The Truth about Class War in America

NATION OF CHANGE:  [President] Obama’s modest proposal for tax increases on the rich does not begin a class war. On the contrary, it is a small, modest effort to reduce the other side’s class war victories…

  … the tax rates on the rich­est Amer­i­cans fell from 91 per­cent in the 1950s and 1960s, and 70 per­cent in the 1970s to the cur­rent low rate of 35 per­cent. The rich­est Amer­i­cans won that spec­tac­u­lar tax cut. Mid­dle- and lower-in­come Amer­i­cans won no such cuts, while pay­ing a higher pro­por­tion of their in­come for So­cial Se­cu­rity that the rich were re­quired to do. In plain Eng­lish, the last 50 years saw a mas­sive shift of the bur­den of fed­eral tax­a­tion from busi­ness to in­di­vid­u­als and from rich in­di­vid­u­als to every­one else. Class war poli­cies, yes, but a war that vic­tim­ized the vast ma­jor­ity of work­ing Amer­i­cans.

Of course, Re­pub­li­cans and con­ser­v­a­tives care­fully avoided using “class war” to de­scribe those tax-shift­ing achieve­ments over the last half-cen­tury. They wanted us to be­lieve that all they cared about was eco­nomic growth and job cre­ation. But when Obama now pro­poses mod­est in­creases in tax rates on rich in­di­vid­u­als (“mod­est” be­cause they don’t begin to re­turn to the tax rates in the 1950s, 1960s and 1970s), the Re­pub­li­cans and con­ser­v­a­tives howl “class war­fare.” Obama claims that higher taxes on the rich re­duce the need for spend­ing cuts that would slow growth and in­crease un­em­ploy­ment. Re­pub­li­cans and con­ser­v­a­tives argue that rais­ing taxes on cor­po­ra­tions and rich in­di­vid­u­als pun­ishes those who cre­ate jobs and thus will hurt ef­forts to re­duce un­em­ploy­ment. Nei­ther logic nor ev­i­dence sup­ports their ar­gu­ments. Last Fri­day, the US Fed­eral Re­serve re­ported a record quan­tity of cash on the books of US busi­nesses (hoard­ing over $2 tril­lion). De­spite the cur­rently very low taxes on busi­nesses and the rich, that cash is NOT being in­vested and NOT cre­at­ing jobs. Nor is it being dis­trib­uted to any­one else who is spend­ing it ei­ther. Wash­ing­ton could tax a por­tion of that cash and spend it to stim­u­late the econ­omy. That would be es­pe­cially ef­fec­tive if the taxed cash were spent to hire the un­em­ployed rather than leav­ing the cash idle in busi­nesses’ hoards.

Bil­lion­aire in­vestor War­ren Buf­fett re­cently upset many of his fel­low super rich in­di­vid­u­als by a New York Times op-ed that he wrote. It ex­plained that he had never met any se­ri­ous in­vestor who de­cided about in­vest­ments based on tax rates. Rather the prospects of prof­its and sales made the key dif­fer­ence to in­vestors. Buf­fett urged higher in­come taxes on rich Amer­i­cans like him­self partly be­cause those higher taxes would not neg­a­tively im­pact job cre­ation in the fu­ture just as it had not done in the past. He im­plied that it was be­com­ing dan­ger­ous for cap­i­tal­ism’s sur­vival to keep pro­vid­ing the mi­nor­ity of rich peo­ple with lower fed­eral tax rates than the mid­dle and lower in­come ma­jor­ity paid…. (more)