem is that we simply do not have anyone presenting or discussing the central issue that I have been raising about how the system furthers concentrated ownership of productive capital economic growth, while leaving the vast majority of people essentially enslaved in labor tasks exponentially being destroyed or degraded by technological innovation and invention––the result of tectonic shifts in the technologies of production and the steady off-loading of American manufacturing and jobs. Where is the media and academia who have remained silent on this pressing issue? Where are those leaders that can be supported for serving the public interest, and where is the money to mount presidential, senatorial,and congressional campaigns that won’t behold them to special interests? This is problematic!
Sadly, after a half-century, we have no leaders with a growth strategy that could restore the economic productiveness of the American economy. The growth strategy I have presented is not new, but it has not yet registered in the minds of leaderless politicians and their advisors from the left to the right of the political spectrum and a population of people who have been mis-educated and mis-led by conventional economists from all the conventional schools of economics.