Maule and Pappas on progressive taxation and the decreasing burden on the rich

by Linda Beale
crosposted with Ataxingmatter

Maule and Pappas on progressive taxation and the decreasing burden on the rich

Maule and Pappas have been engaging in a debate on progressive taxation and the decreasing burden on the rich. See Canonizing the Rich, Part 1, Part 2, and Part 3.

As Maule shows in his posts, the rich have an increasing share of the income (an even larger share of the economic income–because they benefit much more than ordinary folk from tax expenditures in the Code, from capital gains preference to charitable contribution deduciton to mortgage interest deduction to life insurance exclusion, and more of adjusted gross income, a tax concept that excludes much of economic income). But they pay a much smaller proportion of that income in taxes now than they did in the period when our country was the most prosperous shortly after WWII–a decline from about 50% of the income in taxes to less than 20% of it paid in taxes. Meanwhile, our country has slid into a deficit spiral from the combination of gigantic tax cuts under Bush that were of primary benefit to the ultrarich (the 2001 tax cuts were projected to cost about $1.6 trillion over the first decade and have cost about $700 billion so far) and the huge increase in government under Bush from militarization and his “preemptive war” policy (costs of the Iraq-Afghanistan wars in human lives greater than 5000 and in dollars running to the multiple trillions–especially when long-term health needs of Vets and replacement costs for the expensive equipment is factored in).

So why would anyone think that these disastrous policies of cutting taxes for the rich should continue? Such a policy has no good outcomes–deficits, inequality that threatens democracy with oligarchy, political instability, poverty and the disease, lack of education, despair and often violence that can come from it. I wouldn’t want to live in a country where the well off live entirely within isolated islands of gated communities, surrounded by deep zones of poverty. I much prefer a country built on communities based on sustainability, where the wealthiest are merely rich and not “filthy rich.” A salary for a hedge fund manager or a CEO of a million a day (not uncommon in twenty-first century America) is, simply put, obscene when it is 300 or 400 or even 500 times the salary of the average worker. No one “earns” that kind of salary–it is a corrupt gift from peers who want the same return favor when the manager sits on their salary board.

People who disagree with me on this tend to say that my opposition to such inequality is just jealousy. No, it is concern for the very heart of this country’s democracy. And I suspect many of those who defend the low taxes for the wealthy put in place under the four decades since Reagan took office do so reflexively–because they are wealthy themselves and don’t want to feel guilt for their undeserved fortunes, because they hope to be wealthy themselves and want to get in on the privileges enjoyed by the wealthy few, because they make their incomes by serving the wealthy and perforce take opinions favoring their clients, or because they have been so indoctrinated by freshwater economist thinking that they buy into the myths of the wealthy as the entrepreneurs that make our civilization possible. Whatever their reasons, it is discouraging to see this defense of the US as tax haven for the wealthy.