Soak The Very, Very Rich

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Surowiecki begins: "The fight on Capitol Hill over whether to extend the Bush tax cuts is about many things: deficit reduction, economic stimulus, supply-side ideology. But at its core is a simple question: who counts as rich?"

Goldman Sachs CEO Lloyd Blankfein during an exchange with Senator Carl Levin, 04/27/10. (photo: Getty Images)

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+24 # Guest 2010-08-14 21:50

The author is saying something that I've felt for a long time. We need to see to it that those who have benefited the most from our society support it the most in relation to the amount that they benefit. Putting in a few more tax brackets would be a good place to start with the highest being over 50%.

What will happen though is that some jerk will start yammering about "soak the rich, redistribution of income" and the like. You will notice, however, that the above mentioned jerk will have absolutely no problem with the income redistribution that has been going on or the soak the working class that the uber wealthy have been doing since the time of Reagan. He may even try to argue that working the angles and chiseling people somehow benefits our economy to the tune of billions of dollars.

+19 # Guest 2010-08-15 01:27

I don't like the title of this article !! Of course the super rich can afford to pay more taxes and should, however this shouldn't be done as if we are punishing the super rich (soaking them). This should be seen as a civic duty and a necessity in these days of obscene budget deficits. Then we should bring our young people home from the senseless wars and close half of our overseas military bases and take care of our own problems at home !!

+9 # Guest 2010-08-15 02:00

Alexander Hamilton, a Super-Deficit-H awk, usually referred to as "The Father of American Capitalism," always advocated raising taxes to pay for necessary spending--in order to prevent the burden of taxation's being passed on to the children and grandchildren.

+41 # Guest 2010-08-15 03:26

The very rich in this country are the ones that caused the crash of the economy with their gambling with our money on Wall Street. The very rich were bailed out. They don't go to wars or send their sons to wars. If they are a billionaire Hedge Fund manager they pay a flat tax rate of 15% and NO Social Security. An E-6 enlisted man returning from the war will pay more than the chickenshit Hedge Fund manager. They do not care about the country or the middle class, they are the greedy Gordon Gecco's whoso only offer to help our country is to allow the middle class and poor to gather the crumbs from their dinner tables. Did you know that the top tax rate under Nixon was 70%. Was he a socialist?

+6 # Guest 2010-08-15 03:47

Well, I say, hear, hear! Right now I am living on a small commercial rental income while freely selling off or borrowing from stocks that are falling, falling, falling again while I gestate my small production business. Am I privileged? Yes! Am I lucky? Yes! Do I live in New York City? Yes again! Can I afford to do more than subsist? NO. If I lived in middle America I would be decently off. Here I am hanging on by my fingernails. The very very rich live in a different world. Give the IRS the statutory tools to differentiate and ideally to recognize cost of living differences across the country. $70,000 is comfortable in Indianapolis. In Manhattan, you can't rent an apartment because your salary doesn't qualify. (I am over generalizing but you get the idea.)

+19 # Guest 2010-08-15 03:52

Many people have observed that the period of the 1940s to 1980s were the best for America. This is when the middle class was created. America grew both in wealth and in the quality of life for most of its people. Civil rights movements were launched and college education became standard. This was also a period of very steep progressive tax rates -- up to 90% sometimes.

Post-Reagan's supply side, the rich and corporations don't pay their social wage. They loot the nation and since the 80s America has been on the decline.

It is pretty clear what America needs to do to return to a healthy society. But the rich now control all media and government, so it is not likely that they will give up anything. They did not get rich by paying their fair share.

0 # Guest 2010-08-19 11:19

Amen. Good (and accurate from my perception) summary! You might add to the control list..."and courts".

+6 # Guest 2010-08-15 04:25

We need to ask why capital gains are taxed so low. When people invest in stocks they are gambling. The stocks they are buying add nothing to the capital of the company they are buying stock in. They are adding nothing to the economy as they would if they were investing in ventures such as new businesses.

Capital gains should be reserved for those who invest venture capital. That means new stock offerings where the money raised will be put toward investment by the company issuing the stock. For new companies and companies targeting growth this would be a positive move. The SEC should monitor new stock issues to insure the investment community the money being raised will be targeted for growth, not some executives pocket.

+17 # Guest 2010-08-15 06:20

The very rich NEVER pay their fair share--any good tax accountant can find multiple loopholes, and no one can estimate the unfathomable tax cheating by the rich. We ALSO need a "NET WORTH TAX," which should kick in at $5-10 million dollars (1%), increase in 1% increments, to >$50 billion taxed at a flat 8%. It should last until the deficit is completely paid off.

+3 # Guest 2010-08-15 09:21

Almost Every Fortune 500 company has a bank listed as the chief shareholder!! Currently, the PRIVATELY OWNED Federal Reserve prints Our money and charges us interest to use it, but worse, the Fed can print how ever much money they want, sometimes causing deflation, sometimes inflation, but it is at their whim, and the fiat currency is backed by Nothing.
Congress must take back it's Constitutional duty and have the treasury print Our money, interest-free, backed by US, and based on reality like the amount of taxes, tariffs, fees, penalties, etc. due to the gov't.
Andrew Jackson killed the central bank and did this, and became the Only president Ever to pay off the national debt!

+9 # Guest 2010-08-15 06:22

The problem with taxing the ultra rich is how do we keep the money in the US? But as I said before, action speaks louder then words and action is what makes the difference. So call your rep and tell them you want those tax cuts to expire.

0 # Guest 2010-08-17 12:24

But make sure that you're specific - just the top tier, as 82% of those tax cuts were/are for everyone else. Source:
A July 29, 2010 report from the Tax Policy Center, which is a part of the liberal Brookings Institution.

+8 # Guest 2010-08-15 06:35

I agree that the rich are always crying Poor. But they aren't confined to places like these for their complaints about being "fleeced." We all know that with a relatively painless donation to a party hack they can get their concerns addressed in the actual halls of the nation's congress!

+12 # Guest 2010-08-15 07:29

At which point in the history of this planet has a small tax increase on the very rich brought about a depression or recession? I can recall no such event.

I do recall what happened after the GOP beat their breasts rent their garments and demanded to be held blameless when Clinton taxed the rich. Cast your mind back to the mid and late 1990s and you will remember the catastrophe predicted by the infallible GOP fiscal prognosticators . Oh, how we suffered when the stock market rose 9,000 points and unemployment fell below 4%. Those were hard times and the GOP wishes to protect us from having to suffer like that again. Let us all duly thank them.

0 # Guest 2010-08-17 12:17

Perhaps you forgot, that when the Enron era crashed, in March of 2000, all that was given came crashing down. As the progressive economist Dean Baker said in 2000:
"The decline in the stock market was an entirely predictable event for anyone familiar with basic arithmetic... The nation's political leaders chose to ignore the stock market bubble .. As a result, millions of families have seen their dreams of a secure retirement or their children's college education vanish with the stock market bubble. The level of negligence of the nation's political leaders in ignoring the stock bubble exceeds anything since the days of Herbert Hoover."

Do you think that the housing bubble - born in the late 90's because of HUD's marching orders to Fannie & Freddie was not just another repeat? Dissent Mag., in 2008, in "The legacy of the Clinton bubble, headlined, "Chickens come home to roost. HISTORY SHOULD deal harshly with Bill Clinton"

It's a process.

+3 # Guest 2010-08-15 09:20

We can discuss 'flat tax', income tax, payroll tax, etc. till the cows come home, but that doesn't address the heart of the problem. We have to ask ourselves, "how did we get such disparity in wealth?" The USA has starving children, while the Warren Buffets of this world strut around with billions! How is it we have about $500 trillion in a thing called derivatives? And this is owed to someone!!! (probably a Rothschild) Everything on Earth and more is owed!! by US!!!
It's the banking system that brought us here, not taxes.

+7 # Guest 2010-08-15 09:37

This is an excellent suggestion by the author. Not only would it raise tens of billions of additional tax dollars, but would discourage greed by the richest Americans. We had a 90% tax rate for the highest bracket during the Eisenhower administration. Why not tax any income over lets say 20 million at that figure. It's not like this will crimp their ability to feed themselves or their families.

+6 # Guest 2010-08-15 09:59

The author of the above article has made some excellent points concerning economic history in this country and policy means to deal with taxes. Many comments push his points forward and add perspective. We must consider, however, that the top holders of income cannot only buy government officials and access to them, they can threaten these officials and our society with economic meltdown. The big question is, "How do you get the "rich" to pay their fair share, to pay the social overhead costs that make their acquisition of wealth and power possible?" Demand on the part of the public can help; simplifying the tax codes can help; but perhaps most important would be to provide some tax incentives for moneybags to invest in American production. Yes, more and higher tax brackets. But also, put these clever money makers to work for us rather than for only accumulating obscene amounts of wealth. Three million dollar weddings, obscene!

+5 # Guest 2010-08-15 12:07

Higher taxes is a scare phrase used by the grossly rich to protect their excessive incomes. Instead, everything earned above $500,000 annually should be transferred into special federal accounts to go to bolstering social services for the suffering and upgrading our educational systems. As for the deficit, stop fighting unnecessary wars. - G. Beres

0 # dick.howland 2010-08-15 17:03

Congress and the Supreme Court have allowed the power of the United States embarrass the Concept of "Democracy" vesting the actual suffrage in Corporations foreign and domestic and those who own the Congress. Only by a revolution in the form of a true Constitutional convention of the people, free of all elected legislators as delegates. The charge must be to reform the Constitution in accordance with the values, concepts and purposes of the original drafters and ratifying states as they have evolved to the present. All elected officials must owe their allegiance to their electorates. Public finance of elections, taxation designed to distribute wealth consistent with the nation's financial condition and regular Constitutional Conventions not less often then every two decades should be part of the Convention's primary concern and action.

0 # Guest 2010-08-15 17:21

Oligarchy plain and simple.

+1 # Guest 2010-08-15 17:56

Even though the author makes some good points, he does not note that paying the so-called fair share of taxes is not the only consideration when setting the tax brackets. You do not want to have very high taxation rate or as you suggest many more tax brackets, because that only discourages people from working. If one has to pay, say, 80% of his/her additional income to the government, what incentive remains for him/her to work hard enough to make that additional money? What prevents him/her from going abroad and even giving up his US passport? There are limits to how much you can soak people.

0 # Guest 2010-08-15 22:17

My father was management, a devoted type who drove to the crappiest neighbourhoods to give a ride to employees if they needed it, or even worked for no pay when the company was in trouble. So I think that the answer is the same as we lowest workers here so often, 'No one is irreplaceable!' Go ahead let them flee the country someone else can do their job.

+2 # Guest 2010-08-15 18:40

When I was a young boy, living in the Bronx, I had a savings account at Northside Savings Bank. I would put my quarters, nickels and dimes, and my birthday gift money into this account. The lowest interest rate, for the simplest, no bells or whistles account paid 4.5% interest. The highest income tax bracket was 90%. Nearly everyone was making a decent living with only one parent working, not two. Fast forward to 2010.
Question: WHAT HAPPENED?!!

+3 # Guest 2010-08-15 19:13

I'd like to add something I've never seen in the discussion of raising taxes before. My husband is a professional who has made more than $250,000 only a few times in the past 35 years. Usually, in such a situation, he will hire more employees or give generous bonuses to his most productive employees. This effectively brings down his taxable income under the $250,000 amount.

It's a blatant lie that tax increases for those making more than $200K or $250 K will cause small businesses to close. It's more likely that such an increase in the tax rate will create more jobs!

Why doesn't anyone recognize this?

+1 # Guest 2010-08-15 21:21

There is virtually no way to make a tax system universally fair and to adjust for all the legitimate differences in personal situations. However, the sort of strongly progressive tax suggested here is a good start. The lower uppers should pay more than folks making something closer to the median income, BUT of course, this should be significantly less than the modern Midas folks at the top who can afford to pay much more. If many of these folks really worked (in the common way that we understand work), I'd be more concerned about incentives :-)

+4 # Guest 2010-08-16 05:03

The rich create jobs, all right. Minimum wages bordering on slave wages. The make money on the sweat, tears and blood of our young men and women. Our prisons are full of young men and women who have no future except to be exploited when they get out. The rich don't even pay for the corporate prisons they support, nor for wars, no for medical care for the poor, women and children included.

Yes, indeed, corporate greed, greedy wealthy who do not pay their share of taxes is what democracy is all about in the US of A!

+4 # Guest 2010-08-16 06:03

Thanks to St. Ronald Reagan, corporations and their shareholders count more than the toilers who make their bottom lines expand. Thanks to George Bush and Dick Cheney and their FAT CAT Repugnican "leadership" pals, the folks with the dough continue to expand while the economy goes further into the toilet. Why can't the rich slave holders be required to pay just their fair share? And why can't the rest of us get into the streets and the polling places and make it happen.

0 # Guest 2010-08-17 12:08

Come on..what about Clinton era? My comment is focused on cherry picking numbers!!

From 1993-2000 the top 1% of income earners income as a % of total income earned went from 13.89% to 20.8% of all personal income. Enter Bush; by 2003, the top 1%'s share had dropped to 16.8%. Latest data I have does show that by 2007, it's back up to 22.8%.

Under Clinton, this increased by a huge amount; under Bush it's managed in 7 years to pop up a couple of points.

Another. Under Clinton the ratio - average CEO pay to average Worker pay soared from low 100's (was 107:1 in 1990) to 525:1 in 2000. Under Bush it fell consistently and in 2008 was @ 319:1.

The 1990's were the era of excess and greed since the roaring 20's-it could only fall apart after that gold rush (which effectively crashed in March,2001.

http://www.aflcio.org/corporatewatch/paywatch/images/2010_trend_chart.gif

If one wants to address the issue, one must understand the issues.

+4 # Guest 2010-08-16 07:40

There is a fundamental misunderstandin g about tax brackets and how they work, and the media, alas, does nothing to clarify it. Most people I talk to believe that "I can't afford to make more money because it will move me into the next tax bracket, and that will actually lower my after-tax income." Not so. Going into the next tax bracket means only that the portion of taxable income that exceeds the lower limit of that bracket will be taxed at the higher rate. The rest stays the same. Thus, it is impossible to "lose" money by earning more. Weep not for the "poor soul" whose income exceeds $250K by a few grand. Only the net income (after deductions) OVER $250K will be taxed at the higher rate.

0 # Guest 2010-08-16 10:27

This article and this comment still doesn't go to the core of the question that should be asked.

What is middle class?

If $70,000 was middle class in the early 70s what would that be worth today? My guess with inflation would be $700,000. Why should the taxes for the "rich" start before that amount of money?

Until we truly understand the monetary losses represented by the current definitions of middle class no progress can be made in resolving the problem. The scope of the devastation to the middle class only becomes clear when we understand how devalued the definition has become.

+1 # Guest 2010-08-16 18:06

Since the average income has fallen since the 70s, middle class is more like $50-60k, today. In the 70s it was still, barely, possible for a single income to support a family. Today, that's not true, not because of inflation but because the average worker earns less in real dollars. $700k would be "middle income" only in the deluded dreams of the idle rich.

+2 # Guest 2010-08-17 07:59

Exactly my point, but you made the wrong conclusion. What $50-60k would buy today is equal to $5k to $12k in the 70s - depending on the item. Look at the price of a car or many other things. The poverty line at that time was $4,540k for a non-farm family of four and the government lists it today to be $22,500. Nearly 500% increase.

The median household income was around $44k in 1973 and is around $55k now. Only a 20% increase. That is shocking to me! But these are all numbers from the Census Bureau.

If salaries had kept up with the increase in basic costs over that time, using the ratio of the poverty line increase, the median household income would now be around $215k. Remember there were also many more union jobs with medical plans and retirement plans that have now disappeared.

+2 # Guest 2010-08-17 08:02

No wonder that we need more than one income to even begin to obtain what was bought in the 70s. The problem is that we are accepting lower class incomes and trying to live like we are still middle class.

It may seem like an extreme number to list $700,000 as still middle class, but that is what it would take to equal the economic power that was possible in 1973 for working middle class people.

And this is an income obtained only by very hard working people. The truly rich are earning much, much more.

If you question that amount look at what a college cost then. An elite private college used to cost close to $6,000 per year. Now it is much closer to $60,000.

We need to raise the bar on what is truly Middle-Class... .not some number not much above the poverty line.

0 # Guest 2010-08-17 10:50

Yes, by all means, soak the rich... in a nice tangy marinade! Grill and then serve to the poor for maximum nutritive value.

Perhaps they can call it Soylent Sh*thead.

0 # Guest 2010-08-21 14:57

In the past, the sword has been able to extract values from society. Today, money is ascendant as a means of power. Those who have money can buy politicians; they can buy expertise; they can buy status. Money is a much more flexible linguistic medium in the economy than votes are in the polity. Authorizing and enforcing production, learning, and applied skills has not proved effective in modern times. Thus, we must develop an electorate that can insist on financial rules that support their needs as well as those who enter the market. How? Vote against those who put particular interests ahead of the public interest. The sum of particular interests cannot add up to the public interest. (Kenneth Arrow) Yes, we all must work for our bread, but we must also work for our civitas.

0 # Guest 2010-08-23 04:03

Terrific, that' s exactly what I was seeking for! You just spared me alot of work

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