Wednesday, November 9, 2011

NYC Mayor Michael Bloomberg: "I don't like class warfare."

Mayor Bloomberg, who is worth $20 billion and is #9 on the Forbes 400 list, is deathly afraid of having a class war with people like me - - - someone who subsists of food stamps and had ZERO for an income in all of 2011.

Why is he afraid? Because I have a weapon in my arsenal that can defeat wealthy and powerful people like him. It's called a vote, and I can vote for people who will raise his taxes.

It's the only weapon I have at my disposal that can hurt them the most, by hitting them in their wallet.

Fox News, the Tea Party, and the right-wing accuse people like me of wanting to "fleece" innovative business owners and job creators, and says "the looter class demonizes the wealthy", and they equate fair taxation to socialism. They say "If you punish the wealthy, the risk-takers, the innovators, you kill the goose that lays the golden eggs."

Oh really? The top marginal tax rate during the 1950s was 91% (today they're 35%). During the 1950s corporate taxes were 52% (today they're 35%). And back in the 1950s the capital gains taxes were 25% (today they're 15%). Didn't we innovate and have jobs back then? (READ: America and taxes during the Fabulous Fifties)

I submit, it it THEY and the large corporations who have been doing all the fleecing.

If this were really true, that people like Mayor Bloomberg didn't want a class war, then why is it that the rich have been waging class war on the middle-class and poor for the past 40 years?

Poor people can't wage a class war, they don't have the resources. And they are forced to spend most of their time and energy on just trying to survive. Their only weapon in a class war might be a cardboard protest sign.

But the uber-wealthy, large corporations, and big banks have all the financial resources at their disposal to wage any kind of war they wish, especially if profits are involved. They control everything from the media to the food chain. How can poor people wage a class war against them? By refusing to pay $5 ATM fees? That's a pretty pathetic war plan.

So then, why do the rich keep crying about "class warfare"?

Simple. The best defense against a class war that's being waged against the poor (by the rich) is to raise their taxes. And they know this, that's why their strategy has been to call themselves "job creators", and to claim that they can't create jobs if you tax them more - - even though they've already had some of the most historically lowest tax rates for the past ten years (since the Bush tax cuts).

Mayor Bloomberg was on MSNBC this morning and said we should just let the Bush tax cuts expire...for EVERYBODY (not just for the rich). He said there were two reasons why he feels this way:

  1. It's fair, because he doesn't like class warfare.
  2. Politically, it's the only chance of getting it done (by just letting the Bust tax cuts expire)
Bloomberg is an ass on # 1 but he may be right on # 2. Last year the Republicans wouldn't fund unemployment benefits for 1 year unless the Bush tax cuts were extended for 2 more years.

The Bush tax cuts have benefited the wealthy far much more, because the capital gains tax was lowered from 20% to 15% - - - and stock trades and stock options in CEO salaries is where they earn the bulk of their personal earnings.

The Bush tax cuts has been a huge windfall for them since 2003. But Mayor Bloomberg also thinks we should lower corporate taxes too (which is bullshit, since they don't pay them now as it is, because of all the loopholes they use. (See: How Corporate Tax Dodgers Hoarded $2 Trillion).

Although the corporate tax rate is currently 35%, the largest and most profitable U.S. corporations have actually been paying only 18.5% of their profits to Uncle Sam. By comparison, in 1969, the year we sent astronauts to the Moon, the tax rate for corporations was 52.8%, and there were not as many loopholes. America was flourishing and people were working then.

In 1977 the capital gains tax was the highest in history at 49%. Today at 15% they are the lowest in history, and they have been this low since 2003. Republicans like Newt Gingrich wants this rate to be 0% and Herman Cain wants it to be 9% with his 9-9-9 Plan.

EXAMPLE: As Freddie Mac’s CEO, Ed Haldeman received a base salary of $900,000 last year and garnered a $2.3 million bonus from stock options. His tax bracket is 35% on his base salary after the first $379,150 but his Social Security and Medicare taxes are capped on the first $106,800 - which equates to 11.86% of his base salary. Most people in the U.S. earn less than $106,800 a year so we pay these taxes on 100% of our wages.

If you earned between $34,500 and $83,600 a year in wages or salary, your federal income tax rate is 25%. But CEO Haldman, who received a $2.3 million bonus, only paid a tax of 15% in capital gains tax on these earnings, and he paid ZERO in Social Security and Medicare taxes. This is how ALL corporate CEOs (and Mayor Bloomberg, Warren Buffet, and Herman Cain) pay a vastly lower amount in taxes as a percentage on their total personal income, than do average working Americans who are only earning a median wage of $41,673.

Some people (usually Republicans) are arguing that high corporate taxes are keeping "job creators" from creating jobs. That is simply not true. They're creating jobs overseas because they are saving themselves a fortune in payroll and healthcare costs by using cheap exploited labor overseas. This savings is then directly funneled into the CEOs salaries through stock options, which they only pay a 15% capital gains tax on. (See: It's Not Regulation or Taxes, it's Cheap Labor Stupid!)

One of the greatest detriments to job creation in the U.S. is the overseas income deferral law. This unbelievable gift to multi-national corporations is at the heart of free trade, globalization, off-shoring and outsourcing. Presently these corporations are sitting on $2.2 trillion in untaxed profits in offshore banks to dodge taxes.

Currently in the congressional Super Committee the Republicans are offering $30 billion a year in new revenues, which is peanuts because it's only a one fifth of 1% raise. And of course you know that in exchange for that, they'll also want 10 times more than that in reductions to Social Security and Medicare.

The Republicans would rather allow corporations to hoard cash overseas, than to collect taxes from them to create government jobs and fund our entitlement programs. The CEOs would rather pay themselves another few millions dollars a year and continue to pay $1 an hour for child labor in sweatshops. Unpatriotic CEOs and Republicans would rather let the country fall into ruin, rather than have millionaires and billionaires pay their fair share of taxes on their corporate profits.

It's THEY who have waged class war on US! They haven't paid their fair share of taxes for decades! They've been fleecing record profits and record salaries for years, and yet STILL they're whining, "Class warfare! Class warfare!!"

When is enough ever too much?

Low Corporate Taxes = Excessive CEO Salaries

It doesn't matter what a corporation pays in taxes as compared to GDP, or how it's compared to any other index of measure (to skew the numbers), it's what they actually pay to the U.S. Treasury after loopholes (aka "deductions") that matters most. And for the last 25 years corporations have actually paid historically low taxes.

While today some corporations may have paid the maximum rate of 35% (when it was over 50% in the 1950s), many others paid ZERO, with the average being only 18%.

The same can be said for their CEOs and other high-income earners. While although the top bracket is also almost historically low (at 35%, when it was once over 90%), what they actually pay is nearer to 15% because the majority of their income is earned through capital gains.

And because corporations have been paying a low effective corporate tax rate for decades, that didn't keep them from outsourcing jobs overseas for cheap labor, but rather, it did enable them to pay very excessive CEO salaries...who only mostly pay 15% in federal income taxes on their capital gains.

Tax Rates during the Fabulous Fifties

Historical Tax Rates on the Rich from 1862 to 2011

How Corporate Tax Dodgers Hoarded $2 Trillion


  1. I forgot to add: Also, the CEOs, bankers, and hedge fund managers (the ruling class) can afford to hire high-priced tax attorneys to write off their steak dinners and country clubs fees as "the cost of doing business".

    On the other hand, unless you own a house, people like me (the working class) go to H&R Block or use TurboTax; and we can't even write off the cost of our work boots.

    For years the tax system has been rigged so that only the wealthiest among us can benefit the most.

  2. Jared Bernstein - "We can have an efficient system that serves us well if we simplify the current code by treating all income the same, regardless of its source, close distortionary loopholes [on both personal income and corproate revenues]...and sticking with—I’d say expanding—the progressivity of the current rate structure." PERFECT!