March 9, 2012 by David K. Sutton
Occupy Fairness: Don’t Let The One Percent Define What Is Fair
It really does come down to fairness.
Republicans say that high income earners already pay a disproportionate share of total federal tax revenue. They are correct. Republicans say 46% of Americans pay no federal income tax. Again, they are correct. Republicans say it is unfair to increase taxes on people in the top tax bracket. According to who?
Liberals have this crazy idea that government in a representative democracy can serve as the great equalizer, that government can help lift people up who have been left behind through no fault of their own. No, we aren’t talking about a truly level playing field, one that sees everyone making the same income and owning the same wealth. Instead, liberals believe in a constant and continual emphasis on making government work for everyone, not just the people at the top. We should stop conservatives in their tracks when they attempt to falsely redefine what liberals are about.
Before the Great Depression we had an upper class and a lower class. The robust middle class that most of us have grown up with in this country didn’t start to take shape until post-WWII and it was largely a result of an interest in making government work for everyone. That was, at its core, the goal of the New Deal. Because of this emphasis on fairness and equality, over the next several decades the country saw a long and sustained period of wealth and income equality. There were still rich and poor, but the gap narrowed considerably.
Since that time, and over the past 30 years, we have seen this gap widen again due to supply-side economics and the parallel belief that the wealthy are only motivated when given more money and the poor are only motivated when taking it away. We need not look any further than tax policy from the Reagan administration until today. All incomes have seen tax cuts, but the highest earners have seen the biggest gains when it comes to real dollars. During this same period there has also been a slow and deliberate erosion of the social safety net. These are programs put in place in the 1920s, 30s and 60s, meant to preseve a strong middle class and stop people in poverty from ending up on the street. Every time you hear about a budget crisis at the federal, state or local level, you can be sure that another strand of the safety net has been removed.
Large scale, across-the-board tax cuts (i.e. the Bush tax cuts) will always award high income earners with the greatest windfall. The higher your income, the more dollars you keep. Many Republicans, under the guise of fairness, point out that top income earners already pay the largest share of income tax. This is true, but I posit this very fact supports the idea of raising taxes on these same high income earners (which of course counters the original intent). This disproportionate contribution towards the total tax pool is the result of tax code loopholes and relaxed regulations that have allowed the wealthy to accumulate even more wealth. Keep in mind that not all income is the same. Mitt Romney, for example, generates income from his wealth, not a job. Romney might have worked at one time, but he no longer has to. He has a multi-million dollar investment income generated solely by his wealth and he pays a lower effective tax rate than most earned income workers, you know, the average person like you and I working a 40+ hour week at a real job. The more wealth accumulated, the more wealth subject to tax, even if it is taxed at a smaller rate like Romney’s (again, due to manipulation by the powerful). The fact that the wealthy might pay the largest share in real dollars is cherry picking statistics.
There are even some Republicans in congress that take the idea of “fairness” to a whole new level. They point to the fact that 46% of Americans paid no federal income tax in the previous year. They say this is unfair and that everyone should put some “skin in the game”, nevermind that the poor have no “skin” to spare. These Republicans conveniently ignore the fact that everyone (including the 46%) pays payroll tax, state and local taxes, real estate taxes (if they are lucky enough to own a home), gas tax, etc. The Republican idea of tax fairness is to cut taxes for the wealthy and require tens of millions of Americans to start contributing something to federal income tax even if they are broke, in debt and have no money to spare.
I recently asked “Where Do You Suppose The Wealth Of The One Percent Comes From?” My intention was to start a dialog about income and wealth inequality in this country. The Occupy movement has compressed it down to the 99% vs. the 1% because that is easy to grasp, but it is a much more complex issue. The effect of wealth and power on our democracy has shaped legislation over many decades. Armies of lobbyists are in Washington for one purpose, to make sure their respective industries keep more money and make bigger profits through loopholes and relaxed regulations. This lobbying of elected officials is how a representative democracy is meant to work. We all get to lobby our government for change, but some have louder voices and deeper pockets.
So where does the wealth of the one percent come from? As I said, it’s not a simple equation, but wealth isn’t created from nothing. If somebody is getting richer that means somebody else is getting poorer, or at the very least not benefiting as greatly as he or she should have in a more just system. A simple example is out-of-control CEO salaries. You can reward a CEO – who is making many more times his counterpart 40 years ago – with a $10 million bonus or instead you could reward all 5,000 workers with $2,000 bonuses. I’m not suggesting that CEOs should not receive the highest pay in a company, there are some things that aren’t going to change. If you work your way up the ladder to CEO, then sure, you can receive the highest pay. But where do our morals and values come into play in a system that disproportionately rewards one person when it took the work of all to make the company successful? Where we strike the balance will always be a matter of debate, but can anyone honestly look at income and wealth inequality in this country and say the balance is just about right?
By shaping legislation to their benefit, I’m not suggesting that the one percent are literally stealing money from people. What I am suggesting is that this manipulation of government has allowed the one percent to accumulate a larger slice of the wealth pie. Because of this, we have greater income and wealth inequality and a less robust middle class with reduced purchasing power. With the possible exception of the .01%, this equation eventually hurts the entire country, one percent included.
I don’t have a magic pill for fixing this problem but we can start by changing the dialog. This is one great success of the Occupy movement. Talk of income inequality was previously limited to small circles of policy wonks and reform activists. It was Occupy Wall Street that got everyone talking income inequality, even if some would rather the topic found its way back to obscurity. Changing the dialog allows for greater numbers of citizens to put pressure on elected officials. We can remind them that their duty is to serve all citizens, not just those who can afford the largest campaign contributions. We can demand a fairer tax system based, not on dollar amount, but instead the ability to pay. We can hold our elected officials accountable if they put tax breaks for the wealthy ahead of education, infrastructure and the social safety net.
We must do what we can to keep this dialog going and stand up for what is right and what is fair.