Thursday, January 26, 2012

Why Do Republicans Castigate the Poor and Unemployed?

And why aren't the top percent's capital gains taxed as regular income? And why do they accuse the poor and unemployed of waging a class war against the ultra-wealthy?

Let's briefly review a few of the millionaire's, billionaire's, and Republican's talking points regarding a fairer tax code:

  • "We don't want to raise taxes on anyone."
  • "The rich pay more in taxes than anyone else."
  • "We shouldn't be taxing the job creators in a bad economy."
  • "We don't have a revenue problem, we have a spending problem."
  • "45% of all Americans don't pay any taxes at all."
  • "If you raise my taxes, I might have to quit my job." - Bill O'Reilly
  • "Taxing capital gains is double taxation."
  • "Taxing millionaires will kill their ambition and discourage investment."
  • "Raising taxes on millionaires is punishing success."
  • "Taxing the rich and giving to the poor is a redistribution of wealth."
  • "Raising taxes on the rich is a form of socialism."
  • "Exploiting tax loopholes isn't tax evasion, it's avoiding taxes."

Mitt Romney recently used the old argument of "double taxation" because corporations pay a corporate tax before allocating personal income to their top executives (salaries, bonuses, stock options, etc).

In 1921 was when capital gains were first taxed at the preferential rate of only 14.5%, and they went to their highest rate in 1977 when they were taxed at 49%. Today they're only 15%, thanks to the Bush tax cuts - - about where they were 90 years ago when the tax code was first changed to no longer tax capital gains as regular income.

Congress understood this part of the tax code for almost a century. The working-class has been hoodwinked all this time. Mitt Romney doesn't even come close to a ranking on the 2011 Forbes Fortune 400 list, but he and almost everyone else in the top 1% has been paying a lower tax rate than almost everybody else has been for many decades.

But now that we know this, millionaires, billionaires, and Republicans like to tout that 45% of all Americans pay no taxes at all. That's a flat-out lie. This 45% they're referring to are those who earn less than $27,000 a year, when the poverty line for a family of four is $22,314. With child credits and other personal deductions, they might not be obligated to pay federal income taxes, but they pay many other taxes through consumption.

Most people in this very low income bracket spends almost ALL their income in "personal consumption" for the very basic necessities. And guess what? Millionaires, billionaires, and Republicans want to impose a consumption tax (e.g. flat tax or VAT tax) on them too! Unbelievable!!!

Now in 2011 we have 30 million under or unemployed Americans and another 75 million earning near poverty wages. Millionaires, billionaires, and rich Republicans are now complaining because very poor people don't have to pay taxes. That's just like calling paraplegics lazy and complaining about them not having to go to work! Crazy!

Besides, I thought they didn't want to raise taxes on "anyone". But instead, the very rich would rather deny those with so little, just so that those with so much, wouldn't have to pay a little more. That's just plain disgusting and immoral! It's nothing more than raw greed. When is enough ever enough for these people? And when is it ever too much?

In 2010, notes Syracuse University tax expert Len Burman, Americans making over $1 million that year earned $258 billion just in capital gains...and they all paid Mitt Romney's very low tax rate.

John Hammergren, the top exec at the California-based McKesson, pocketed $145 million last year after cashing out stock options. He pays a lower tax rate on capital gains while not even breaking a sweat -- less than someone else that's earning $35,000 a year breaking their back.

JPMorgan filings last week revealed CEO Jamie Dimon will receive $17.6 million in stock awards for 2011, a little boost from the $17.1 million in stock he grabbed in 2010. Can you say a 15% tax rate?

Also at JPMorgan: the head of investment banking, James E. Staley, was granted restricted stock valued at $7.8 million and he has options valued at an added $2 million. Mary E. Erdoes, head of asset management, received restricted stock valued at $7.1 million and a further $2 million in options. All pay the very low15% tax rate.

Morgan Stanley’s CEO James P. Gorman will receive $9.7 million in deferred compensation for his work last year, according to a regulatory filing. This number includes $4.7 million in deferred cash and equity linked stock and an additional $5 million in restricted stock. In 2010, Mr. Gorman received $7.4 million in stock and his total compensation for the year was $14 million (taxed at 15%) These numbers also include Mr. Gorman’s base salary of $800,000 (only this part of his salary might be taxed as ordinary income after deductions).

Other senior executives at Morgan Stanley: The wealth management chief, Gregory J. Fleming, and Paul J. Taubman, co-head of institutional securities, were both granted restricted stock valued at $3.4 million. Colm Kelleher, the other co-president of institutional securities, received restricted stock valued at $1.9 million. His grant is less because he is based in Britain and there are different requirements on the mix of his pay. Ultimately, he will receive the same as Mr. Fleming and Mr. Taubman, a company spokesman said. Morgan did not release how much deferred cash these senior executives will receive.

Citigroup also disclosed that its CEO John P. Havens received a stock award valued at $3.47 million. Its consumer banking chief, Manuel Medina-Mora, got $2.64 million and its chief risk officer, Brian Leach, received an award valued at $2.36 million, according to regulatory filings. All of them pay a 15% tax rate (the middle-class pays the higher 25% tax rate).

Look at our defense industry: Lockheed Martin CEO Robert Stevens earned $21.9 million, Northrop Grumman CEO Wes Bush reaped $22.8 million, and Boeing CEO James McNerney cleaned up with $19.4 million...ALL IN ONE YEAR...and they all only paid 15% for taxes on their stock options for "performance" compensation.

In 1963 the highest marginal income tax rate was 91% on base salaries or wages earned as "regular income", today most of the top 1% use this "capital gains tax loophole" to avoid paying the higher tax rate of 35% for the top marginal rate by paying the lower 15% capital gains rate.

In all fairness though, one rich man had whined that he had to pay an effective personal income tax rate of 53 percent last year -- and he would favor a flat tax. Blackstone Group LP Chairman Stephen Schwarzman said he was taxed at 36 percent by the U.S. and 17 percent by state and local governments (but we all have to pay state and local taxes, even those poor people I mentioned earlier.)

Schwarzman was paid a $350,000 salary last year, but he didn't receive any stock options or a bonus that year.

But what Schwarzman didn't say was that he owns about $399.2 million worth of Blackstone vested stock, and the value of his unvested stock was worth $544.7 million. When Schwarzman cashes out, he will only have to pay the lower tax rate of 15% for capital gains.

Stephen Schwarzman was ranked 169th on Forbes magazine’s list of the world’s richest people earlier this year, with an estimated net worth of $5.9 billion. Poor guy. He had to pay the regular top marginal tax rate last

But yet, the rest of us will either have to pay a higher tax rate than he does if we earn $35,000 a year -- or unless you're very poor and not have to pay any federal tax at all. But then you'd be envied and castigated by the very rich.

Poor Mitt Romney...his $370,000 in speaking fees last year (that he says, "wasn't very much") might have been taxed at 35%...because it wasn't a stock option, a SWAG investment, carried interest, a gift, an inheritance, a generation-skipping estate, a trust find, or a capital was just plain old ordinary "earned" we earn.

Obama suggested that anyone earning more than $1 million a year should be taxed at 30%...which would also mean lowering the top marginal rate of 35% for regular earnings over $380,000 a year.

Yet all the millionaires, billionaires, and Republicans want ALL their capital gains to be taxed lower than the current 15% rate. Herman Cain had wanted them to be taxed at 9% in his 9-9-9 Plan. Mitt Romney and Newt Gingrich wants capital gains taxed at ZERO percent!

I like Obama's tax plan much better. Maybe then we can pay off the national debt and save Social Security. And the ultra-rich can castigate me all they want to, I wouldn't care. We would have won a battle in the "class war" that the uber-rich has waged against us over the past several decades by bribing lobbying our congress for preferential tax rates.

The millionaires, billionaires, CEOs, bankers, and Republicans have accused Obama of waging a class war and "dividing" the country. Dividing the 1% and 99%? The Republicans have always divided the county...the rich against the poor, the middle-class against the working-class, and the whites against the African-American and Hispanic communities.

In reality, it's always been the millionaires, billionaires, and Republicans who have been guilty of waging class war and dividing the country...and castigating the poor, the unemployed, and me.

More posts on Mitt Romney:

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  1. According to a poll which was conducted immediately after the president's State of the Union address, 91 percent approved of the proposals that Mr. Obama put forth...almost the entire "99%".

  2. It's hypocritical, dishonest and morally wrong for the millionaires, billionaires, CEOs, bankers, and rich Republicans to point accusing fingers at those that don't even earn enough to pay federal income taxes...and then castigate them for being poor and unemployed...when it was THEY that put those people in poverty in the first place by outsourcing jobs, paying poverty wages, and laying them off to save themselves the money that enabled themselves to become as wealthy as they are...but yet they STILL insist on paying a lower tax rate than those who can barely survive.

  3. Lowering the corporate tax rates will only enable these CEOs to pay themselves bigger salaries, it would NOT create more jobs.

  4. "Typical investors drawing from their 401k savings pay taxes at ordinary rates -- whatever they would pay if they earned it at a job."

  5. Did Mitt Romney pay a zero percent tax rate in 2009? That's what David Shuster, filling in for Keith Olbermann on Countdown on Current TV, planned in last night's report. Meanwhile a disabled worker is fired for stealing twenty cents!