10 Ways to Force the Stinking Rich to Share Their Wealth

For all the moaning from deficit hawks, the U.S. budget is simply not in crisis. If investors were losing confidence in our nation's ability to pay off its debts, we'd see a major reduction in demand for U.S. Treasury bonds. And we do not, in fact, see any such reduction. Last week the Treasury sold $21 billion in 10-year bonds, and investors were clamoring for them in such droves that the government had to turn away nearly 80 percent of them. If investors were really worried about the U.S. paying back its debt, they'd demand a very high interest rate from the government to compensate them for the risk they were taking. But in fact, interest rates are remarkably low. That 10-year bond currently fetches a yield of around 3.9 percent. For entire years of President George H. W. Bush's reign, the yield was above 8 percent, often eclipsing 9 percent.

Deficit hawks aren't interested in the deficit, they just don't like the idea that the government spends money on social projects that help poor people. To close the deficit, we could either raise taxes or cut expenditures, and you never hear deficit haws begging to raise taxes. Here are 10 ways a deficit hawk who didn't hate poor people could ease his anxiety

1.  Ban Offshore Tax Havens For Big Corporations

The government loses about $100 billion a year from corporate tax evasion. Companies that do their business in the United States hide their assets in another country that offers very low taxes, or none at all. You know the places: Bermuda, the Bahamas, the Cayman Islands, Switzerland, etc. This is illegal, but it happens anyway. President Obama vowed to end this absurdity shortly after taking office last year, but strangely, the proposal evaporated over time. It's easy to see why. According to the Government Accountability Office, 83 of the 100 largest American corporations (pdf) engage in this kind of tax evasion. All of those companies have lobbyists.

Congress did finally take some action on this front in March, when it passed its paltry $15 billion jobs bill. The legislation included some efforts to crack down on corporate tax deception, but nowhere near enough. Over 10 years, the new provisions are only expected to bring in an additional $8.7 billion—that's less than 1 percent of the overall problem. 

2. Close the Loophole for Hedge Fund Kingpins 

Why do the richest people in the world get taxed at the lowest rates? Nobody makes more money than Wall Street hedge-funders, but thanks to a particularly preposterous loophole in the tax code, they pay only a 15 percent tax rate for income that is supposed to be taxed at 35 percent. Why? Instead of taking a salary, hedge fund managers compensate themselves by taking a percentage of their fund's profits, and these profits are subject to the capital gains tax rate, rather than the income tax rate.

This costs us about $5 billion a year, and it's very easy to fix. Obama supports closing the loophole, and has included it in his current budget proposal. Congress just has to pass the thing.

3. Increase the Capital Gains Tax

But why is the capital gains tax only 15 percent? For that, we can thank Dick Cheney. When President Bush was devising his epic tax cut agenda, he didn't have a problem with axing most taxes for the super-rich. But one tax cut struck him as just too conservative: the capital gains tax. Capital gains are increases in the value of investments like stocks—poor people don't buy stocks, and besides, the capital gains rate was already very lenient, a mere 20 percent. But Cheney fought a behind-the-scenes battle to overrule Bush, and his plan to slash the capital gains tax passed.

Obama supports reinstating the pre-Cheney 20 percent capital gains tax, and Congress doesn't have to lift a finger to restore it—the Cheney cut expires at the end of this year. As always, be on the lookout for heavy lobbying from Wall Street.