Imperium Watch: ?A Handful of Yachts?
The battle that centers around tax hikes for the wealthiest of Americans is historic—historic because it points up a question about whether the American people want an economy that allows ordinary citizens to live a decent life, secure in regard to basic benefits such as food, housing, police and fire protection and K-12 education, or whether they want the rules to be written to favor the making of enormous fortunes.
What’s worth noticing about the way the right has dug in on the point of taxing the very highest layer is that the rise President Obama and the Democrats have been fighting for is so small. An entrenched position would be understandable if the very wealthy were being asked to put up with a tax increase that would take them back to the 50 percent they paid under the right’s much-touted hero, Ronald Reagan. No one is asking for that, let alone that we go back to the days before that—to the 70 percent they paid from 1964 until 1981.
But to hear the hue and cry from the GOP, you’d think they were facing a hike to the 91 percent they paid during World War II and until 1964 (during which time, let it be noted, the economy grew like mushrooms after rain).
What’s at issue is a 4.6 percent rise, a return to the rate the very wealthiest paid under President Clinton: 39.6 percent. Not a rise of 35 percent or 56 percent. Not even a rise of 15 percent.
An ABC-Washington Post poll recently showed that 60 percent of respondents favored letting the Bush tax cuts on incomes over $250,000 expire; those results were supported by two other polls within the same week. Even the International Monetary Fund has cautioned the United States about policies that are perpetuating the income gap here, pointing out that growth in gross domestic product is not a sign of a healthy economy if more and more money is trapped at the top. “When a handful of yachts become ocean liners while the rest remain lowly canoes,” IMF commentators wrote in a study of income equality, “something is seriously amiss.”
And the very richest, who have had a 12-year tax holiday from the rate they paid during the Clinton administration, are not creating jobs, at least not in the U.S. We know they aren’t, because the jobs are not here.
Meanwhile, many experts, including entrepreneur and venture capitalist Nick Hanauer, point out that a financially empowered middle class that can buy things and start small businesses is better for the economy than a bloated top layer. Hanauer wrote in The Atlantic (“Rich Americans Aren’t the Real Job Creators,” September 27), “The crony capitalism that we have allowed to infect the U.S. economic system shares weaknesses with communism. A tax system that amplifies compounding advantages for businesspeople and corporations the higher up the food chain they go and compounds disadvantages for people at the bottom is bad for business. It slows the rate at which ideas are generated and problems are solved. The healthiest ecosystem or economy is one with the most diverse, able competitors, not one overrun with one or two dominant species.”•