My twitter feed is all about taxing the rich this morning, so let's carry on the discussion here.
In a bizarre column for the New York Times, Ross Douthat writes that increasing taxes on the rich will only help a little bit and pretty soon, even the middle class are going to be taxed at rich people rates, because of "bracket creep" and inflation. And then in some way off, Rad Bradbury future, you're going to have the black and Latino middle class paying to have the liver spots taken off some white, old dude's nose. There will be race riots and tar and feathers and pitchforks. Dogs and Cats. Living together.
In a more sane column in Slate, Robert Reich explains that the rich aren't really paying all that much in taxes right now.
Both Reich and Douthat agree that the middle class can't afford more taxes. Reich writes,
The vast majority of Americans can't afford to pay more. Despite an economy that's twice as large as it was thirty years ago, the bottom 90 percent are still stuck in the mud. If they're employed they're earning on average only about $280 more a year than thirty years ago, adjusted for inflation. That's less than a 1 percent gain over more than a third of a century. (Families are doing somewhat better but that's only because so many families now have to rely on two incomes.)
But Reich says that we can continue to fund our current policy obligations and even expand our investments, if we increase taxes on the super wealthy. The wealthy are wealthier than they've been in decades, yet their taxes have decreased.
Yet, remarkably, taxes on the top have plummeted. From the 1940s until 1980, the top tax income tax rate on the highest earners in America was at least 70 percent. In the 1950s, it was 91 percent. Now it's 35 percent. Even if you include deductions and credits, the rich are now paying a far lower share of their incomes in taxes than at any time since World War II.
The estate tax (which only hits the top 2 percent) has also been slashed. In 2000 it was 55 percent and kicked in after $1 million. Today it's 35 percent and kicks in at $5 million. Capital gains – comprising most of the income of the super-rich – were taxed at 35 percent in the late 1980s. They're now taxed at 15 percent.
If the rich were taxed at the same rates they were half a century ago, they'd be paying in over $350 billion more this year alone, which translates into trillions over the next decade. That's enough to accomplish everything the nation needs while also reducing future deficits.
If Reich's calculations are correct, $350 billion can buy a whole lotta medical care and education programs.