Written by Harrison Kelly   

A New York Times/CBS national poll conducted on April 20 shows Americans hold different values about the economy and social programs than those of either Party. According to the poll 56 percent did not have a favorable view of the Republican Party. The Democratic Party fared somewhat better, with 49 percent unfavorable views of the party.

Its clear to Americans that neither party is leading the country wisely, as 70 percent of poll respondents say the country is heading in the wrong direction.

Apparently one of the issues that is wrong has to do with the country’s most vulnerable citizens: about three-quarters of Americans polled think the federal government has a responsibility to provide health care for the elderly, and 56 percent believe it has a similar duty to the poor. More than 6 in 10 of those surveyed said they believed Medicare was worth the costs. When asked specifically about Medicare, respondents said they would rather see higher taxes than see a reduction in medical services if they had to choose between the two.

Most Americans think neither Mr. Obama nor the Congressional Republicans share their priorities for the country. The poll gave President Obama a 45 percent approval rating, and John Boehner, leader of the Republican Majority in the House of Representatives a 41 percent approval.

Neither party is allocating spending in line with majority wishes. Given the choice of cutting military, Social Security or Medicare spending as a way to reduce the overall budget, 45 percent chose military cuts, compared with 17 percent favoring cuts to Social Security and 21 percent favoring cuts to Medicare.

Opposition by Tea Party supporters to raising the level of the debt the nation can legally carry was shared by nearly two-thirds of poll respondents, including nearly half of Democrats. Administration officials rightfully say, however, that blocking the government from raising that limit could force it to default on its debt payments. The American majority wisely understand that the country cannot continue to spend beyond its means. But according to a recent Washington Post/ABC News poll the Republican solution as reflected in Congressman Paul Ryan’s plan for dealing with the deficit is opposed by 65 percent of American citizens.

That opposition is undoubtedly because two-thirds of Ryan's budget cuts come from programs serving lower and moderate-income Americans and over 70 percent of the his proposed savings come from tax cuts for the rich. The majority of Americans tax payers seem to understand that his proposal in reality is a giant transfer from the less advantaged to the super advantaged without much deficit reduction at all.

And if people knew that the Ryan plan would channel hundreds of billions of their Medicare dollars into the pockets of private for-profit heath insurers, almost everyone would be against it.

Given that American citizens by a wide margin resist drastic cuts in spending for social programs, yet they know the deficit must be reduced, there is only one logical question: Why shouldn't we go back to the tax rates we had thirty years ago, which required the rich to pay much higher shares of their incomes? One of the great scandals of our age is how concentrated income and wealth have become. The top 1 percent now gets twice the share of national income it took home thirty years ago.

Yet marginal tax rates for the most wealthy are the lowest they’ve been since 1945. The 94 percent rate during World War II was an all time high. But marginal rates were not reduced significantly until Ronald Reagan began lowering rates with his famous trickle down, supply side economic reforms. And because they let Americans believe that constant refrain of most economists that budget deficits don’t matter, every President since has acquiesced to that view, including Democrats Bill Clinton and Barak Obama, resulting in the current maximum marginal rate of 35%.

Conservatives always argue that raising taxes on the rich would stifle growth because the wealthy would be investing less and therefore creating fewer jobs. That argument does not necessarily stand up to objective economic analysis. A few years ago, New Jersey instituted a tax that raised rates on those making more than $500,000. Economists decided to test the prediction that all the rich folks would leave the state.

The study found that the overall population of millionaires increased during the tax period. Some millionaires moved out, of course. But they were more than offset by the creation of new millionaires. The study dug deeper to figure out whether the millionaires who were moving out did so because of the tax. As a control group, they used New Jersey residents who earned $200,000 to $500,000 — in other words, high-earners who weren’t subject to the tax. They found that the rate of out-migration among millionaires was in line with and rate of out-migration of sub-millionaires. The tax rate, they concluded, had no measurable impact. Like a lot of conservative scare tactics the claim that paying a bit more taxes has little impact on behavior of wealthy taxpayers.

In any case Americans believe that, even if growth is somewhat stunted by higher taxes for the rich, it is the lesser of two evils in order to begin dealing with the unsustainably high government debt.

Meanwhile, large and many smaller corporations pay no taxes at all. For example 10 of America’s largest and most profitable companies have paid no taxes for several years, resulting in over $1.3 trillion in profits held by their offshore subsidiaries in tax haven banks. To make matters worse many actually collect payments from the US government related to government subsidies or legal tax credits. Among the worst offenders are Exon Mobil, Bank of America, General Electric, Chevron, Boeing, Valero Energy, Goldman Sachs, Citigroup, ConocoPhillips, and Carnival Cruise Lines are some of those well known companies. There are probably thousands more deadbeats that pay no taxes on their profits.

It is obvious that President Obama’s proposal to raise taxes for those earning more than $250,000 per year, coupled with legislative action that will force corporations to pay their taxes are crucial to dealing with the nation’s deficit. The average citizen knows that any family can live quite well on $250,000 per year. They will not be gravely affected by somewhat higher taxes, and corporations should be made to pay the taxes required by law.

There will be no disastrous impact on the economy, despite the fear mongering that can be expected from Republicans who have always favored the rich and the corporations over the average citizen.

Kelly M. Harrison, PhD
Political Economist