Why Tax The Rich?

Conservatives such as George Will complain that it is a reflex action by liberals in Congress to soak the rich in order to pay for health care reform. They point-out that the top 1 percent of income earners in America pays 45 percent of the income taxes. Conservatives claim that Congress is engaged in a Robin Hood form of class warfare which was never authorized by the constitution. They want to retain the Bush tax cuts for the wealthy and prevent surcharges on the rich to pay for health care reform.

If I were making the tax laws, I would not simply repeal the Bush tax cuts. I would greatly increase taxes on the rich. Why? Because there is too much poverty, too much hunger, too much sickness, too much disparity between rich and poor here in America, the land of wealth and opportunity. I doubt that most people are aware of the enormous gap between the wealth of the top 1 percent of people in America and the rest of us. Those very wealthy people have excellent health insurance and health care. Perhaps that is why we hear so much drivel about how America has the best health care in the world. We don’t, but very wealthy Americans probably do.

What George Will and the right-wingers fail to mention is that according to the Census Bureau and a study by the Sociology Department of the University of California, as of 2004, the top 1 percent of Americans owned 42.2 percent of all privately held financial wealth in America, and the next 19 percent owned 50.3 percent, which means that just 20 percent of the people owned 85 percent of the wealth in America! Their wealth was 190 times greater than that of the median U.S. household. The top 10 percent had 85 to 90 percent of stock, bonds, trust funds, and business equity, and over 75 percent of non-home real estate.

Conservatives have been trying to eliminate inheritance taxes, which they call “death taxes.” According to a study published by the Federal Reserve Bank of Cleveland, only 1.6 percent of Americans inherit more than $100,000. Another 1.1 percent inherit $50,000 to $100,000. On the other hand, 91.9 percent of the people in America inherit nothing.

Of all the new financial wealth created by the American economy in the 21-year-period between 1983 and 2004, 42 percent of it went to the top 1 percent. A whopping 94 percent went to the top 20 percent, which of course means that the bottom 80 percent received only 6 percent of all the new financial wealth generated in the United States during the '80s, '90s, and early 2000s.

A 2007 study by the Congressional Budget Office (CBO) found that the top 1 percent of income earners in America nearly quadrupled their share of the nation's income between 1979 and 2005, while their effective income tax rate dropped by 15 percent.

According to the Center on Budget and Policy Priorities, income growth in America Between 1979 and 2006 was starkly uneven. Real after-tax incomes for the top 1 percent of households rose by 256 percent, or $863,000, compared to 21 percent, or $9,200, for households in the middle fifth, and 11 percent, or $1,600, for households in the bottom fifth. In 2006, the average household in the top 1 percent had an annual income of $1.2 million, up $63,000 just from the prior year.

Yes, the wealthy people in America suffered losses during the recession, but percentage-wise those losses were nothing compared to what the middle and lower income people suffered. Now that the stock market is rebounding, the rich are recouping their losses. Middle and lower income people will never recoup their losses from foreclosed homes, lost jobs, lost health insurance, and bankruptcies.