Super Rich Go from Paying Taxes to Lending Money to Government: Robert Reich

[The Straight Story]

Super Rich Go from Paying Taxes to Lending Money to Government: Robert Reich


The United States has gone from relying on its rich for tax revenues to relying on them for loans, an economic turnabout that hasn’t been good for the country, writes Robert Reich, a professor at UC Berkeley and former labor secretary under President Bill Clinton.

Forty years ago, the rich had a tax bracket of about 70%, and even after deductions and credits it was above 50% percent. Today, the official rate is down to 36%. The capital gains tax rate was 35% as recently as the late 1980s, but now it has dropped to just 15%. Add to this a collection of bigger and bigger loopholes and, according to the IRS, the richest 400 Americans pay only 18% of their income in federal income taxes.

All this means that the U.S. Treasury isn’t getting nearly as much revenue as it once did from top earners.

With fewer taxes to pay, the wealthiest 1% have gone from controlling 9% of the national income in the late 1970s to more than 20%. What have they done with their extra wealth? Buy Treasury certificates, for one. And if they, like foreign holders of Treasuries, get nervous about the national debt and dump their certificates, it could spell trouble for the economy.

“The great irony is if America’s super rich financed the U.S. government the way they used to—by paying taxes rather than lending the government money—that long-term budget deficit would be far lower,” writes Reich. “This is why a tax increase on the super rich must be part of any budget agreement. Otherwise the great switch by the super rich will make the income and wealth gap far wider.”

http://www.allgov.com/Opinion_from_the_Left/ViewNews/Super_Rich_Go_from_Paying_Taxes_to_Lending_Money_to_Government__Robert_Reich_110521

[cspanlovr]

1. Welcome to the 14th Century!

[slay]

5. +1

as capitalism eats itself.

[palm_to_forehead]

2. That tax bracket stat from 40 years ago is such a bull shit stat

The tax code is nothing like what it was back then. People like to complain about tax loopholes now but have no clue at all what it was like back then.

The fact that we now bring in a higher percentage of the GDP in income tax than we did then with the high income earners still paying the lionshare of it is as perfect an illustration of it as you can get.

"The capital gains tax rate was 35% as recently as the late 1980s, but now it has dropped to just 15%."

Now THAT is the real method the truly wealthy avoid paying more tax. The truly, truly wealthy by and large do not have ordinary income, it's virtually all capital gains.

[stillwaiting]

4. Yes, they live well off others labor.

Solving capital gains issues for these individuals should involve a simple "if..then" equation.

i.e., IF your TOTAL income exceeds 500,000 THEN your capital gains tax rate is the same as your income tax rate for capital gains over 500,000.

IF your TOTAL income is less than 500,000 THEN your capital gains tax rate is 15%.

There you go.

[palm_to_forehead]

6. I'd avoid the if/then all together.

Why in the world is passive income given preferntial treatment to actual work?

[Skink]

3. The Gilded age part 2.

You know I recently read were the U.S. itself is becoming a tax haven.

[girl gone mad]

7. k & r