Saturday, April 7, 2012

Why Congress Refuses to Tax the Rich

It would be too simple to say that, because half the members of congress are millionaires themselves, and that just like most of their largest political donors that get them elected and keep them in office, benefit from the very same tax laws that they write on behalf of the most wealthy and largest corporations. That would be too simple, but it is entirely true.

Just like the Republicans, who get so much money from the gas and oil industry (already large and profitable), continue to give them billions of dollars in tax subsidies, despite the fact that the vast majority of Americans are against this tax give-a-way.

Lawmakers in the U.S. House of Representatives worked up quite a sweat last week — protecting America’s richest.

On March 29th they voted by an overwhelming 346-78 margin, to reject a Congressional Progressive Caucus budget proposal that would have put in place a 0.5 percent wealth tax on assets over $10 million and upped the tax rate on all income over $1 billion to 49 percent. That rate currently runs as low as 15 percent for capital gains.

The same day, by a 221-198 vote, House lawmakers lustily endorsed a GOP budget that gives taxpayers making over $1 million an average $265,000 in new tax breaks --- that's above and beyond the $129,000 they already each receive from extending the Bush tax cuts of 2001 and 2003 --- a move the budget also advances to make permanent.

GOP White House hopefuls want taxes on the rich cut even lower than they've already been cut. The United States is a land where the mega rich pay lower tax rates than their secretaries, and a White House hopefuls like Mitt Romney (with a quarter-billion-dollar fortune) only pays 13.9 percent of his annual take-home in federal income tax.

Romney and all his rivals propose abolishing taxes on the estates rich people leave behind for their kids. Rick Santorum advises we should drop the tax rate on capital gains below the current 15 percent - - or as Newt Gingrich advocates, simply eliminate those taxes altogether.

Cutting taxes on America's most wealthy, our GOP Presidential candidates all claim, would bring the United States a broad new prosperity from sea to shining sea.

Congress makes tax laws, and it's no secret that congress is influenced in their voting records by, not the interests of the general public, but the interests of their biggest campaign contributors. Members of congress don't vote with their conscience, they vote for their own re-election. This form of government is patriotically wrapped around the American flag and called "serving their country".

Politics in the United States has now become known as the “super PAC” phenomenon, but politics has been a rich person’s game for quite some time. The rich in America didn’t need the Supreme Court’s 2010 Citizens United decision to dominate the American political process. They already did.

In the 2006 congressional elections, just under two-thirds of the individual contributions to candidates came from Americans that were affluent enough to contribute at least $1,000 to a political campaign. But super PACs have most definitely made a bad situation worse. Much worse.

The Supreme Court, by allowing the super-wealthy and large corporations to contribute as much money as they want to “independent expenditure committees” (the technical label for super PACs), the conservative-stacked court has essentially shifted dominance over our political process from our top 1 percent to the top 1 percent of the top 1 percent. If they want lower taxes, they just ask for doesn't matter what THE PEOPLE want or need.

Read: Auctioning Democracy: The Rise of Super PACs and the 2012 Election

Over the past two decades Chuck Collins has been moving among all the key players and groups working to make America a more equal place...think tanks, trade unions, tax reformers and concerned business leaders. People of faith and people of wealth uneasy about their privilege.

Collins has launched economic justice advocacy groups and co-written a book about saving the federal estate tax with Bill Gates Sr., the father of America’s richest man. He has shared strategic insights with Occupy Wall Street activists and listened and spoken at hundreds of community forums.

And Collins writes well, too, with welcome touches of humor. Early on in his new book 99 to 1: How Wealth Inequality Is Wrecking the World and What We Can Do about It , he notes that he surveyed hundreds of people for ideas on titling the book. He still can’t help smiling when he remembers one of the ideas that came in, Eating the Rich: Recipes for Ending the Class War.

I just saw some of the richest people in America say the most astonishing things...and realized how they REALLY think and feel about the 99%...things you'll never read about in any newspaper, but you can now see and hear them with your own eyes and ears.

(Left) 28-year-old Jamie Johnson, heir to the Johnson & Johnson pharmaceutical fortune, is an Emmy-nominated documentary filmmaker. In Johnson's first documentary, Born Rich (which is available on DVD and Netflix) he exposes how 10 children from families such as the Trumps and the Newhouses spent their time--and their fortunes.

Then Jaime turns the camera on his own family in The One Percent. This documentary (now on Netflix) offers a rarefied view of the scandalously secretive world of "the top 1%", a small segment of the U.S. population that owns roughly 40% of the country's wealth. Through a series of interviews with high-profile figures like Bill Gates Sr., U.S. Secretary of Labor Robert Reich and economist Milton Friedman, Johnson explores the disparity of wealth in America.

Jaime Johnson's documentary also tells of Warren Buffett's grand-daughter's estrangement. In an interview with Marie Claire magazine, Nicole Buffet reveals that she was disowned by her grandfather after making the mistake of talking publicly about her low-profile family in a Jamie's documentary. Warren Buffet keeps a low profile, and he wants everybody in the family to adhere to this as well. Thus, when Nicole dished out family secrets in The One Percent , so she was kicked out!

Also read Forbes interview of Jaime and Jamie's article "The One Percent" at the Huffington Post.

The 1% has the Family Wealth Alliance - - they meet every year and discuss how to make more money for the next 5 of their generations, and how to keep the money inside the top 1%...and to lobby congress to NOT tax their capital gains, dividends, inheritances, and SWAG invests (silver, wine, art, and gold) as "regular incomes", but at a much lower tax rate...lower tax rates than what middle-call earners must pay.

The preferential treatment for capital gains was introduced in 1921 by the Republican Secretary of the Treasury, Andrew Mellon, the big banker. (Read Historical Tax Rates for the Rich from 1862 to 2011)

Members of congress benefit from these same tax breaks for the super-rich, so therefore are just voting in their own self interests, and not the greater interests of the majority of the American people.

Last week the mega-rich Frank McCourt emerged as the biggest financial winner in the history of professional sports. On Tuesday, in a special bankruptcy auction, a group of deep-pocketed bidders agreed to pay $2.15 billion for the Dodger baseball franchise, an all-time record for a U.S. pro sports team, nearly double the previous high-water mark, the $1.1 billion football’s Miami Dolphins fetched in 2009.

Out of that $2.15 billion, McCourt will have to pay off the $706 million in debt that his widely derided incompetence and greed saddled on the Dodgers. After that debt settlement, analysts estimate, he'll walk away with a crisp $1 billion profit.

And what will he pay in income taxes? A lower tax rate than what his secretary will have to pay. And we only have congress to thank for that. It's no wonder their favorable rating is only 11%.

I suggest we vote out ALL incumbents out of office - - good or bad, rich or poor, Republican or Democrat - - and wipe the slate clean. Then only vote for people who will promise to repeal the Citizens United law.

Because if only one incumbent member of congress is allowed to remain, like cancer or other fatal disease, they will eventually infect everyone else.

1 comment:

  1. Bud, while it's true that members of Congress look after the interests of their rich backers, maybe that's not all the story. There seems to be a deep belief in trickle-down economics, if only we let all the ''job creators'' keep more of their loot, some will eventually fall on the rest of us. We see evidence of this belief in Paul Ryan's recent budget and the endorsement that it receives from the GOP presidential candidates. Good article, Bud.