Like it or not, taxes on rich must be increased

Posted on May 17, 2011 in Governance Policy Context

Source: — Authors: – editorials
May 16, 2011.   Jim Scofield

— It should seem incredible that, with all the big tax cuts the wealthy and corporations have been given, and the expensive multiple wars we have to pay for, the country must drastically trim our Social Security and medical supports and further limit the modest pay and pensions of  public workers.

Certainly the recession has eroded tax revenues of national and local governments.

It’s strange, though, that government under a Democratic administration is drawing most of the criticism.

After all, the George W. Bush tenure doubled the national debt, despite the fact that he came into office with budget surpluses from the Clinton administration.

A recent Washington Post examination (May 8) based on Congressional Budget Office data indicates that “Obama-era choices account for about $1.7 trillion in new debt, Bush-era policies for

$7 trillion.”

And the hypocrisy of Republicans who pose as fiscally responsible should be evident in their desires nationally and in state houses to cut taxes drastically, measures which hardly balance budgets. It isn’t wasteful federal programs or over-rewarded public workers who account for the problems.

Surely though, defense spending is a huge problem.

It is double what it was in 1998 (from $360 billion to $739 billion). And we now have three wars-plus – Iraq, Afghanistan, Libya and  the drone and special forces attacks in Pakistan and elsewhere.

It’s hard to argue that these wars are against terrorism.

Iraq and Libya clearly are not. In the other two countries, the main enemy is the Taliban, not an internationalist terrorist force. Al-Qaida is small. These wars may be creating more resentment and revenge against us than they are a defense.

We could easily return to the late 1990s military budget of half or less.

Like it or not, besides reasonably limiting military spending, the taxes of the rich, which have been substantially reduced, need to be increased.

While housing prices have fallen and unemployment is still 14 million, the incomes of the wealthy are flourishing.

CEO pay is now better than in prerecession 2007. Thirty-some years ago it was about 25 times that of the average wage. Now it’s more than 300 times.

Is anyone worth all that?

Are the bankers who crashed our financial system with their wild speculations worth that much more?

By weakening unions – something conservatives want to do even further – and moving jobs to places such as China, where Wal-Mart, Nike and other corporations can pay subsistence wages, corporations have changed a once-equitable America.

According to an Economic Policy Institute analysis, the richest 10 percent received all the average income growth of the expansion of 2000-07.

Now they are doing even better. Our post-World War II era had a much fairer income growth and distribution. Now the richest 5 percent get 63.5 percent of our wealth.

According to a recent Harvard Business School survey, Americans don’t realize that wealth in their country is that badly skewed, and say they favor the richest 20 percent owning only 32 percent of the wealth (close to socialism).

Most developed countries haven’t divided wealth as badly as we and have better outcomes in many categories, such as overall health and education.

Moreover, top individual income and corporate income taxes are way down. Corporations, for example, pay one-third less of their share of the total income taxes, shifting the burden to individual taxpayers.

Republican Paul Ryan’s plan is to reduce the wealthy’s income taxes further, and the Obama administration may go along with some of this.

The continuation of the Bush tax cuts are one bad example. Even the Democrats’ idea of extending tax cuts to include those with $250,000 taxable incomes (actual about $300,000) shows a party too indebted to wealthy campaign contributors.

For conservatives, these steps are appropriate. All government services – Social Security, Medicare, public education, etc. – are undeserved handouts and should be paid for by individuals.

Several Republican governors (including ours) have expressed the opinion that the unemployed could find work if they desired and are therefore shirkers. By contrast, in most  European countries, ordinary people have a better economic safety net, a factor scorned by our very financially secure rich.

This recession has set back government finances. But generous tax breaks for the wealthy and our expensive wars have become the major problems.

We don’t have to let public education, health and retirement funding recede back to pre-Great Depression levels.

Many conservatives, though, wish to seize the chance to undo the advances made since the New Deal and other reforms increased the living standards of the great majority.

Jim Scofield of Richland Township is an associate professor emeritus of English at Pitt-Johnstown.

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