How FDR Would Bring Back America’s Middle Class: Tax the Rich

[ErikJ]

How FDR Would Bring Back America’s Middle Class: Tax the Rich

by Virginia Anders-Ellmore
26 Feb 2013

CLOSING THE INCOME GAP - Yes we have been here before.



Capitalism is an economic system that values the accumulation of wealth. In free-market economics, governmental regulation should be as little as possible. The combination of capitalism and the laissez faire, free-market economy has brought the United States to a major imbalance of wealth distribution. Today, CEOs make more than 400 times the salaries of the average worker. The bankers and corporate owners have worked hard to change laws and regulations that allow them to keep their wealth at levels not seen since the 1920s.

In the 1930s, the United States suffered a similar financial crisis. One percent of the population owned most of the nation's wealth. Laissez faire economic philosophy had reduced government regulation, allowed for risk-taking and created financial bubbles. In 1929, the markets dropped, which kicked off the Great Depression. That crisis was even worse than today's, mainly because unemployment was at 24 percent and there weren't any government programs in place that helped people get back on their feet.

A New Theory

..................................................

President FDR was from the 1% and supportive of capitalism, but he was forced to look at different economic theories due to the growing number of unions and socialist and communist political groups. People started to believe in their government and to think that the government should provide opportunity for all, instead of just for the wealthy and corporations.

How did Roosevelt Pay for It?

In the 1930s, Roosevelt went to the wealthy and convinced them that they would have to pay more into the system to help the economy recover and to stop the hundreds of strikes per year by the workers. Roosevelt's plan was to tax the wealthy 100% on any earnings over $25,000 per year. The wealthy ultimately agreed to a major tax hike. The Revenue Act of 1942 forced America's wealthiest to pay taxes on income over $200,000 at a tax rate well over 90 percent.

Today, the tables have turned. The wealthy pay a mere 15 percent on their capital gains income. This is compared to worker's payroll taxes, which are 25 to 35 percent of our earnings. With all of the loopholes, the wealthy, especially corporations, may even get money from the government. Only seven percent of the workforce is unionized. Socialism is demonized as a threat to capitalism and the rule of the 1%. Protecting American interests in the United States and abroad really means protecting the interests of corporations, not the safety of our citizens.

How Did We Get Here? ...............................................read the rest>
http://www.citywatchla.com/8br-hidden/4597-how-fdr-would-bring-back-america-s-middle-class-tax-the-rich

by Virginia Anders-Ellmore -(LA County nurse practitioner)

[uponit7771]

1. Obama needs an 80+ % congress like FDR....why did people vote for Trickle Down economics?!

[Trajan]

2. there is another way

ANY company that has the means could increase pay for all employees by 20% .... instant injection of capital into the system ...

[JaneyVee]

4. Whoa whoa whoa! What will the shareholders say??! God forbid they only make $3Billion in profit

instead of $3.5Billion in profit! What are you, one of those common sense socialists?!

[Cleita]

5. But they won't unless they are taxed.

When tax rates were up to 90% for the very wealthy, companies put their capital back into their companies by expansion and raising wages. When they no longer had that tax liability, they just kept the money and salted it away in Swiss and Cayman Island bank accounts.

[ErikJ]

6. Exactly right. Or worse-they gamble with it and create financial bubbles.

[pampango]

9. Well said. Higher, more progressive taxes would do much for our economy and income equality just as

it did in FDR's era.

You are right that higher taxes on the rich lead to "companies put their capital back into their companies by expansion and raising wages". In addition to those benefits, company executives pay more attention to long-term thinking which lead to more attention to a producing a quality product and taking care of customers to insure loyalty to your company and product, as well as reinvesting in the business and in the loyalty and productivity of your employees who are the source of your profits, after all.

Low taxes on the rich promote exactly the opposite type of corporate thinking - maximize short term profits (since the money stays in your pocket after all) rather than long term viability and squeeze your employees (in terms of wages and other areas) as much as you can (again the extra profits will stay in your pocket rather than being paid in taxes).

Nice post, Cleita.

[Cleita]

3. Three cheers for FDR.

We need to bring back a lot of his policies that pulled us out of the Great Depression. Washington, please learn from history.

[Octafish]

7. Oh, no. That's so liberal yesteryear. We're looking ahead, now.

Thank you for a most important post, ErikJ. These are right gangster times.

[angry citizen]

8. The redistribution of wealth

The re-distribution pf wealth has been going on for decades. Governments have been taking from the many and giving to the few.