Reich: The logic of Taxing the Rich, and Why Dems are Afraid to Use It

Robert Reich makes the case for a more progressive tax structure:

The logic of Taxing the Rich, and Why Dems are Afraid to Use It, by Robert Reich: No candidate for president has suggested that the nation should raise the marginal tax rate on the richest beyond the 38 percent rate it was under Clinton (it’s now 35 percent, but the richest of the rich, as I’ll explain in a moment, are paying only 15 percent). Yet new data from the IRS show that income inequality continues to widen. ...

The biggest emerging pay gap is actually inside the top 1 percent. It's mainly between CEOs, on the one hand, and Wall Street financiers – hedge-fund managers, private-equity managers ..., and investment bankers – on the other. ... The 25 highest paid hedge fund managers are earning more than the CEOs of the largest five hundred companies in the Standard and Poor’s 500 combined. CEO pay is outrageous; hedge and private-equity pay is way beyond outrageous. Several of these fund managers are taking home more than a billion dollars a year.

You might think that Democrats would do something about the anomaly in the tax code that treats the earnings of private-equity and hedge fund managers as capital gains rather than ordinary income, and thereby taxes them at 15 percent... But Senate Democrats recently backed off a proposal to do just that. Why? It turns out that Dems are getting more campaign contributions these days from hedge fund and private equity partners than Republicans are getting. They don’t want to bite the hands that feed.

Taxing the super-rich is not about class envy, as conservatives charge. It’s about the nation having enough money to pay for national defense and homeland security, good schools and a crumbling infrastructure, the upcoming costs of boomers’ Social Security ..., and, hopefully, affordable national health insurance. Not to mention the trillion dollars or so it will take to fix the Alternative Minimum Tax, which is now starting to hit the middle class.

If the rich and super-rich don’t pay their fair share of this tab, the middle class will get socked with the bill. But the middle class can’t possibly pay it. America’s middle class is under intense financial pressure. Median wages and benefits, adjusted for inflation, have been going nowhere for thirty years; health costs are soaring..., fuel costs are out of sight, the prices of the houses occupied by the middle-class are in the doldrums.

What’s fair? I’d say a 50 percent marginal tax rate on the very rich (earning over $500,000 a year). Plus an annual wealth tax of one half of one percent on net worth of people holding more than $5 million in total assets. Can’t be done, you say? Well, the highest marginal tax rate under Republican Dwight Eisenhower was 91 percent. It dropped under JFK to the 70 percent range. You say the rich will leave the country rather than face a marginal tax of 50 percent? Let them, and take away their citizenship.

If the Democrats stand for anything, it’s a fair allocation of the responsibility for paying the costs of maintaining this nation. So far, neither the Dem candidates for president nor the Senate Dems have shown a willingness to uphold this fundamental principle. It seems the rich have bought them out.

The Democratic leadership's decision to sell-out on the capital gains versus ordinary income tax issue was disappointing. On Robert Reich's proposal, whaddayathink? Is 50% fair?

Comments

[Tom Russel]

Sounds good to me, but the key issue is to take away the citizenship. This is the stick.

It will be interesting to see how many people jump to other jurisdictions, like Qatar or Israel, or if this number is small.

[bob mcmanus]

I am not interested in fair. I like the 91%, for a lot of reasons associated with equality. Someone making a quarter million isn't likely to try to skip the country with it.

I'll figure out what to do with the money later. The millionaire will get his one vote.

[James Killus]

Reich is only half right and his analysis of why the Democrats are waffling contains the other half. The sort of money being hauled in by hedge fund managers isn't money for consumption--it's raw political power, plus the power to redirect the social priorities of the nation through "philanthropy" and other social engineering.

And the romantic notion that those who gamble with other people's money are somehow "earning" their fat paychecks is beyond ignorant. It's a symptom of power worship.

[Gene O'Grady]

Fifty percent is OK, although I might have picked forty-five, but it needs to kick in at a much higher figure, such as two-five million per year. The wealth tax is unmanageable given the cost of real estate in California (among other things).

Above remarks imply eliminate preferential rates for unearned income and retaining some form of estate tax.

[BJ Feng]

Reich shows his true colors. The biggest goal of government should be to create the opportunity and environment for people to become rich. Yes, people come to America like my family did, for the opportunity to achieve the American Dream. All of us did at one point. Somehow that's been lost; America is great for the opportunity it provides, perhaps some of us have been here for too long to remember what this country represents and means to immigrants.

Government role should be to make sure opportunities exist for those willing and able. It already has enough resources to do this. Government's role is NOT to punish the successful. Doing so would destroy the opportunity for the American Dream so many of us have come to America to find.

[Cyrille]

It's not punishing the successful. Every extra dollar still gives you something MORE, rather than a public flogging. However, every extra dollar after a while would just give you 50 cents. Which is fine -you're not exactly in need when you are a hedge fund manager.

The American dream was about being successful. Not about making a billion dollars a year by gambling with others' money without disclosing anything about your transactions.

[wjd123]

Most people realized a better life when the tax rates on top earners were over 50%.

I wish Reich would have explained why he thinks that the threat to top earners of loss of citizenship would be a deterrent to their avoiding a higher tax bracket.

[James Killus]

Beyond ignorant, BJ Feng. Beyond ignorant.

[Lafayette]

Article: The biggest emerging pay gap is actually inside the top 1 percent. It's mainly between CEOs, on the one hand, and Wall Street financiers – hedge-fund managers, private-equity managers ..., and investment bankers ... The 25 highest paid hedge fund managers are earning more than the CEOs of the largest five hundred companies in the Standard and Poor’s 500 combined.

Greed is good?

Spot on. These people are feeding at the trough.

No one can convincingly argue that being compensated at that level is "a just reward for hard work and risk". Earning a million times more than the janitor is fair and equitable -- or "just the way the cookie crumbles"?

I can see it now, "Hey, if I don't take it, some one else will!" Yeah, right. John Dillinger also said that he robbed banks because "that's where the money is!" Both are simplistic nonsense, but at least John went to jail. He was hardly “earning” his money. And, I maintain, anyone involved in financial chicanery is not earning their money either – they are just profiting from the “game”. And, as with all speculative games, the proceeds should be heavily taxed.

The argument for near confiscatory taxation of greed is apparent. This compensation level is not necessary, the people earning it would work just as hard earning a tenth of what they are actually being compensated.

Besides, though not apparent, it is menacing the social fabric of the country. This sort of wealth amassing is undermining the pillars of the nation that were founded on fairness and equitability. Not greed.

If communism won't work because it does not correspond to innate human abilities (and luck) that allow some to perform better than others; then income inequality generated by crude capitalism, by which the victor wins ALL the spoils, is contrary to a sense of social justice. Certainly, fairness is somewhere in between the two extremes.

Why do the Dems say nothing about confiscatory taxing of the rich? Because that is precisely where their campaign money is coming from.

Cut the umbilical cord between politicians and moneyed interests and you'll get more fair elections -- not a media circus. Till then, we're just pissing into the wind.

Watch what will happen; it is called "bait and switch". The Dems win, they throw a high-cost bone (health insurance for all) to the masses and then we all get back to business as usual.

P.T. Barnum was right, “A sucker is born every minute”. Especially during election years.

[reason]

Hey I agree with Lafayette, the problem is the political process. We need the US to reform its electoral process more than any particular policy.

says...

Not adequately taxing the super-rich allows them to buy government through campaign contributions, and unduly influence social progress through bullying philanthropy to favor their pet (and sometimes petty) interests with the money, instead. They do not need that much cash for their personal budgets, and the way in which they use all that surplus income to influence society is anti-democratic-- one dollar/one vote rather than one (wo)man/one vote.

Campaign cash-- and the grateful connections to the mega-donors-- is the root of all evil in the Democratic Party. James Killus is spot-on in comment above. The beholden way in which Chuck Schumer and company relate to the hedge-fund managers is a blight on the dream of democracy...

...which, BJ Feng, is the dream that my immigrant grandparents came here to pursue-- not the chance they might get rich through greed, but, rather, that all willing to work might enjoy modest prosperity and the opportunity to live a good life, through democracy.

If they had wanted a society ruled by heirs to massive inherited fortunes and secretive, wealthy, ruthless conglomerates, held together by raw power and greed, they could have stayed in Southern Italy or occupied Ireland. We must keep alive the dream that they believed, that all are created equal, endowed by their creator with certain inalienable rights....

As for the super-rich who will not be loyal to these principles if their wealth is taxed at 50%, let them forfeit their citizenship and move to Dubaii, and good riddance, too. Plenty of talented and wealthy people are willing to be US citizens, with all the responsibility to democratic principles that implies.

[Daniel]

FYI, Lafayette
I think you're referring to Willie Sutton.

[Don Quijote]

I think that we should give the Republicans what they have always wanted, a repeal of all income tax and a repeal of all inheritance taxes.

We should give them what they have always wanted a flat tax. ON WEALTH. 3 to 5 % yearly.

On April 15th every year, Mr Gates, Buffet, Mellon-Scaife & company pay up 3% of what you were worth on December 31 last year, thank you.

Mr John Q American, net Worth $200,000, pay up that'll be $6000.

ps.
Loss of citizenship isn't enough. It has to be loss of citizenship and being persona non grata on all US territories.

[ken melvin]

How very fitting, people come to America to do the very thing that destroyed the culture they were glad to leave. Make no mistake, greed and grub destroys a society and it's greed and grub with the blessing of CATO, Chicago, and Rand that is turning America into a third world country.

[juandos]

I do believe that Robert Reich could be considered a liar through omission...

The rich already carry society's parasites on their collective backs and have been for quite some time through the scam called, "progressive taxation"...

The rich have always been and still are paying far more than their 'FAIR' share and Reich's logic is that these producing people should be punished for their productivity through income redistribution via the Constitutionally questionable socialist programs foisted off on its citizenry via Congressional acts...

[anne]

"The rich already carry society's parasites on their collective backs and have been for quite some time through the scam called, 'progressive taxation'..."

Notice the crazed language; this is what purposeful hatefulness was about when the same term was used in another world in another time, a term that would bring endless misery. This is what hatefulness is about.

[anne]

Thank you, Robert Reich and Mark Thoma, for having such courage.

[Don Quijote]

Juandos,

My inheriting a hundred million from my family will make me a productive person.

Born on Third Base - The Sources of Wealth of the 1997 Forbes 400

42 % Born on Home Plate - inherited sufficient wealth to rank among the Forbes 400. This percentage is higher than that listed by Forbes for inheritors. The reason: Forbes listed as "self-made" people who actually inherited substantial sums or property and then later built that stake into a greater fortune. One example is Philip Anschutz (1997 net worth: $5.2 billion) who is listed as "self-made" even though he inherited a $500-million oil and gas field.

6 % Born on Third Base - inherited substantial wealth in excess of $50 million or a large and prosperous company and grew this initial fortune into membership in the Forbes 400.

7 % Born on Second Base ó inherited a medium-sized business or wealth of more than $1 million or received substantial start-up capital for a business from a family member.

14 % Born on First Base - biography indicates wealthy or upper-class background that was to our knowledge less than $1 million, or received some start-up capital from a family member. Due to the study team's conservative coding rule, it is likely that some of those listed as born on first base actually belong on second or third base.

31 % Born in the Batter's Box - individuals and families whose parents did not have great wealth or own a business with more than a few employees.

The fastest and most common way of getting wealthy, inherit a lot of money.

As for the parasites, They do most of the working and paying and living and dying in this community.

[Anarcho]

"the biggest goal of government should be to create the opportunity and environment for people to become rich."

Except, of course, social mobility is falling as inequality is rising. Unsurprising, really, as it is easier to climb a a hill than a mountain...

And, of course, neither party will be addressing the various laws which help skew the market in favour of the capitalist class nor will they address the legacy of previous state interventions on their behalf. They are capitalist parties first and foremost, although ordinary people seem to have more influence with the Democrats. The Democrats also have the advantage in that the Republicans do seem to be totally corrupt and incompetent.

Which goes to show, as anarchists have always stressed, the importance of direct action and solidarity. Without pressure from the streets and workplaces, politicians will do little. Hence the pressing need to build unions and community groups and for people to act for themselves instead of waiting for politicians.

says...

Juan's really the same right winger who used to post under the nom de plume of some crank named John D... (can't remember).

[Turbo]

Making long-term capital gains progressive rather than a flat tax seems the most direct way to end the perversity of having billionaires taxed at a 15% marginal rate, while the merely well-off are taxed at 35%. But then again, I suppose that's the distinction between who buys the government as opposed to who actually pays for it.

[save_the_rustbelt]

Whatever the flaws of the tax system, fixing the tax system is no guarantee of fixing inequality of incomes.

See the WSJ editorial from last week on the hollowing of the US job market and the resultant hollowing of the US middle class.

Americans do not want more tax credits (although that would be better than nothing). Americans want productive work with productive companies.

We don't seem to know how to fix that.

[anne]

"Americans do not want more tax credits (although that would be better than nothing). Americans want productive work with productive companies.

"We don't seem to know how to fix that."

Always Republican nonsense, always Republican ignoring of the New Deal and Republican ignoring of immense gains in employment and well-being through the Administration of Bill Clinton in which job creation averaged over 235,000 a month through 8 years. The idea of even green infrastructure development in the New Deal tradition as creating jobs and well being is lost on Republicans.

[anne]

We could have health care for all Americans; we could have free tuition at public colleges and universities; we could have a green infrastructure development program, and watch this country flower rather than being content with spending an insane $200 billion a year on destruction in Iraq.

Imagine a country that is spending $200 billion in Iraq against $4.2 billion for energy research or $7 billion for the health care of 3.8 million children. This is an America that would completely forget its idealistic heritage, and America where the President is bent now on denying health care for disabled children an adults under Medicaid while threatening Iran with World War III.

[anne]

When the President decided that we could not afford health care for 3.8 million children for a mere $7 billion a year, which was already paid for, the President failed to mention that the decision had been made before that Medicaid could no longer afford the health care of needy mentally and physically children and adults. The vetoed health care bill for children, also contained a provision to protect Medicaid health care services for needy disabled children and adults.

We know precisely what we can do to fix things in America, but we are all about war and occupation and the destruction of war and occupation. We know.

[save_the_rustbelt]

Anne:

Let reality intrude a moment...

The New Deal did a lot of good things but did not fix the job market.

The severe drain of middle class jobs, particularly manufacturing, began as the Clinton administration started pushing globalization (Rubinomics).

Beyond that, there is no guarantee that fixing the tax system will fix inequality. None. Nada. If there is such a guarantee or even a high probability please explain in technical detail, I'm waiting. Insults do not inform me.

Fixing the NLRB would likely do more for the job market than fixing the tax code.

[Farrar Richardson]

Feng -

You wrote and I agree -
"Yes, people come to America like my family did, for the opportunity to achieve the American Dream. All of us did at one point. Somehow that's been lost"

Apparently you thought the American dream was to become rich, but "Somehow all that's been lost", and you seem to think that high taxes are preventing people from becoming rich. But now taxes are lower than they have been in three generations. Isn't there a contradiction in your reasoning?

Or maybe you were just mistaken about the content of the American dream. I seem to remember something about a quest for Liberty figuring in there somewhere.

That's why my family came, and simply for the opportunity to earn a living wage. We haven't become rich in 10 generations, but our heads are still above water.

Or maybe I was mistaken about the content of the Dream, too. I always thought it was Liberty, Equality, Fraternity. I guess I got my revolutions mixed up.

Maybe that's why I like living in France, but can't quite give up on the USA.

[anne]

"The biggest goal of government should be to create the opportunity and environment for people to become rich."

Which is precisely why lunatics are fighting so hard to deny mere health care to milliuons of needy children, let alone adults. Precisely why we turn from the evient effects of cutting Medicaid even on infant mortality in the South.

We are terrified that the Iraqi government is turning to the Chinese and Iranians for electricity, while we have been busily warring and occupying for what will have been a direct cost of $800 billion in a few months and no longer counting the hours of electricity that are not being supplied.

Turning now to creating the environment and opportunity for us all to be rich....

[save_the_rustbelt]

"Plus an annual wealth tax of one half of one percent on net worth of people holding more than $5 million in total assets."

It is clear Reich has never done tax returns or financial statements, this would be a compliance and auditing nightmare, roughly equivalant to filing an estate tax return every year.

[anne]

"Fixing the NLRB (national labor relations board) would likely do more for the job market than fixing the tax code."

I would suggest both, but fixing the NLRB so that worker rights in balance to management rights are attended to is essential. Whether fixing the tax code will lessen inequality, which it surely might, is less important than having a fair tax code. Now, the tax code is fostering inequality.

The danger for France, and danger there is, is that France should wish to become the America we are as opposed tol the America we once wishes to be an were becoming.

[Farrar Richardson]

Rusty Belt,

You may be right about fixing the NLRB having more immediate effect on fixing the job market.

I also wonder whether redistribution of income and increasing the propensity to consume will help much.

But in the long run - when many of us - will be dead - we've got to have faith (and it is perhaps largely a question of faith) that fixing education and health care are the keys to prosperity.

Human capital is always and everywhere the key to economic development.

[Denis Drew]

The only campaign finance mechanism that can end the super rich buying out the Dem party might be REVERSE matching funds: the taxpayer matches any private contribution with a public contribution to the opponent's campaign.

Do this and incumbents of both parties will fly away from contributers -- and instead of spending half their time raising money and the other half the time working for those they raised the money from they can start working for the voters again.

Would help immensely if America were adequately reunionized so that the number of lobbyists keeping an eye on the interests of the average person in DC matches the numbers of special interest lobbyists.

Add on a suggestion I saw on the SEIU's Since Sliced Bread thing -- paying voters $35 to vote which will get more poor folks than rich folks into the voting booth for once -- and we will have about the perfect fair representation setup.

[anne]

Though I could criticize Robert Reich as being unrealistic and needlessly complicating a matter of tax fairness, I would rather be pleased the subject is raised. These coming days as data is analyzed we will find another startling increase in income and wealth concentration that is being fostered partially by tax structure even more by the lack of balance to management an especially financial management dominance.

[anne]

Remember the time in which we are living, when even Jay Leno could ask Barack Obama about the President's raising of the phantom of World War while the President of Russia warns about concern over any prospect of another war in Asia. And, I was recently complaining merely about the absurd threats of Bernard Kouchner.

We have completely lost our way, with Administration leaders seemingly beyond thinking of American needs. So much for realism.

[save_the_rustbelt]

Farrar:

Absolutely, but the collection of taxes is no guarantee the money will be spent wisely.

And there is risk in the deadweight loss of higher taxes (I don't think we are there yet).

Also, higher taxes tend to protect established corporations and drag on entrepreneurs.

Complex problems require sophisticated, multifaceted solutions.

[Patricia Shannon]

http://www.nytimes.com/2007/10/18/business/media/18broadcast.html?_r=2&ref=business&oref=slogin&oref=slogin

Plan Would Ease Limits on Media Owners
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By STEPHEN LABATON
Published: October 18, 2007
WASHINGTON, Oct. 17 — The head of the Federal Communications Commission has circulated an ambitious plan to relax the decades-old media ownership rules, including repealing a rule that forbids a company to own both a newspaper and a television or radio station in the same city.

Plan Would Ease Limits on Media Owners
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By STEPHEN LABATON
Published: October 18, 2007
WASHINGTON, Oct. 17 — The head of the Federal Communications Commission has circulated an ambitious plan to relax the decades-old media ownership rules, including repealing a rule that forbids a company to own both a newspaper and a television or radio station in the same city.

Kevin J. Martin, chairman of the commission, wants to repeal the rule in the next two months — a plan that, if successful, would be a big victory for some executives of media conglomerates.

Among them are Samuel Zell, the Chicago investor who is seeking to complete a buyout of the Tribune Company, and Rupert Murdoch, who has lobbied against the rule for years so that he can continue controlling both The New York Post and a Fox television station in New York

The Republicans are trying to pay back their promise to big media to allow media consolidation, for which they have been getting greatly preferential treatment from the media. Great wealth allows the few to have great power, including the power to control sources of information. Accurate information is necessary for effective democracy.

[Farrar Richardson]

Rusty

"the collection of taxes is no guarantee the money will be spent wisely."

As the Bush govt has proved

the NON collection of taxes is no guarantee the money will be spent wisely.

[anne]

"Absolutely, but the collection of taxes is no guarantee the money will be spent wisely."

Again, we will soon have spent an insane $800 billion in all for war and occupation. We are spending shamefully, worse than shamefully, far worse, but this compassionate conservativ Administration has complained not a whit about the tragedy of spending on a needless war and occupation. This is a period of immoral waste beyond waste, and the waste will continue for Administration leaders have willed it so.

[anne]

That there are strikes in France and Germany now, real strikes not the pretend American strikes we have had, pleases me in telling of the strength of European labor. Paul Krugman has pointed out that union membership in our neighborhood Canada has been sonstant in work force proportion as union membership in America has been steadily lost. And we wonder about balance.

[donna]

I often wonder why the hell "the rich" whoever they are, bitch so much about taxes. Beyond a 100 mil or so, what do you do with the money anyway? There are certain creature comforts to be met, but who really needs another yacht anyway?

I can't imagine I could even be that rich without just wanting to give the money away to someone. Why not to the government to do something useful with?

Of course if it were just to blow up more Iraqis, I would bitch about it. But that doesn't seemt o be what the rich complain about. They aren't out there protesting the war.

I really don't get it.

[Patricia Shannon]

Some of them use their money for worthwhile things like going on hunting safaris where endangered wild animals such as tigers are tied to a tree so they can safely shoot them for a trophy, to prove how manly they are.

Some of them use their money to get elected President.

Oct. 18: President Bush warns that a nuclear-armed Iran could lead to "World War III." NBC's David Gregory reports. (Today Show)

This is from clicking on the little box with the + to see the text for the video.

Some of them use their money to become celebrities, like Paris Hilton.

[Patricia Shannon]

http://www.msnbc.msn.com/id/21356241/

- President Bush warned on Wednesday a nuclear-armed Iran could lead to World War III as he tried to shore up international opposition to Tehran amid Russian skepticism over its nuclear ambitions.

Here's a text article.

[anne]

Donna reminds me then of the absence of financiers at peace rallies; even the thought is comical but should not be.

[Barry]

I have to begrudgingly agree with Reich's 50% proposition, but not for equity reasons. It should not be considered "fair" to tax someone at a higher rate simply because they make more because such socialist thinking will hurt our economy -- from top to bottom -- if unchecked. However, if we simply need more money to accomplish what the government needs to accomplish for the nation, we can't get it from those who don't have more to give.

[reason]

I'm going to throw a spanner in the works and wonder if inequality is not a function of financial market function as much as market power and government policy (although those things make a difference). I'm not an Austrian, but I'm quite impressed by the argument that spending based on borrowing inflates profits, because it increases firms income but not its costs. In a sense the American economy is in its Wile E. Cayote moment as it sails along not generating enough income to pay for its consumption, but spending anyway. A disfunctional financial system (both domestic and international) is supporting this process.

I'm all for all sorts of policy to reduce inequality, which I regard as poison for democracy, but I don't think we should stop thinking about micro-economic reforms, both in terms of anti-trust and financial markets.

[reason]

P.S. for those who don't get the relevance to this debate, maybe we should be wondering why people are making such outrageous amounts of money with so little effort in the first place.

[Nordic Mousse]

Rusty

"It is clear Reich has never done tax returns or financial statements, this would be a compliance and auditing nightmare, roughly equivalant to filing an estate tax return every year"

Never mind. Both sides employ professionals with computers. Give them a time limit, and let them get on with it.

And if the rich don't comply, do what the Germans do, and freeze their accounts until they submit. And maybe go a step further and publish their names as tax defaulters in the newspapers, so as to downsize their egos.

Btw, I'm not picking on Americans. Our top marginal rate is 61% (for earned income), and the amount of income + taxes paid are published in newspapers. And very few people skip the country. Imagine that.

[Macquechoux]

"I am not interested in fair. I like the 91%, for a lot of reasons associated with equality."

"...let them forfeit their citizenship and move to Dubai, and good riddance, too."

"Loss of citizenship isn't enough. It has to be loss of citizenship and being persona non grata on all US territories."

Well, the tax Nazis have landed.

“If they had wanted a society ruled by heirs to massive inherited fortunes..”

Pick up Forbes and check their list: The vast majority of the super rich have earned their money, not inherited it.

“Most people realized a better life when the tax rates on top earners were over 50%.”

You got to young and perhaps stupid. I am an old man and I sure would not trade any past decade for the current one. You gonna give up your Blackberry, today’s medicine, etc for exactly which years? (Well, maybe if I had a shot a Liz Taylor.) Maybe you want to buy my old 12” black & white TV with the rabbit ears?

[save_the_rustbelt]

Nordic:

Being a CPA, I could certainly be enthusiastic about a plan which would be a full employment act for CPAs. God bless accountants.

I do not, however, think there are enough accountants in the country to process such an annual net worth tax. Accounting firms are begging for employees as it is.

Reason:

The rich own the government, which is why private equity fund managers often pay lower tax rates than plumbers.

[Patricia Shannon]

I don't own a blackberry. I haven't watched TV in months. I do miss them at all. I do miss having my house with a fenced in yard. I miss having air conditioning. I miss having central heat. I miss having hot running water. I miss being able to get a job where my capabilities were used and appreciated. I'm not suicidle, but I find life nowadays to be more trouble than it's worth.

[Nordic Mousse]

Barry:

"It should not be considered "fair" to tax someone at a higher rate simply because they make more"

Well, how do you see it? If they have more, then clearly being where they are is worth more to them than those who have less. They have a bigger stake, and society expends disproportionate resources to protect that stake. So why shouldn't the rich be encouraged to contribute more?

It's in their interest.

[kthomas]

Macquechoux....what? > "You got to young and perhaps stupid. I am an old man and I sure would not trade any past decade for the current one...."

Your analogy reminds me of BJ Feng's silly tirades on the American dream: pure idealism.

"Pick up Forbes and check their list: The vast majority of the super rich have earned their money, not inherited it." - OK, which issue and article. Please cite this.

[Nordic Mousse]

Rusty:

"I do not, however, think there are enough accountants in the country to process such an annual net worth tax. Accounting firms are begging for employees as it is"

Well, shouldn't economics fix that? You know, supply and demand, and all that.

After all, if other countries can do it, you should be able to too. It's not as if you were starved of intelligent people. Perhaps the incentives need to be looked at?

[richard]

I believe it was Vickery who suggested the fairest tax would be one on lifetime earnings, adjusted for age. And the Islamic equivalent of tithes -- 2% of total assets -- has its virtues. But I agree with Rusty: administering such a tax would be a nightmare.

While I don't envision this happening in my lifetime, the best (practical) suggestion that I can make:

Increase the current highest tax margin. Add another one at $200K with a 50% rate.

Increase capital gains taxes.

Create a carbon emissions tax, investing the proceeds in transit construction and energy research.

Substantially decrease marginal tax rates below $100K.

Result? A tax policy that reflects domestic goals (reduced energy consumption, more progressive tax structure). Raising the capital gains would hopefully decrease hedge fund loopholes and churn alike; the decreased marginal rates should help elderly savers who are slowly selling off assets in retirement and who are hit by the increase capital gains tax.

[Patricia Shannon]

I meant I don'tmiss them at all.

[Peter Schaeffer]

ken melvin,

"How very fitting, people come to America to do the very thing that destroyed the culture they were glad to leave"

Have you joined FAIR (Federation for American Immigration Reform) or what?

[save_the_rustbelt]

Nordic:

Salaries for new accounting grads are increasingly (about $50,000 for a new grad with no experience), and we still cannot keep up. Keeping an accounting degree is really hard work, passing the CPA exam is an ordeal.

Sarbanes-Oxley and the current tax code keep us plenty busy already. The valuations necessary for a net worth tax are always a giant headache.

[save_the_rustbelt]

If anyone is looking for signs of hope, senior Republicans are announcing retirements at quite a fast pace.

Hastert today.

[Nordic Mousse]

Mark:

"On Robert Reich's proposal, whaddayathink? Is 50% fair?"

It's a giveaway. They should thank you on their knees.

[Nordic Mousse]

Rusty:

"Salaries for new accounting grads are increasingly (about $50,000 for a new grad with no experience), and we still cannot keep up."

What do Harvard law grads and MBAs get? Not that they're necessarily more skillful or know more, but what do they get in their first year?

Isn't it quite a lot more than $50,000, or am I reading the wrong stuff?

Maybe the accounting profession needs a John Grisham to glamorize it...

[Peter Schaeffer]

"What’s fair? I’d say a 50 percent marginal tax rate on the very rich (earning over $500,000 a year). Plus an annual wealth tax of one half of one percent on net worth of people holding more than $5 million in total assets."

Considering the influence of Hollywood alone, the Democratic party will never support such a plan (barring a new Great Depression). Add in Wall Street, Democratic leaning lawyers, doctors, etc., who is kidding who?

However, there is a deeper problem. Plenty of people making $100,000 will oppose such a scheme. Some believe that they might someday make $500K+. However, considerably more believe that any tax imposed on people making $500K+ will eventually be imposed on them.

This is a historically valid point. The AMT was meant to tax a few hundred people total. It is now a potential burden on dozens of millions of people.

The bottom line is that as long as the Democratic party is dominated by Hollywood, trial lawyers, and Wall Street this isn’t going to happen. Note that the domination is not just financial (campaign contributions), but cultural as well. Who attends Renaissance Weekend? What sort of people does Soros hang out with?

[Ken]

BJ Feng says...
Government's role is NOT to punish the successful. Doing so would destroy the opportunity for the American Dream so many of us have come to America to find.

Who is being punished. Those that depend more on the regulative infrastructure should be required to pay more. They are the greates beneficiary of an economically viable marketplace.

We also seem to have forgotten the other role of taxation. and that is to influence corporate behavior. Walmart pays a dividend yet its workforce is subsidized. Shouldnt we double tax the dividend to encourage the corporation to take advantage of the wage and benefit write-off?

Want to pay less in taxes? Reinvest and depreciate. We know that markets can be inefficient. Fiscal policy addresses that. The BEA and BLS collect data to give us clues to the needs of the economy.

[Patricia Shannon]

I saw an article on the source of wealth for the Forbes 400 just an hour ago, but didn't bookmark it and now I can't find it. If I do, I'll post the reference, or maybe someone else will see it.

The article analyzed the source of the wealth of the Forbes 400 and found that most of the came from wealthy backgrounds. Many (most?) that Forbes listed as making their own wealth, actually came from wealthy families that bankrolled their business ventures in the first place. I think about 15 percent came from modest beginnings.

[save_the_rustbelt]

Nordic:

Accounting has neither the power or glamour of the law or Wall Street.

There has yet to be a network television show featuring the dramatic work lives of auditors.

And not everyone has the aptitude for it.

Peter:

The private equity fund managers have bought off the Democrats on the 15% rate issue. Nancy Pelosi is very much under the sway of the techies in California. Now both parties are bought.

[wjd123]

About 5 years ago 2slugbaits mentioned a study that claimed that for optimal productivity the rich should be taxed at 42% or 48%, I can't remember which. That was before the rich started paying themselves billions a year. I'm willing to split the difference for now and go with Reich's 50%.

The Democrats can pass Pay/Go, but they can't seem to find money for new programs by taxing those who have the money. The Republicans, who don't think deficits matter anymore, let Pay/Go expire and never talk about a progressive income tax. They'll tack fees on to every move you make as long as they don't have to call them a tax.

[bakho]

Pay to play. The wealthy make a lot of money becasue the economic rules favor them over other people in the economy. Those that benefit most from our rules and make the most money should be willing to pay their fair share for receiving more than their fair share from our system.

[johnchx]

Federal law requires me to comment on every blog post mentioning federal finances, so here goes. ;-)

I don't know if a 50% marginal tax rate is "fair," that's not my department. However, I can venture a (very) rough estimate of how much additional revenue it could raise. I'm not assuming any additional tax avoidance, so this estimate may be on the high side. I'm also making no effort to estimate the negative impact on growth due to the higher tax rate, or the positive impact on growth from the reduction in the deficit and corresponding lower long-term real interest rates; I'll pretend that these effects cancel each other out. And yes, finally, I'm assuming that the Fed can do it's job and keep the macroeconomy out of a liquidity trap.

In 2005, there were about 828,000 households with AGI's of $500,000 or more, with total incomes of $1.4 trillion. Their incomes below $500k would total 828,000 x 500,000 = $414 billion. Assuming that the average tax rate applied to that income would be more or less unchanged (at 25%), taxes on the sub-500k "tranche" would yield $103.5 billion. The remaining $967 billion in income above $500k would be subject to the 50% tax rate, yielding $483.6 billion in tax revenue. The total would be $587.1 billion, compared with the $320.4 billion in taxes this group actually paid in 2005. That's an increase of $266.7 billion.

From 2005 to 2006, personal income tax revenue grew by about 10%, so we can guesstimate that the added revenue for 2006 would be around $293.4 billion. Or, since we're just spit-balling anyway, let's call it $300 billion.

Which is not a small chunk of change. But, of course, nowhere near enough. (I'll let somebody else do the legwork on Reich's wealth tax.)

Throw in my own favorite litany of tax loopholes to eliminate (lower tax rate for capital gains and dividends, exclusion of capital gains at death, exclusion of capital gains on sale of primary residence, deduction of local property taxes, deduction of mortgage interest) would bring in another $265.5 billion (more or less).

Cut the Iraq war ($95 billion in 2006) and we're within striking distance of a balanced budget.

And voted out of office...but never mind. We can dream!

[bakho]

What do Democrats have to do with taxes? Bush will veto any new tax on rich people. So why bash the Dems. Clinton raised the top rate when he was in office and the billionaires took out their wallets and launched the mother of all smear campaigns agianst him. So Dmeocrats if given the chance will do the right thing, but that chance has not been available since 1994.

[Patricia Shannon]

I never did find the article I saw article, but got something even better, the original source.

http://www.faireconomy.org/press/archive/Pre_1999/forbes_400_study_1997.html

Born on Third Base
The Sources of Wealth
of the 1997 Forbes 400

42 % Born on Home Plate : inherited sufficient wealth to rank among the Forbes 400. This percentage is higher than that listed by Forbes for inheritors. The reason: Forbes listed as "self-made" people who actually inherited substantial sums or property and then later built that stake into a greater fortune. One example is Philip Anschutz (1997 net worth: $5.2 billion) who is listed as "self-made" even though he inherited a $500-million oil and gas field.

6 % Born on Third Base : inherited substantial wealth in excess of $50 million or a large and prosperous company and grew this initial fortune into membership in the Forbes 400.

7 % Born on Second Base : inherited a medium-sized business or wealth of more than $1 million or received substantial start-up capital for a business from a family member.

14 % Born on First Base : biography indicates wealthy or upper-class background that was to our knowledge less than $1 million, or received some start-up capital from a family member. Due to the study team's conservative coding rule, it is likely that some of those listed as born on first base actually belong on second or third base.

31 % Born in the Batter's Box : individuals and families whose parents did not have great wealth or own a business with more than a few employees.

Inherited fortunes are disproportionately represented in the top half of the list. There is a higher percentage of inheritors, those Born on Home Plate, in the top 50% of the list than the bottom 50% of the list.

So it's 31 %, not 15 % "born in the batter's box".
Of course, an unknown proportion of these came of comfortable, rather than than what I would call modest, backgrounds.

[Peter Schaeffer]

Patricia Shannon,

You might have been looking for this

"BORN ON THIRD BASE: The Sources of Wealth of the 1996 Forbes 400" (http://www.faireconomy.org/press/archive/Pre_1999/forbes_400_study.html)

"We examined both 1995 and recently released information about the 1996 Forbes list. The average of 1995 and 1996 results indicate that:

30.1% Started in the Batters Box -- includes individuals and families whose parents did not have great wealth or own a business with more than a few employees.

13.9% Born on First Base -- includes individuals whose biographies showed signs of a wealthy or upper class background, but did not apparently have assets of more than $1 million.

5.75% Born on Second Base -- members inherited a small company or wealth worth more than $1 million, but less than $50 million.

6.85% Born on Third Base -- includes people who inherited substantial wealth, in excess of $50 million, but not enough to qualify for membership in the Forbes 400.

43.35% Born on Home Plate -- includes those who inherited sufficient wealth to rank among Forbes 400."

[Bruce Webb]

I know my obsession is showing, but Reich knows better.
It’s about the nation having enough money to pay for national defense and homeland security, good schools and a crumbling infrastructure, the upcoming costs of boomers’ Social Security ..., and, hopefully, affordable national health insurance.
I saw an online interview with Reich almost ten years ago where he admitted Social Security faced no long term threat and added the rather mysterious "I know how those Reports are written". Given that he signed them I would hope so. It is worth noting that signs of tinkering with the Intermediate Cost projections can be seen in the 1998-2000 Reports, that is to say under Clinton and Reich. Current year numbers were consistently too pessimistic and there was constant downward pressure on the outyears all to maintain 'Crisis'. I personally think this was a reasonable tactic to fend off tax cutters. But come on Reich. He is including Social Security as a standard scare tactic, which may help make his current point but doesn't serve the larger cause. It simply invites the "Even Robert Reich says...."

Thanks Bobbie. Heckuva job (making my job harder).

[anne]

Robert Reich might really try to be reasonable or realistic at times, but that is seldom what Reich is about. Still, we have a decidedly unfair tax system, a deciely unfair fiscal system that are fostering wealth and income inequality such as had been unthinking from the New Deal till now.

Changing orientation slightly though, we should be relieved at just having saved the absurly small cost of caring for the health of 3.8 million needy children for all of $7 billion a year which would have benn paid for without even raising income taxes. Not only that, we haver manage to save the cost of paying for the health care of needy disabled children and adults who were included in the bill that compassionate conservative Republicans have destroyed for us.

[anne]

So nutty Robert Reich is worried about taxing the wealthiest even as the middle class are taxed, but we are busily about making sure to deny health care to millions of children, not to mention physically an mentally disabled needy children and adults. I am so proud, and back to thinking excitedly about threatening Iran and Russia and China too for that matter with World War.

[STS]

The unfortunate thing about Reich's line of thinking is that it reduces people to abstractions like "rich" or "poor" and then attempts to quantify them in ways that don't really stand up to scrutiny. How many dollars in income make you rich? In what parts of the country? What if you have a top 1% income but have 20% percentile *assets*, or a lot of assets offshore with little *apparent* income in the US? Reich incites anger against "rich" people the way Republicans constantly incite blame for poor people.

The AMT was an attempt to get those nasty "rich" people, only to steadily inflate its way into a tax nightmare for people with quite middle class standards of living. And taking away citizenship is a pretty frightening idea, placed in the wrong hands. Of course, the money would go offshore to create an *appearance* of lower income/assets/whatever is taxed. You've got no traction with this notion.

reason: I like your line of thinking. Instead of demonizing James Simons of Renaissance for making $1.5B in one year (lots of hedgies are obnoxious, but I rather appreciate the fact that Simons was a world-class mathematician working for the love of knowledge for quite a while before getting involved with money management) it would be more constructive to examine the hedge fund industry and consider what regulatory gaps are feeding the excess. And yes, the carried-interest = capital gains thing is pretty embarassing. But I never understood why cap gains so urgently needed special treatment to begin with.

I'd also like to see more progressive intellectuals look into VAT or consumption based taxation. I don't know about you, but I am inclined to want to tax Paris Hilton a whole lot more than Warren Buffett. And I am less inclined to tax an entrepreneur who habitually uses most of their growing assets to reinvest and create additional jobs than another taxpayer who likes to spend money on bigger cars, houses and yachts. I don't want to create any hard limits on peoples' choices, but tax policy should tilt us toward productive investment rather than extravagant spending. If a reasonably efficient progressivity could be built into consumption taxes, they might be a good approach.

[anne]

Please, let there be no more rubbish about Republicans, conservative Republicans, radical-conservatives Republicans not being in complete control these last 7 years. This is Republicanism, this is conservatism. Caring not a whit for the health of a disabled child; and we wonder at infant mortality rates increasing in the South as Medicaid is slashed. Here then is modern America. Now to complain about France. Do they allow Franch children to visit, say, doctors?

[Patricia shannon]

Thanks, Peter Schaeffer.
We must have created our posts at almost the same time.

[worker]

Reich's argument misses a couple of major taxes the dems have planned in addition to restoring the Clinton era marginal rates. Most significant among these is eliminating social security ceiling, applying it to all earnings. This would add 16% and push federal taxes above 50%.

50% is a magical number in my mind. It is where taxation becomes theft. Avoidance of theft is morally justified and tax avoidance becomes a productive act of citizenship by demonstrating to populist politicians and their supporters that there is no free lunch.

Philadelphia has been convinced of this- with a 5% municipal income tax in the late 1980's that could easily be avoided by moving 5 miles, the city found itself effectively bankrupt at the peak of the laffer curve, with no capacity for further increases. The self-interested actions of the many tax avoiders and employers who left the city (if only on paper) have tought a union dominated city that the trough does indeed run dry. There is now widespread consensus among politicians of all stripes for continuing to reduce personal income and "business privilege" (revenue) taxes. The city is slowly becoming a better place to live. Waging a war against the rich is counterproductive. FDR did it and extended the depression for another decade, which explains the residual loophole-ridden 90% rate during Eisenhower's presidency.

The rich are not likely to leave the country, but their capital will. It is a big world out there and if you have the ability to avoid repatriating large amounts of cash, it is very difficult for the IRS to track you. The US is virtually alone in believing its citizens should be taxed on foreign income. There will be no coalition of foreign governments ready and willing to give up sovereignty to the IRS and the arrogant US political class. Most of the best investment opportunities are abroad anyway, so why let the US government take over half the return?

[worker]

However, Reich's point about the loophole for hedge funds and other money managers is spot on. The dems have been bought and sold on this, courtesy of Chuck "soak the rich" Shumer. Guess the rich are only bad when their not paying him shakedown money.

And the Republicans are too reflexively stupid to realize how self-servingly hollow the money managers arguments are and how distortive it is to the economy to provide lower tax rates to gamblers who have rigged the game to guarantee their winnings.

[anne]

"Reich's argument misses a couple of major taxes the dems have planned in addition to restoring the Clinton era marginal rates. Most significant among these is eliminating social security ceiling, applying it to all earnings. This would add 16% and push federal taxes above 50%."

This is completely false, and meant only to deceive. Robert Reich is a nutty professor who in no way represents the Democratic Party, and there are no Democratic plans to raise taxes. Reich's ideas on taxes are almost all absurd and no Congressional Democrat would give them a moment's thought.

There will be no Democratic income tax increase, nor any increase of Social Security taxes. Time for Republicans to stop lying, but Republicans do not seem capable of stopping.

[Bruce Webb]

Reich is not being helpful here. He can't be that politically obtuse as to believe Dems will give Republicans a cheap rhetorical victory "See they really want to tax and spend". Or to summarize 'what bakho said'.

All of these tax schemes fail to take into account the fundamental reality: 'Who bells the cat?' For example people blithely suggest we raise the cap on Social Security. What would be the proximate result? It would mean every person who managed success in a public service position gets an immediate 12.4% increase in their marginal rate: tenured professors, heads of non-profits, doctors, labor lawyers. Great you just disincentived any serious public sector or charitable career. Because what is the other side going to do? You can bet big money that every private sector business entity that can will simply restructure their compensation package so that what was wages magically transforms in capital gains of one type or another.

Politically a cap raise is a non-starter. Not only does it hit the wrong target by and large but it also hits every single Congressman right in the pocketbook. Boom about 5% vanishes from their check and a big hole blown in their budget. Who wants to be the lobbyist for this proposal?

Would I like to see 50% marginal rates? Would I like to see capital once again taxed at the same rate as labor? Of course. Is Nancy Pelosi in a position to deliver either? No, and it is not because she has been bought off. It is a constant failure of the modern day Left to take the rhetorical position of All or Nothing and to deride Incrementalism. Well important things got done during the Clinton years at Clinton rates, an attempt to return to Reagan era rates would likely have been an abject failure.

Sometimes you have to hunt where the ducks are, blazing away at birds you don't have a hope in hell of hitting, at least right here and right down is just a waste of powder and shot.

[worker]

Anne,

Clearly various dems have floated multiple tax increases such as the war surcharge. Most of these proposals are not likely to attract widespread dem support. However, removing the cap on SS taxes does attract widespread support and keeping it on the table was a pre-condition to participation in the social security debate. Dems find this appealing, regardless of whether it makes it into Hillary's platform.

I will bet you $100 it is approved by majority of house and senate before 2010, assuming dem control of white house & congress. Do you use Intrade? We can set a custom wager there. As an added benefit, your winnings can then accrue tax free in an off-shore haven.

[anne]

Robert Reich is as usual "not being helpful," but he has had no influence among Democrats in Congress nor will he have. There issue of tax fairness is important, and Reich was right in raising the issue, but as always Reich has the political sense of a tea kettle.

There are all sorts of needs that Democrats should and must attend to, including tax fairness, but there is no need to raise income taxes.

[worker]

And Reich is hardly ONLY a nutty professor (though I do agree with your characterization) with a Napoleonic complex.

He is a former cabinet level official- Secretary of Labor in the last Democratic administration. He speaks for a substantial number of socialist leaning Democrats.

[Cyrille]

"FDR did it and extended the depression for another decade"

WHAT ???

[bakho]

The last chance the Dems had to raise taxes on the rich was 1993. Clinton raised the top rate to just under 40%.
The Dems don't even have the votes to stop the GOP from blocking a very popular SCHIP extension. There is a snowball's chance in hell of ever getting a tax increase past the veto pen of the "obstructor in chief". Don't blame the Dems.

[kthomas]

anne, i have to admit, I take a small perverse pleasure in watching you seeth on issues of income taxes.

[anne]

"Reich's argument misses a couple of major taxes the dems have planned in addition to restoring the Clinton era marginal rates. Most significant among these is eliminating social security ceiling, applying it to all earnings. This would add 16% and push federal taxes above 50%."

This is deceit, typical Republican deceit, but deceit and smears are what Republicans are about.

There will of course be no income tax or Social Security tax increase, but because of Republicans there will be no SCHIP health care for millions of needy children, there will even be no Medicaid health care for disabled children an adults.

[anne]

There are analysts who enjoy being self-destructive, when there should be an understanding of the destructive array in waiting. No matter. The understanding of what Republicanism has brought us is there and continually growing, and Republican leaders are frightened but persist in policies that will frighten other more. I do wish Robert Reich had more sense, but his ideas are irrelevant for Democratic policy making. Democrats have learned, and a supposed analyst from California who hasn't yet figure out who is Governor of California and why is of no account.

Sympathy for the immediate attack on Reich caused me to make a mistake an refrain from criticism from the beginning. But, the column is absurd.

[310]

The best way for old money to stay on top (like the Bush and Kennedy family) and control the nation's wealth is to increase taxes.

I can't see Oprah and other Hollywood types being too high on this plan. Especially when you hit .005 of assets.

And by the way, the OLD American dream was to come here work your butt off and maybe own a home, vote.

Now its to take advantage of the social safety net put in place. We need to eliminate this safety net and institute some sort of a more progressive tax plan. But ultimately reduce tax across the board - keep enough for our military, infrastructure and a few schools.

[Michael]

Skip the country? Everyone knows that Americans can barely speak their own language, let alone be able to converse in another.
Seriously, the taxes in most other desirable places are already near or over the 50% mark for the rich, so moving away is not much of an option unless you move to the third world. I think Monaco also has no income tax, but it is a pretty small place to fit all those billionaires.
Perhaps to balance the political power money brings, maybe the amount that you can spend supporting your candidate should be inversely proportional to your income.

[Jim]

What we need is a dividing line between "rich" and "not rich". Let us tax 110% of the income of the "rich", and let the "not rich" ride for free. I would modestly propose my net worth plus a dollar as that dividing line.

[dale]

Anne,
Why is it absurd to say that those who have prospered should be required to pay more in taxes? I don't get the problem. If we can't even say this out loud for fear of stirring up anti-Democratic backlash- it seems we should just give up and turn on the Tee Vee.

Or are you saying that there is enough money to be saved by cutting our budget for Empire and War that we can do what needs to be done without raising taxes on our wealthy citizens? But it seems to me that cutting our war and military complex budget is just as counter productive to a safe, middle of the road Democratic political agenda as is Reich's proposal to raise taxes on wealthy citizens.

[Barry]

I think the highest taxes should be placed on short, bitter, and angry socialists such as Mr. reich..

[calmo]

I'm sure that's how Mr HF Universe 2006 (this guy, the $1.7B performance, doesn't look like Arnold posing, but it is still posing...in fact why don't we include the little Japanese dude who ate 52? hotdogs in the 15min time limit?) might respond to St Peter who refused him:"You're just bitter!"
Barry, would you say that this blog is just a sweltering pack of unrankable short, bitter and angry socialists and that your mission is to redeem usall ...startin with that glorious and triumphal, squat sentence with the 2 periods?
Or wazat a noivous period to go with the noivous un-capitalized "reich"? How tall should we imagine you are?...as tall as shortie?
Alrighty then.
So you've come for medicine. Good!

[George]

“You say the rich will leave the country rather than face a marginal tax of 50 percent? Let them, and take away their citizenship.”

This statement may or may not be a fine sentiment. However, it shows a lamentable ignorance of tax law. US citizens are liable for US taxes irrespective of where they reside. Leaving the country does not obviate an American’s responsibility to pay American taxes. Yes, the tax code does contain complex double taxation provisions. However, the notion you can move to some tax haven to avoid US taxes is basically false at least if you intend to obey the law.

However, the notion of stripping Americans of their citizenship is even farther afield. The Supreme Court (1986) has imposed severe restrictions on removal of citizenship. The idea of doing so over taxes is constitutionally impermissible.

Reich should know this stuff. It is pretty basic tax and immigration law.

[BJ Feng]

It just shows a deep bitter resentment for those who have made it. Let me put on my leftist cap and ask, wouldn't it be better for us to try to make everyone rich rather than preach hatred against those fortunate enough to be where we all want to be? Shouldn't we be inclusionary and respectful rather than spiteful and mean? I mean isn't that what separates us from the right? We are all about love and inclusion.

[Cyrille]

There's not hatred in that -just fair taxation.

50% on the marginal rate is not exactly confiscatory -it means that no one would pay 50% on all of his revenues. And anyway, the more you make the more you keep, and at the top rate it's really about keeping since you'd have too much to spend in any case.

You, on the other hand, show hatred for the poor when you advocate that we should just let them suffer when they are sick in order to motivate them to make rich. There can only be a tiny proportion who makes it rich, and encouraging risk taking rather goes with ensuring that no one gets hurt too much in case of failure. So to deny care is just cruelty. To tax the top rate at 50% really is not.

[Lafayette]

juandos: The rich have always been and still are paying far more than their 'FAIR' share and Reich's logic is that these producing people should be punished for their productivity

A rising tide raises all boats

What naive bullshit, juanito. Any more where this came from? Keep it to yourself.

Amassing wealth is not "fairness". Get informed -- look at the America's Gini coefficient ... the same as China's. We knew that the super-rich in China were riding on the backs of the foreign consumers -- now we can believe the same of the super-rich in America profiting from a tax policy that benefits the priviledged.

Social justice is not "the same income for everyone". Social injustice is when 1% of the population garners any percentage above 25% ... which is the case today since the actual rate is closer to 40%.

Social justice is the idea that a nation can live without both extremes, neither aberrant wealth nor abject poverty. But, a capitalist system of “free-for-all” wealth accumulation cannot make that possible, without government intervention, in an economy where the “playing ground” is slanted upwards towards the richer classes. Ever play football on such a field? Then you should understand.

Please explain why this imbalance in income/wealth should exist? Explain how taxing most of it will leave the rich relatively worse off than redistributing the resulting tax revenue to the lower classes by means of -- not welfare -- but health care, training/education and rental/purchase housing. Explain how allowing the poor to take the escalator up to the middle-class will NOT better all Americans as the former become more prosperous. A rising tide raises all boats.

Do explain how this sort of social justice, now practiced largely in Europe, has created the rot that is eating away at the European economy.

We are all waiting with bated breath for your explanations.

[Lafayette]

BJF: Let me put on my leftist cap and ask, wouldn't it be better for us to try to make everyone rich rather than preach hatred against those fortunate enough to be where we all want to be?

What drama. What colossal nonsense.

Who is preaching hatred? Those who would tax the super-rich to benefit the super-poor. Yeah, right.

You should be in Hollywood writing soap-operas scenarios. Which is probably true given the drivel that you post as commentary on this forum.

And, you think "being rich" is the raison d'être of our existence? From whence springs this idiocy? When everyone is a millionaire, a caffé-latté will cost $5000. That's goodness? Most people would be content with a descent living, that's all.

Consider this ranking of countries that have fewer people than the US living below the poverty line:
United States 12.6% (2005)
Montenegro 12.2% (2003)
Syria 11.9% (2006 est.)
Jordan 11.7% (2001 est.)
Croatia 11% (2003)
Germany 11% (2001 est.)
The Netherlands 10.5% (1999)
Mauritius 10% (2001 est.)
The Bahamas 9.3% (2004)
Estonia 8.9% (2003)
Tunisia 7.4% (2005 est.)
Libya 7.4% (2005 est.)
Ireland 6.8% (2004 est.)
France 6.2% (2004)
Austria 5.9% (2004)
People's Republic of China 10% (2004 est.)
Belgium 4% (1989 est.)
Lithuania 4% (2003)
Republic of China (Taiwan) 0.9% (2006 est.)

[anne]

“You say the rich will leave the country rather than face a marginal tax of 50 percent? Let them, and take away their citizenship.”

Typical of the continual stupidity of Robert Reich, who is evidently beyond research or even asking questions before speaking or writing, and is politically antagonistic for the sake of antagonism.

Thank you, George.