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RobertReich
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Robert Reich is Chancellor’s Professor of Public Policy atthe University of California at Berkeley. He has served inthree national administrations, most recently as secretaryof labor under President Bill Clinton.He has written thirteen books, including The Work ofNations, Locked in the Cabinet, Supercapitalism, and hismost recent book, Aftershock. His “Marketplace”commentaries can be found on
publicradio.com
and
iTunes
. You can find his blog onwww.robertreich.org.
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WhyWeMustRaiseTaxesontheRich
 
MONDAY, APRIL 4, 2011
 
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
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