03/26/2009 03:26:24 PM EST
Cenk's 'Shared Sacrifice' Tax Plan (W/ Poll)
posted by ihavenobias
Cenk's Shared Sacrifice Tax Plan1. The plan goes from 2010-2015.
2. Taxes on people making 250k to 1mil go up 5%.
3. Taxes on people making 1mil-10mil go up 10%.
4. Taxes on people making over 10mil go up 15%.
What do I think about this plan? I agree with Robert Borsage, the plan is much better than doing nothing, but it doesn't go far enough and it should be permanent.
There are two critical points to keep in perspective when evaluating any tax proposal:
1. What is the Top Marginal Tax Rate?
The TMTR is the highest amount of taxes paid only on money made after a certain cap. For example, under Republican president Eisenhower, the top marginal tax rate was 91%.
That means that in today's dollars, people making over about 3 million a year would be taxed at lower rates (the rates that applied to everyone else making less) for their first 3 million, and 91% on every dollar made AFTER that.
This is a critical point, because far too many people think that the top marginal rate applies to every dollar someone makes, i.e. a 91% rate means that someone making 3 million a year ends up with $273,000. If that was in fact the case, then yes, obviously that tax rate would be insane and make no sense whatsoever.
2. What Do Income Tax Rates Look Like Historically?
As you saw above, income tax rates have generally been significantly higher in the past, even under Republican presidents.
Here is a nice
chart showing the top marginal tax rates over time. Matthew Iglesias of Think Progress brilliantly makes the following observation:
"And yes, please pay no attention to the fact that the three periods of ultra-low taxes were followed by a budget crisis (Reagan) and catastrophic global economic collapse (Coolidge-Hoover, Bush)."
Yes, the Great Depression was directly preceded by 5 consecutive tax cuts. And yes, the S & L debacle and other issues were preceded by the largest tax cut in history after Reagan cut the top marginal rate from 70% to 28% (he was also responsible for the largest tax increase in history i.e. he doubled the payroll tax that whacks middle class folks).
And most of us are already familiar with what just happened under Bush Jr.
Some argue that the 90's are a great template for what the marginal tax rate should be as we had a balanced budget and good growth, and while that's true to some extent, it ignores some important facts. Like the fact that
Clinton added a good chunk of change to the National Debt (far less than Reagan or Bush, but still, and yes, he lowered it as a % of GDP).
There's also the fact that we don't have a
tech bubble tech boom every decade.
At any rate, conservative arguments that high top marginal rates destroy the economy have been debunked by history,
as explained by Larry Beinhart:
The four period of greatest economic growth in American history, by pretty much any measure, are:
· World War II (1941-45): top tax rate varied from 88-94%
· Post-war under Truman and Eisenhower: top rate bounced around from 81-92%
· Clinton years: Clinton raised Bush's top rate of 31% to 37% and then to 39%
· First two Roosevelt Administrations (1933-40). When Roosevelt came into office, Hoover had already raised the tax rate in 1932 from 25% to 63%. Roosevelt raised it again in 1936 to 79%.
We're in Iraq and Afghanistan, we're trying to seriously improve health care and get off of foreign oil and we're climbing out of economic disaster. I'd like to think that the wars and economic disaster will eventually go away, but that still leaves us with a massive debt and possibly health care for all and dramatic changes in how we get our energy.
Not to mention
our crumbling infrastructure that we're
barely addressing. It's quite clear to me that permanently increasing the top marginal tax rate is part of the answer. As a compromise I'd even say going to 50% would be a huge step forward, keeping in mind it's over 20% less than what it was from Kennedy-Reagan, and over 40% less than it was under Republican Eisenhower.
Also, here's a really interesting (and short)
article on why a STET (tax) for Wall Street is a great idea.
The Bottom LineLow tax rates on the rich coupled with
deregulation encouraged crazy speculation at the Wall Street Casino.
As Cenk often says,
these people have so much money they don't know what to do with it! And while sensible rules for Wall Street are an important part of the equation, we can't ignore the other half, which is a return to more historically proven tax rates.
Do we get crazy growth (90% of which only benefits the top 1-10% of Americans BTW)? No. We get slow, steady growth minus the booms, busts and economic disasters. We can repeat tired clichés about Laffer curves and
the rich creating jobs, or we can look at history and cut out the nonsense.
I'll leave you with this devastating quote from
a great NY Times piece:
"...
From 1980 to 2005 the national economy, adjusted for inflation, more than doubled. (Because of population growth, the actual increase per capita was about 66 percent.) But the average income for the vast majority of Americans actually declined during that period. The standard of living for the average family has improved not because incomes have grown, but because women have gone into the workplace in droves.
The peak income year for the bottom 90 percent of Americans was way back in 1973 — when the average income per taxpayer (adjusted for inflation) was $33,001. That is nearly $4,000 higher than the average in 2005.
It’s incredible but true:
90 percent of the population missed out on the income gains during that long period..."
