Thursday, April 7, 2011

How to Fix the Deficit

Here. Of course, there are problems with the NYTimes options. The sorts of taxes they allow you to meddle with are excessively narrow and confined to those already in existence (what about an intangible property tax, for instance?) Moreover, they only let you raise taxes on the rich to "Clinton-era Levels" which were already indexed to the neoliberal era begun under Reagan. For instance, we must note that the top marginal rate of income taxation was low during the Clinton-era. It would do this country some good to let everyone use this gadget with the added option of raising the top marginal rate on income as high as they like.

Below is the history of the top marginal tax rate on income (i.e. the rate paid by the richest earners who constitute less than 1% of the population.... right now it means that the rich pays 35% on every dollar earned over $373,000):
What you should notice first is that it was raised significantly in the 1930s (from 26% to 60%, later from 60% to 80%). It remained above 60% from the 1930s until the 1980s when Reagan cut it back down to pre-Depression levels. That is, it remained significantly above 60% during the longest, most sustained period of economic growth in the history of the United States (the so-called "long boom" from WWII through the early 70s). When the NYTimes says "Clinton-era rates", they mean a meager 40% top rate, but there's no reason in principle why we shouldn't raise the top rate significantly higher than that right now. After all, in the 1950s it was even as high as 90% under Republican presidencies! So it's just false and disingenuous to claim, as Republicans (and many Democrats) do, that high top marginal rates mean anemic growth. In reality, the fight over taxing the rich has nothing to do with growth or efficiency, and everything to do with class power. That is, the profit-hungry ruling class doesn't want to pay for this crisis themselves: they want to force the working majority to clean up their mess. Their credo is: socialize the losses and risks, privatize the profits and earnings. And their sway in Congress is such that the lowly Democrats hardly even hesitated in pushing through an extension of the Bush Tax give-aways for earners over $250,000. Obama didn't even fight for his campaign promise to return taxes on the rich to pre-Bush levels, and I think that speaks volumes about what the Dems stand for. By further eroding the funding for the public goods that are now on the chopping block, they paved the way for the brutal cuts that are being proposed now. There is no reasonable way to interpret the "budget war" as a struggle between Right and Left. It is a struggle between hard-Right and soft-Right. It is a debate between two bullies about how many times to punch us in the stomach; it's not a debate about whether we deserve to be beat up at all.

No comments: