February 17, 2005
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If the spoke-shills for Wall Street, the Corpies and the 1- Percenters - and that includes the current occupant of the White House, who only dances with them what brung 'im - continue to insist that the income tax is unfair - pretty soon that will become another lie told often enough, etc., etc. It’s time to get rid of the income tax and replace it with a FAIRER tax - such as a national sales tax or (a flat tax).
This myth is part of an orchestrated campaign by "conservatives" of several stripes to do away with a progressive tax that is the fairest tax for all Americans. Replacing the income tax with a national sales tax or flat tax would cut the taxes of corporations and the very rich and impose huge tax hikes on the vast majority of American families.
Look at the state sales tax as an indicator of how a national sales tax would affect people at different income levels. The bottom 20 percent, with an average income of $9,300, pay eight times more of their income in state sales and excise taxes than wealthiest 1 percent, who have an average income of $1.1 million.
(By the way - under typical conservative flat tax proposal, such as Steve Forbes and Jack Kemp and the Repugs in congress were proposing in 2002, all families earning less than $200,000 would pay more in taxes and have lower after-tax incomes. Only families earning more than $200,000 would see their taxes go down and their after-tax incomes go up.)
The higher taxes on the majority of Americans would NOT pay for better schools, improved health care, or shoring up Social Security. Their new taxes would pay for a significant reduction of taxes on the wealthiest 1 percent, who have an average net worth of $10.2 million.
Fair? Hardly. Another perfectly good English word has been co-opted and its meaning distorted - and for what? Will we ever be able to know what someone means when he says or writes the word, "fair" again? How disappointing that the folks who have realized the American Dream would try to get off the hook for propping up the very system in which (and from which) they grew their wealth. And it's even worse that they devise a scheme to shift the burden to the folks who have realized far less from that system - and call it "fair"!
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HEY REV! DID YOU KNOW THAT THE PROGRESSIVE INCOME TAX WAS KARL MARX'S IDEA?!
Excuse me for not being sufficiently schooled in Marx and Engels to know for sure - but even Marx couldn't have been wrong about EVERYTHING, could he? That progressive taxation plank in the Communist Manifesto is a convenient boogieman for reactionaries to misappropriate, but it should be noted that the Manifesto also calls for "Free education for all children in public schools and abolition of children's factory labor in its present form."
So - I'll leave it to those who are more conversant with Karl's ideas to say whether, like a broken clock, he may have been right twice a day.
Who thought that the progressive income tax, authorized by constitutional amendment in 1913, would be up for discussion or that the nation was prepared to revisit fundamental aspects of the New Deal's social compact for retirement security? The constitutional amendment allowed a progressive income tax that raised revenue for public services, while counter-acting the overconcentration of wealth and power that was just as much a threat to equality of opportunity and true democracy then as it is today. The liberal consensus on taxes and entitlement programs is unrecognizable as a generation of progressives who grew up taking these policies for granted have forgotten how to fight for them effectively.
Meanwhile conservatives in wealth-infused think tanks have mastered the incubation and promotion of radical ideas such as flat or consumption taxes. Progressives are poorly organized to articulate the fundamental principles of fairness that underlie the progressive income tax: the idea that taxation should be based partly on ability to pay: If you earn more, you pay more. Bushco's reactionaries are falling over each other to game the system so the people who work for wages will be the only ones paying income taxes.
Similarly the "social" in Social Security has been lost in the drive to create private retirement accounts. Congress created Social Security not only to protect the elderly against poverty, but also to ensure society as a whole against the social challenges of destitute retirees. Leaving individuals to fend for themselves in the market defeats this basic promise.
The dirty little secret about taxes in this country is that rich people and corporations mostly don't pay them now. We don't need to raise taxes in this country, we need to collect them. The progressive income tax is fair. And a more efficient, fair, and effective tax system is patriotic. Enforcing the law so that wealthy taxpayers don't evade taxes through dubious partnerships, offshore accounts, and unreported income; simplifying the tax code to make it easier to follow the rules; and expanding the earned income tax credit to further reward work - demonstrate a progressive alternative to eliminating the estate tax and creating a national consumption tax.
The Bushco reactionary push seeks to flatten the progressive income tax, to eradicate not just one Roosevelt but two, going after FDR's safety net and the progressive legacy of Teddy. Tax giveaways for the wealthy - from flat taxes to a national sales tax to cuts in capital gains taxes to reduced estate taxes - are just that. There's no trickle down, no mitigating economic effects likely to spread their wealth more widely. Bushco misrepresents fact that the United States is still among the lowest-taxed industrialized countries in the world (by a large margin, compared to most countries). Moreover, the total U.S. tax rate on capital income, according to reasonable estimates, is quite competitive.
ARE THE HAPPY DAYS OVER FOR GOOD? http://www.cartoonbank.com/
Kevin Phillips is author of "Arrogant Capital: Washington, Wall Street and the Frustration of American Politics" discussing PARASITES & POLITICS:
~~~ (Corporate leaders these days) are less concerned about actual work. They don’t want to build things. They want to manipulate things. There’s always a lot of pioneering by these cultures, and it’s all negative for the average person. It’s all financialization.
The ultimate financialization has come with the superelectronic age. Lower Manhattan has become the new Tortuga, which was the pirate center in the Caribbean in the seventeenth and eighteenth centuries. The investment firms can do more with modems and quotrons than Henry Morgan and Blackbeard and all the rest could do under the skull and bones.
The result of this financialization process, where more and more are sucked into the orbit of Wall Street and the financial sector, is that all kinds of people in different parts of the country start thinking about how they can do a leveraged buyout of their business, or how they can get in this or that speculative side. It is very striking in the business community how many people who worked hard as humdrum presidents of little companies in Springfield, Ohio wanted to get pulled into the orbit of finance and somehow sell out or do a leveraged buyout. That was the way to go instead of being somebody who retired as having merely made good money for 20 or 30 years ...
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What we began to see, even before the rise of electronic finance, was the breakdown of employees getting the rewards of their productivity, and more and more of the profits in companies being taken by the top small group of managers. And whereas the CEOs of companies averaged 25 to 40 times the pay of the average worker back, say, in 1970, by the mid-to-late 1980s, you were looking at ratios like 120, 130, 140 to 1.
One of the reasons for this was the extent to which the senior people in companies were getting caught up in the whole financialization process. They wanted to get into buyouts. They wanted big salaries. They wanted deals. They wanted options. They’ve talked about golden parachutes.
A whole mindset developed in companies that had very little to do with whether you were actually making things that society needed or employing a lot of people or giving strength to a community. What counted was how much money you could get in your bonus, and how high you could get your stock price.
In the name of competitiveness and global problems, which obviously were very substantial, an awful lot of stuff was justified that was really just aimed at increasing the price of a company’s stock. When Xerox laid off 11,000 or so a year or two ago, their stock price went up about 7, 8 or 9 percent very quickly. The CEO’s bonus increased because the stock price increased. So in essence, he got a bonus from laying people off.
This undercuts the fabric and pulls things apart. There are all kinds of examples of the way this has worked against the average person. You have banks getting away with paying 2.75 percent on deposits while they charge 17 percent on credit cards, and politicians back off regulating this because it might upset the stock market. Pension funds have been undermined. There’s just a whole mindset out there that grew up around the assumption that all this was acceptable and even useful ...
EEK!!
Phillips describes other cultural shifts that take place among elites in declining powers such as the U.S.:
~~~ You internationalize. You lose your parochialism. In the early stages of the rise to power, you’ve got countries, whether it was Rome, Holland, Britain or the United States, that were somewhat Puritan, that worked very hard. But as the country hits its peak, it becomes the center of the world. It becomes much more fashionable and internationally oriented, especially the elites ...
The other thing that happens is that people get caught up in the sophistication and economic opportunity of global finance and investment. And as a country tends to peak, investors don’t get as much money from investing in the weakening parts of their own economy. So they want to ship it overseas. The Dutch financed a lot of the growth of Britain; they were major stockholders in the East India Company and the Bank of England. Then the British did, right before World War I; one of the reasons why their industry was aging was that they would rather put money into a tea plantation in Ceylon or a railroad in the Argentina, or for that matter, even something in Germany. They wouldn’t invest it at home.
This whole sense of internationalism and sophistication removes the elites from a commonality with their own peoples. They don’t care about decay in the Great Lakes or in the north of England, or in the old textile centers of Holland. It’s much more exciting to worry about where you can put your money 4,000 miles away ... As the elites pursue globalizing the economy and sophistication and progress, but (financialization) actually helps the 1, 2, 5 or 10 percent who have capital skills and education, whether it’s the trade consultant, or the international ship broker, or the commoditity company that trades globally, or Goldman Sachs or First Boston. There are other people who lose the standard of living they enjoyed 10 to 20 to 30 years ago. As we accept globalization, more and more people in the midsection of the population may have slightly cheaper sweatshirts coming in from China, but somehow or another their whole standard of living is stabilized or heading down, and their children don’t have the opportunities, and both parents are working to keep the same income coming in. ~~~
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UNIONS ARE CONSISTENT WITH A FREE ECONOMIC SYSTEM - Whether we can do without them or not, depends on whether you're satisfied and well-paid for your work, I'd guess . . .
I believe one should be able to do whatever one wants as long as he isn't hurting anyone else, hurting defined as the use of force or fraud. The primary - and proper - role of government is to protect individuals' rights to do what they want, and to help individuals protect themselves against force and fraud.
The acts of forming a union and negotiating via a union do not inherently rely on force and fraud. In the absence of a voluntarily signed contract forbidding it, one has the right to go to an employer and ask for a raise, benefits, or improved working conditions, right? If one tells his coworker that he plans to do this, the coworker has the same right, doesn't he? And don’t we have the right to go ask together? So, there’s nothing inherently anti-libertarian about unions.
Unions are a consistent libertarian response to the market failure of asymmetrical information. The market model assumes perfect information to get efficient outcomes, but this obviously isn’t the case in an employer-employee relationship. Unions allow these workers to band together, pool their money, and hire their own lawyers to negotiate for them, putting them on a much more equal footing with employers, minimizing the potential for abuse.
The alternative is government intervention into the employment relationship, with the imposition of minimum wage laws, mandatory overtime pay, OSHA working condition regulations, etc. These rely on government force instead of voluntary negotiations. It would seem the employers and employees (via their unions) - who actually know what’s going on in their business and workplace - are better able to negotiate efficient results than politicians pitting one special interest against another and legislating one-size-fits-all universal mandates.
Unions get their power from contracts, special government protection, financial pressure on employers and social pressure on scabs. At present, our body of labor regulations deal with an economic reality from the '30s -'50s, Taft-Hartley, et al. As our national government is seen by many wage-workers to be colluding with corporate interests and unseen captains of finance, labor stands as a seeming anachronism with little or no tools to effectively contend for representation of workers or to effectively represent their interests in the rapidly changing global marketplace. I'm willing to write off the unions as "beyond their usefulness" - but first - there needs to be another institution that represents the interests of those who market their labor lest they be exploited unfairly by capital.
"IT FEELS LIKE ARGENTINA!"
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