The Solution to Our Budget Problems Is So Obvious: We Need to Raise Taxes on the Rich, ASAP
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A great tragedy of the United States is that the answer to many of the country’s domestic problems is obvious, even simple, but can’t be done because of a dominating political/media dynamic that rules that solution out.
The solution to these many problems – from the budget deficit to crumbling infrastructure, from mass joblessness to income inequality, from environmental degradation to educational shortfalls -- is to raise taxes on the rich and to use that money to get the United States back on track and advancing toward the future.
And there are clear justifications for doing so, from practicality to fairness. Though many multi-millionaires fancy themselves self-made men (and women), the truth is that they all have profited from investments that American taxpayers have made over the decades, and even centuries.
For instance, President Dwight Eisenhower’s inter-state highway system enabled companies to move their goods more cheaply; President John Kennedy’s space program spurred the growth in computer sciences; the Pentagon created the Internet (yes, with critical support from Al Gore when in Congress), which revolutionized commerce and spread information.
These innovations and many more were achieved by the federal government using taxpayers’ money. Yes, entrepreneurs in their garages and dorm rooms did expand on these breakthroughs and deserve credit and a share of the profits, but they also should pay back at a much higher rate for the taxpayer-funded R&D that made their fortunes possible.
An even-stronger tax justification applies to Wall Street, where the greed and gambling of bankers tipped the economy into a severe recession just three years ago, costing millions of Americans their jobs and homes. To avoid an even worse outcome – a new depression – the federal government and Federal Reserve authorized trillions of dollars in bailouts.
To further calm Wall Street, the authorities essentially gave the bankers a “get out of jail free” card. Not a single prominent player in the sub-prime securities scandal has been prosecuted or forced to surrender much in ill-gotten gains.
Instead, many of the top Wall Street bankers are lining up again for massive paydays in the tens of millions of dollars, essentially skimming off profits that were achieved only because the U.S. government poured vast sums of public money into the financial sector. Yet, many of these same bankers insist that their taxes remain at historically low levels.
Other wealthy Americans have enriched themselves through holdings in multinational corporations that fattened their bottom lines by laying off middle-class Americans and hiring cheaper replacement workers overseas.
Not only did these American workers see their lives damaged by the exporting of their jobs but they face the indignity of helping to foot the bill for the gigantic U.S. military which protects the global interests of these multinationals.
Fair and Logical
So, it would seem both fair and logical for the U.S. government to restore the marginal income tax rates on the wealthiest taxpayers at least to levels that existed prior to Ronald Reagan’s presidency. That way the rich could pay back the country for all it has done for them.
The American rich would even stand to make more money if they helped to rebuild the middle class. It has been an acknowledged rule of business since Henry Ford that companies thrive when people can afford to buy the products that the factories produce.
A socio-economic system that craters its middle class and caters only to the wealthy is not just unjust but unsafe. It is especially vulnerable to stock market speculation, to boom-and-bust cycles, and to political disruptions.