Why We Must Raise Taxes on the Rich - Reich

Why We Must Raise Taxes on the Rich, ASAP!

America's wealthiest are paying a pittance in taxes, while the country is chipping away at its central foundations to meet budget shortfalls.

 It’s tax time. It’s also a time when right-wing Republicans are setting the agenda for massive spending cuts that will hurt most Americans.

Here’s the truth: The only way America can reduce the long-term budget deficit, maintain vital services, protect Social Security and Medicare, invest more in education and infrastructure, and not raise taxes on the working middle class is by raising taxes on the super rich. Even if we got rid of corporate welfare subsidies for big oil, big agriculture, and big Pharma – even if we cut back on our bloated defense budget – it wouldn’t be nearly enough.

The vast majority of Americans can’t afford to pay more. Despite an economy that’s twice as large as it was thirty years ago, the bottom 90 percent are still stuck in the mud. If they’re employed they’re earning on average only about $280 more a year than thirty years ago, adjusted for inflation. That’s less than a 1 percent gain over more than a third of a century. (Families are doing somewhat better but that’s only because so many families now have to rely on two incomes.)

Yet even as their share of the nation’s total income has withered, the tax burden on the middle has grown. Today’s working and middle-class taxpayers are shelling out a bigger chunk of income in payroll taxes, sales taxes, and property taxes than thirty years ago.It’s just the opposite for super rich.

The top 1 percent’s share of national income has doubled over the past three decades (from 10 percent in 1981 to well over 20 percent now). The richest one-tenth of 1 percent’s share has tripled. And they’re doing better than ever. According to a new analysis by the Wall Street Journal, total compensation and benefits at publicly-traded Wall Street banks and securities firms hit a record in 2010 — $135 billion. That’s up 5.7 percent from 2009.

Yet, remarkably, taxes on the top have plummeted. From the 1940s until 1980, the top tax income tax rate on the highest earners in America was at least 70 percent. In the 1950s, it was 91 percent. Now it’s 35 percent. Even if you include deductions and credits, the rich are now paying a far lower share of their incomes in taxes than at any time since World War II.

The estate tax (which only hits the top 2 percent) has also been slashed. In 2000 it was 55 percent and kicked in after $1 million. Today it’s 35 percent and kicks in at $5 million. Capital gains – comprising most of the income of the super-rich – were taxed at 35 percent in the late 1980s. They’re now taxed at 15 percent.

If the rich were taxed at the same rates they were half a century ago, they’d be paying in over $350 billion more this year alone, which translates into trillions over the next decade. That’s enough to accomplish everything the nation needs while also reducing future deficits.

If we also cut what we don’t need (corporate welfare and bloated defense), taxes could be reduced for everyone earning under $80,000, too. And with a single payer health-care system – Medicare for all – instead of a gaggle of for-profit providers, the nation could save billions more.

Yes, the rich will find ways to avoid paying more taxes courtesy of clever accountants and tax attorneys. But this has always been the case regardless of where the tax rate is set. That’s why the government should aim high. (During the 1950s, when the top rate was 91 percent, the rich exploited loopholes and deductions that as a practical matter reduced the effective top rate 50 to 60 percent – still substantial by today’s standards.)

                 Read the entire piece at Robert Reich.com

The Banker

A similar tax has been proposed for the U.S. by the AFL-CIO

Yes on Prop 24

YES on Prop 24 – The Tax Fairness Act

Prop 24 prevents $1.3 billion in tax breaks to big corporations that would impose further budget cuts to schools, public safety and critical services. Prop 24 would save thousands of much needed jobs.

·         Why Proposition 24 should get your vote:

o   The Tax Fairness Act will prevent another $1.3 billion in cuts to our public schools

o   It will save 22,000 jobs for teachers, nurses and firefighters

o   It will keep corporate taxes as they are today and prevent $1.3 billion in tax giveaways to 2% of California’s wealthiest corporations from kicking in next year

Money for California's schools

When teachers argue that school funding should not be cut, we are told by the  Republicans in the legislature that there is not choice, there just is no money.

Well, that is not really true.  Here is where reasonable people would get the revenue.

1.     Repeal the September 2008 and February 2009 tax cuts.  As a part of the Sept. 2008 and Feb. 2009 budget deals, the legislature created huge new corporate tax breaks.  That right.  To respond to a budget crisis, they gave new tax reductions to corporations.  These take effect in 2011 and will make the budget crisis worse.  What is to be done ? Repeal of tax credit sharing to  raise 2009-10 revenues by $80 million, over time, the permanent tax cuts will cost the state $2.0 billion to $2.5 billion.

2.      Reinstate 10 percent and 11 percent tax rates to 1991 levels, adjusted for inflation. The February tax increases disproportionately affect low- and middle-income taxpayers. Reinstatement of the top brackets would restore balance to the state’s tax system and raise $4 billion to $6 billion in additional revenues.

3.     Impose on oil severance tax. California is the only oil producing jurisdiction in the world without a severance tax. A tax of 9.9 percent, such as that proposed by the Governor, would raise upwards of $1 billion dollars.

We, the people, own this oil.  It is under California soil.  Oil companies only take it out.  They should pay to take our oil out of the ground and to sell it to us.  Even arch conservative Texas, Louisiana, and Alaska have oil severance taxes.

Tax oil severance

Solve the California budget crisis with a 15% Oil Severance Tax.


CALIFORNIA OIL SEVERANCE TAX

This bill, beginning on and after July 1, 2008, would impose a 6% severance tax on
oil extracted from the ground or water in California and use the proceeds to
mitigate teacher layoffs that would result from the Governor's cuts to K-14
education. The oil severance tax will not apply to federal oil production, nor will it
apply to "stripper wells" if the price of oil falls below $50 per barrel.

• California is the only oil-producing state that does not tax oil that is owned,
leased, or extracted from private lands in this state. In contrast, Alabama, Alaska,
Colorado, Florida, Idaho, Kansas, Louisiana, Michigan, Mississippi, Montana,
Nebraska, New Mexico, North Dakota, Ohio, South Dakota, Tennessee, Texas,
Utah, Virginia, West Virginia, and Wyoming levy a severance oil tax at the rates
ranging from 2% to 15%, in addition to other taxes imposed by those states on oil
producers or purchasers.

• The oil severance tax will be required to be paid by a producer of oil that is
generally defined as any person that extracts oil from the ground or water, owns
or manages an oil well, or owns a royalty interest in oil in California.

• The oil severance tax will not apply to oil wells that produce less than 10 barrels
of oil per day (so-called 'stripper wells'), unless the price of oil at the well head
was more than $50 per barrel.

• The revenue raised from the imposition of the severance oil tax will be used
exclusively to fund K-12 education to mitigate teacher layoffs that would result
from the Governor's proposed budget cuts.

• The petroleum industry has experienced enormous increases in profits in recent
years. In light of the recent increases in the price of oil, a severance tax is
reasonable, logical, and could provide needed funds to offset the cuts to education
currently proposed by the Governor.

• The imposition of this tax will have no material impact on investments,
production, or prices of oil in California because high demand for oil will
continue to make the petroleum industry one of the most profitable in the world.

• The oil severance tax law will not create an additional financial burden for
consumers because it prohibits the producers or purchasers of oil to gouge
consumers by using the tax as a pretext to materially raise the price of oil,
gasoline, or diesel fuel.



• Revenue estimate:
o The 6% severance tax levied beginning July 1, 2008 will raise about $970
million in 2008-09 and $960 in 2009-10. The estimates assume about 190
million barrels of annual production subject to the tax, and an average
price about $85 per barrel (California crude oil is heavier and less
expensive than oil used in key price benchmarks.)
o The measure could also result in unknown reductions in local property
taxes and state tideland revenues, ranging up to the low tens of millions
annually.