“Every one to whom much is given, of him will much be required; and of him to whom men commit much they will demand the more.” (Jesus, Sermon on the Mount, Luke 12: 48)
That’s how it is in the kingdom of heaven, that realm of living imagination that inspires us to create it on earth.
But here on earth in America today, Mitt Romney, a very rich man, paid an average of only 14% in tax on his income over the last two years.
Low income Americans paid 15% on taxable earnings over $8,500 to $34,500.
Since 2003, Romney’s investments, which produce most of his income, have been in a “blind trust”. He’s not even making investment decisions. Can it be said that Mitt Romney “earns” any money at all? And if he’s not really earning money through his own hard work and wits, how could taxing his income at a much higher rate have any impact on his level of ambition in the free-market economy? (See more on this subject in a recent “musing” of mine, The Burklo Limit.) Less money in his pocket might dull his political ambitions and campaign expenditures slightly. But would that be an all-bad thing?
America has abandoned much of the principle of progressive taxation, in which the impact of taxes on people’s lives is factored proportionally into the rates that people pay. Under progressive taxation, lower income people would pay a lower rate, and progressively higher income people would pay progressively higher rates – thus somewhat flattening the felt impact of taxation among economic classes.
There’s a lot of noise in politics these days about instituting a “flat tax” – one rate for everybody, regardless of income level. But nothing’s flat about the effect that a uniform tax rate at Mitt Romney’s level would have on the incomes of people across the wealth spectrum. Lower income people might sacrifice buying higher-quality food in order to pay their 14%. Paying taxes has viscerally-felt consequences for them. But 14% is not even close to being a nutritional threat for rich folks. Romney still would be a very wealthy man even if he paid the current top rate, 35%, in income taxes.
What is the “much” that Jesus says will be required of those who have been given much? It must be proportional, so that it is flat in tangible impact rather than in abstract numbers.
The Republican argument for low taxes on rich people is that they are the ones who create jobs. “We all know that there’s a reason we have low rates on capital gains. That’s because it spurs new investment in our economy and allows capital to move more quickly,” House Speaker John Boehner, R-Ohio, said recently. But the top marginal tax rate in the Eisenhower era was 90%. Somehow the economy chugged ahead during that Republican administration!
A researcher with the business-oriented Kauffman Foundation, quoted recently in Miller McCune Magazine, said that only about 10% of the wealthy people of America are job-creators. Yes, almost all job creators are wealthy people. ‘Mom and Pop” small businesses don’t grow the economy nearly as much as those businesses started by rich folks. But only a small number of wealthy people invest in the start-up businesses that create substantial numbers of new jobs. Why is our country rewarding with lavish tax breaks the 90% of the rich who do little or nothing to stimulate more employment of Americans? Higher taxes from them could pay for public investments that do preserve and create jobs and improve the infrastructure for capitalism to thrive.
Winner-Take-All Politics, a book by Jacob Hacker and Paul Pierson (2010), documents that US government policy changes in the last 30 years have been the primary causes of a hyper-concentration of wealth in the hands of the few. A long-term, highly-organized, massively-funded political effort to cut progressive taxation on the wealthy and eliminate regulation on the financial industry has compounded the assets of the very richest of the rich. “Why has Washington made the rich richer and abandoned the middle class? Because of the relentless effectiveness of modern, efficient organizations operating in a much less modern and efficient political system.” (p 115) (See Bill Moyers’ recent interview with the authors of this book here.) “If the effects of taxation on income at the top had been frozen in place in 1970, a very big chunk of the growing distance between the superrich and everyone else would disappear.” (p 49) Hacker and Pierson lay most of the blame for creating much worse income inequality on the Republican Party, but also lay a large share on Democratic politicians who have become dependent on Wall Street money for their campaign funds.
Mitt Romney accuses the President of stirring up class divisions in America. That’s a breathtaking statement from someone who had an income of $42 million dollars over the past two years, money that he gained almost entirely without working. Americans are only now waking up to the results of a class war that has been waged against them for three decades. The President is just responding to the people’s anger about it.
Perhaps this also will be the year when Americans wake up to the consequences of three decades of systematic dismantling of the ability of government to protect them from the excesses and failures of capitalism – and to protect capitalism from its own tendency to self-destruction. All of us have skin in this game. Today, when capitalism succeeds, rich people get richer. When it fails, the taxes we all pay bail it out in order to prevent further economic damage. As quoted by William Cohan in the NY Times: “Senator Christopher Dodd correctly said in April 2008, during the first Senate hearing about the unfolding financial crisis, ‘We’ve socialized risk and we’ve privatized reward.’”
“And what if the traditionalist-conservatives are right and a… tax cut, without corresponding cuts in expenditures, also leaves us with a fiscal problem? The neo-conservative is willing to leave those problems to be coped with by liberal interregnums. He wants to shape the future, and will leave it up to his opponents to tidy up afterwards,” said Irving Kristol, neo-conservative journalist, in 1980. This cynical plan for destruction of the capacity of government to serve the common good has succeeded. Republicans bankrupted the country with tax cuts and an expensive war, leaving President Obama to clean up the mess… and then obstructed at every turn his attempts to clean up the mess. Conservative leaders understand how to manipulate the voters. If Republicans make a mess of government, that makes the people lose trust in government, and that just feeds their anti-government agenda. They believe voters will blame Obama for failing to save the country from the worst recession since the Great Depression more than they’ll blame the Republicans for stonewalling his solutions to the problem.
It’s time for us to prove them wrong. With our votes and our voices, it’s time to put the heat on our politicians to return to a truly progressive income tax system to fund an efficient and effective government that serves the people and not just special interests. It’s time to demand sensible limits on the financial industry and on campaign finance. These are mainstream, tried and true policies that have served our country well in the past and can do so again.
“An imbalance between rich and poor is the oldest and most fatal ailment of all republics,” said Plutarch, the 1st century Roman historian. Our country may not be on its deathbed, but surely we are now experiencing the pain of a serious sickness in our democracy. The interests of the many have been sacrificed for the interests of .1% of the people of this country. And we should ask if the interests even of this tiny slice of the richest of the rich have been best served. Henry Ford paid his auto workers more than the prevailing wage, so they’d be able to buy his cars and make him richer. How much more comfortable everyone would be, including the richest, if lower and middle income workers had a lot more economic security in America? How much easier life would be for capitalists if America had universal, single-payer health insurance! Their companies would not need to pay for ever-more costly private insurance for their workers.
The government’s bailout of Wall Street, and the accompanying massive infusion of public money into the economy, was essential to prevent a bad recession from becoming a terrible depression that would have ruined most of us and severely whacked the assets of the wealthy. Let’s not miss this teachable moment: if the government doesn’t properly regulate business, you and I will pay to pick up the pieces when the market implodes. Preventing such debacles with a reformed economic and political system will benefit people in all economic classes.
We’re all in this together. Shared sacrifice, shared reward: this can be our mantra as the presidential election season begins in earnest.
A suggestion: vote via the buddy system. If you are someone who stays on top of public affairs, please lose your inhibitions and email your voting choices to everyone you know – early and often! If you are on the other end of the spectrum, find folks you know and respect and ask them to be your buddies, getting voting advice from them. From the grassroots up, let’s work for real change – till the kingdom comes!