What Obama Should Run On In 2012

 

Robert Reich takes Obama at his word regarding his recent speech in Kansas:

Reich lays out a great plan to restore stability to the economy, fight the deficit and put people back to work:

An Offer to the President

Bullet points:

• Raise the tax rate on the rich to what it was before 1981
• Raise capital gains taxes to the same level
• Tax financial transactions
• “Use the bulk of this money to create good schools, give our kids access to a college education, and build a world-class infrastructure, so all our children have a chance to get ahead”
• Resurrect the Glass-Steagall Act, that used to separate commercial from investment banking
• Cap the size of Wall Street’s biggest banks and break up the biggest
• Require the big banks that got bailed out to modify the mortgages of millions of Americans now under water, who owe more than their homes are worth

Says Reich:

The top 1 percent has an almost unprecedented share of the nation’s wealth and income yet the lowest tax rate in 30 years. Meanwhile, America faces colossal budget deficits that have already meant devastating cuts in education, infrastructure, and the safety nets we depend on. The rich must pay their fair share. Income in excess of $1 million should be taxed at 70 percent – the same rate as before 1981.

I agree with Reich. If he even does half of these things, my support of Obama would change from hesitantly pulling the lever for the less of two evils to actually encouraging others to vote for him.

I’m less convinced than Reich that Obama is willing to take on any of these proposals and fight for them.

-Chris

GOP Can’t Find “Job Creators” Against Surtax

 

So, NPR had a story this morning about the “Millionaire Surtax” that Democrats have proposed to help pay for an extension of the payroll tax holiday that has been in place since last year.

The GOP‘s argument against the surtax is that it will harm “job creators” who will refuse to hire people.

So, NPR requested to speak to some of the potential “victims” of the surtax:

We wanted to talk to business owners who would be affected. So, NPR requested help from numerous Republican congressional offices, including House and Senate leadership. They were unable to produce a single millionaire job creator for us to interview.

Undefeated, NPR next requested the same thing from business groups that have also fought the proposal. Again, no example could be produced.

Eventually, the reporters placed a request for business owners that would be affected by the tax to respond, and they did — only the answers they got were mostly like Jason Burger, co-owner of a company called CSS International Holdings.

Mr. Burger’s company is an international “infrastructure contractor”:

“If my taxes go up, I have slightly less disposable income, yes…But that has nothing to do with what my business does. What my business does is based on the contracts that it wins and the demand for its services.”

NPR added,

Burger says his Michigan-based company is hiring like crazy, and he’d be perfectly willing to pay the surtax.

“It’s only fair that I put back into the system that is the entire reason for my success,” said Burger.

So again, Republicans are manufacturing disastrous consequences for policy proposals that are quite sound.

Now, it is possible that the businesspeople who responded to NPR on Facebook are prone to be more liberal, but the fact that both the Republican party and business trade groups couldn’t provide a single example of an small entrepreneur who would decide not to hire based on his personal taxes is illustrative of how the conservative mind works.

Thinks are true because I feel they are true. Damn the evidence.

-Chris

Related articles

• GOP backs payroll tax extension but rejects surtax on millionaires (politicalticker.blogs.cnn.com)
• Does the GOP Really Love You? (inc.com)

Basic Math

Image by 401K via Flickr

“It is mathematically impossible to invest enough in our economy and our country to sustain the middle class (our customers) without taxing the top 1 percent at reasonable levels again” – Venture Capitalist Nick Hanaeur

Hanauer has put his name on a growing list of 1 percenters who are boldly stating what most economists already recognize.

Writing on Bloomberg’s website, Hanauer observed:

We’ve had it backward for the last 30 years. Rich businesspeople like me don’t create jobs. Middle-class consumers do, and when they thrive, U.S. businesses grow and profit. That’s why taxing the rich to pay for investments that benefit all is a great deal for both the middle class and the rich.

A new post on ThinkProgress.org reports that even someone in the belly of the beast, Morgan Stanley Chief Financial Officer Ruth Porat, has awakened to this reality:

“The wealthiest can afford to pay more in taxes. That’s a part of the deal. That makes sense. I don’t know anyone that doesn’t agree with that,” Porat said. “The wealth disparity between the lowest and the highest continues to expand, and that’s inappropriate.” “We cannot cut our way to greatness,” she added.

I hope this is the dawning of a new capitalist idea.

We have lived too long in the shadow of timid CEOs and their sycophants who look no further than the next quarter.

In order for capitalism to be sustainable, a robust middle class must exist.

The article goes on to note that one of the major factors driving income inequality is the outrageous compensation and bonuses given to the top tier of huge corporations.

Instituting practices that reward performance and sustainability would go a long way toward creating a healthy economy.

-Chris

Related articles

• Morgan Stanley Executive Calls For Higher Taxes On The Rich: ‘We Cannot Cut Our Way To Greatness’ (thinkprogress.org)
• Silicon Alley Insider: Venture Capitalist Shreds The Idea That Taxing The Rich Is A Job Killer (businessinsider.com)
• Millionaire Nick Hanauer Shoots Down Neil Cavuto’s Straw Men as He Explains Why His Taxes Should be Raised (crooksandliars.com)
• Who creates jobs? The middle class (dailykos.com)
• Study backs up “Buffett Rule” claims (cbsnews.com)

Flat Tax Now! (For Social Security)

 

The Institute for Policy Studies has a great idea of how to handle the projected Social Security deficit — a flat tax on ALL wages:

In 2012, American workers will pay Social Security taxes on their first $110,100 of wages. For most Americans, that’s all of their wages. Only a lucky 10 percent of Americans make more.

Let that lucky 10 percent pay Social Security taxes on all of their wages, just like the rest of us do. Make Social Security a flat tax on all wages instead of a regressive tax on low and medium wages.

The author claims that a flat tax would raise $100 billion annually, and would not only close the deficit gap, but allow for a small increase in benefits to help keep up with the soaring cost of living.

-Chris

Robert Reich has a Sensible Plan

Economist Robert Reich has a sensible plan to fix our deficit and debt woes.

In a November 19 post, Reich gives the following advice to the Deficit Supercommittee (which has since disbanded, after failing to reach an agreement):

1. Make no cuts before unemployment is back under control (down to 5%).

2. Make the boost big enough. We need a huge jobs program with components like the New Deal’s Civilian Conservation Corps and Work Progress Administration to restore our infrastructure.

3. Raise taxes on the super rich and tax all income (capital gains included) at the same rate. Restore the tax structure to pre-1980 levels and put a 2% surcharge on income over $5 million.

4. Cut the real welfare — military spending and corporate subsidies. Savings = $400 billion annually.

Reich’s closing plea, of course,  fell on deaf ears:

Do you hear me, Washington? Do these four things and restore jobs and prosperity. Fail to do these, and you’ll make things much, much worse.

Unfortunately, there’s not a chance any of this will get through in this political climate.

It seems like we are constantly in a battle to mitigate damage from bad policy and those actively on a misguided crusade to make things much worse, and not making any headway in actually fixing the problem.

-Chris

The lie of the tax holiday

Paul Krugman delivers again.

Commenting on the “new” plan being pushed to have a tax holiday for corporations, Krugman points out that it is again being sold as an answer to our job problems.

Cutting taxes for corporations does not and never has led to more jobs.

The cuts are never really designed for small businesses, and are the worst kind of trickle down wishful thinking.

Krugman:
 

As opponents of this plan point out, we’ve already seen this movie: A similar tax holiday was offered in 2004, with a similar sales pitch. And it was a total failure. Companies did indeed take advantage of the amnesty to move a lot of money back to the United States. But they used that money to pay dividends, pay down debt, buy up other companies, buy back their own stock — pretty much everything except increasing investment and creating jobs. Indeed, there’s no evidence that the 2004 tax holiday did anything at all to stimulate the economy.

A nice piece on what really happens when we cut taxes on corporations, and the disincentive it is for them to invest in infrastructure and employees.

-Chris

Related articles

• Avoiding taxes the way big corporations do it (thehill.com)

Wealth and Taxes

Image via Wikipedia

Andrew Sullivan posted a good exchange on wealth and taxes on his Daily Dish this Monday (sorry, I’m just getting caught up).

“The Successful, Ctd”

Sullivan makes a common argument against what he sees is excessive, punitive taxation of the rich:

After all, he is the person whose success makes taxation possible at all – or rather far more successful than if there were only Wal-Mart workers. But I am content with inequality as the price of freedom, and do not believe the government should punish people for being successful.

But one of his correspondents quotes conservative Ben Stein, and makes a key point:

But if they are superrich, they derive special benefits from life in the United States that the nonrich don’t. For one thing, they can make the money in a safe environment, which is not true for the rich in many countries. It is just common decency that they should pay much higher income taxes than they do.

Not addressed in the back-and-forth is the important fact that some of the rich have rigged the system to keep most people poor and the rich richer.

Sullivan closes nicely with a graph that I completely agree with:

I favor a return to Clinton era tax rates for the successful because we need to find some money somewhere and the hike is not that bad, given the debt we face. I’d like tax simplification and an end to the myriad loopholes and deductions in the tax code that the rich pay lawyers to exploit. I believe in an estate tax, in order to reward work not nepotism. I’ve made the same point about paying for the wars and supported the health insurance reform. I just think that wealthy seniors should pay more for Medicare and that social security could easily be means-tested and that the retirement age be raised. Not because I hate the old, but because we have to do something, or go into default. The successful already pay the bulk of the taxes. I just don’t see why tax hikes should be framed as some kind of revenge on them, or long-overdue comeuppance. It’s a necessary evil for the common good. And many liberals would fare better if they made their case that way, as, I might add, Obama generally does.

A good post that I encourage you to read.

-Chris

Related Articles

• Bill Maher: New Rule: Rich People Who Complain About Being Vilified Should Be Vilified (huffingtonpost.com)
• Ben Stein’s fiscal policy (blogs.reuters.com)
• “The Successful” Ctd (andrewsullivan.theatlantic.com)
• Taxing the Successful (outsidethebeltway.com)

Small Businesses Not So Small

Keith Olbermann had a great segment on his program last night:

http://www.msnbc.msn.com/id/32545640

Visit msnbc.com for breaking news, world news, and news about the economy

It seems that The Chicago Tribune, the billionaire Koch Brothers and multi-billion dollar Bechtel Corporation are considered small businesses under the definition being used by the Republicans.

All this in their fevered campaign to try to continue the gravy train for the rich.

Facts:

• Only 3% of businesses would be affected by ending the tax breaks for the rich.
• The definition of “small business” used by Republicans have up to 100 owners — no consideration of income, number of employees or payroll is considered.
• S-Corporations, as defined by Wikipedia, do not pay any federal income taxes. Instead, the corporation’s income or losses are divided among and passed through to its shareholders. The shareholders must then report the income or loss on their own individual income tax returns.
• The richer you are, the more likely you are to file on your taxes this way in what are also called pass-through companies.
• There are 15,000 S-Corps earning an average of $150 million a year.
• There are 18,000 S-Corps Partnerships that pull in $137 million annually.
• 750,000 businesses in total would see any change in their tax share.

In other words, multimillionaires own dozens, hundreds or thousands of these S-Corporations.

The point: Real, actual small businesses will not be harmed by letting the wealthy pay their fair share of taxes.

That’s just the lie the Republicans and their Blue Dog Democrat allies are pushing to make you believe that your neighbor’s business  is going to go under by the oppressive tax burden.

It’s just not true.

-Chris