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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsKRUGMAN: GOP Favoring Wealth Over Work: "Consider, as Exhibit A, The BUSH TAX CUTS"
MAR 22, 4:22 PM 64
Favoring Wealth Over Work
In my last post I tried to document the extent to which modern Republican rhetoric has already adopted the values of patrimonial capitalism, even though Americas top one percent still owes its high incomes largely to compensation rather than wealth. On reflection, I thought I should also document the extent to which the GOP has put its money or, actually, taxpayers money where its mouth is, with concrete policies that favor wealth over work.
Consider, as Exhibit A, the Bush tax cuts. Bush did cut the top tax rate on earned income from 39.6 to 35 percent, a 12 percent reduction. But he cut the rate on capital gains from 21 to 15, a 28 percent reduction; he cut the rate on dividends from 39.6 (because dividends were previously taxed as ordinary income) to 15, a reduction of more than 60 percent. And he put the estate tax on a path toward zero a 100 percent reduction.
The estate tax made a partial comeback thanks to the awkward fact that a Democrat was in the White House, and there have been some tax hikes on capital income. The point, however, was that Bush tried to give people living off wealth, inherited wealth in particular, much bigger tax cuts than he gave high earners.
And the efforts go on. I know that Paul Ryan likes to lecture the poor about the dignity of work; but his famous initial roadmap called for the complete elimination of taxes on interest, capital gains, and dividends, plus elimination of the estate tax. In other words, he proposed eliminating all taxes on income derived from wealth.
Now, Ryan casts this as policy that favors saving. But the truth is that it would mainly favor people born on third base or beyond. Even now, 6 of the 10 wealthiest Americans are heirs rather than self-made entrepreneurs the Koch brothers plus a bunch of Waltons. Theres every reason to believe that the role of inheritance will only grow over time.
MORE:
http://krugman.blogs.nytimes.com/?module=BlogMain&action=Click®ion=Header&pgtype=Blogs&version=Blog%20Post&contentCollection=Opinion
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THIS TOO:
MAR 22, 9:36 AM 91
Working for the Owners
Ive just finished a draft of a long review of Thomas Pikettys Capital in the 21st Century, which argues that were on the road back to patrimonial capitalism, dominated by inherited wealth. Its an amazing book; among other things, it does an awesome job of integrating economic growth, the factor distribution of income (between capital and labor), and the individual distribution of income into a common framework. (Its all about r-g). One slight weakness of the book, however, is that Pikettys grand framework doesnt do too good a job of explaining the explosion of income inequality in the United States, which so far has been driven mainly by wage income rather than capital. Piketty does take this on; but its kind of a side journey from the central story.
No matter; its still a masterwork. But Ive been thinking about this quite a bit, and one thing that strikes me is the remarkable extent to which American conservatism in 2014 seems to be about defending and promoting patrimonial capitalism even though we arent there yet.
Think back to the Bush administration, whose main economic theme was the ownership society: in effect, the message was that youre not really a full-fledged American, no matter how hard you work, unless you have a lot of assets. Think of Eric Cantors famous Labor Day tweet in which he used the occasion to celebrate business owners. More recently, Mike Konczal has pointed out that despite claims that the Tea Party somehow represents a rebellion against business domination of the GOP, the Tea Party agenda corresponds almost perfectly with Wall Streets goals.
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http://krugman.blogs.nytimes.com/?module=BlogMain&action=Click®ion=Header&pgtype=Blogs&version=Blog%20Post&contentCollection=Opinion
ProfessorGAC
(65,013 posts)And, obviously, i agree with Krugman.
reformist2
(9,841 posts)If a person is worth $1 billion, I would impose a 2% annual wealth tax on them - that amounts to $20 million a year.
Guess what they pay now on that? Zero. That's right. A person can be worth one billion dollars, and if they put it all in tax-exempt municipal bonds, they'll pay zero dollars in tax. Insane. Historians centuries from now will look in amazement that we tolerated such unfairness in this, the supposed land of freedom and justice.
spinbaby
(15,090 posts)If it's not done right, a wealth tax could result in billionaires off shoring their wealth while retirees with a few hundred thousand get taxed.
brooklynboy49
(287 posts)Enact legislation making it illegal to have more than x% of your assets invested or stashed outside of the United States. And put teeth in it. And I mean teeth. If found beyond a reasonable doubt to have violated this law, anyone named or referred to on your 1040 is stripped of their citizenship and deported.
By the way, 2% is much too low. Something more on the order of 10 or 25% is more like it.
A Simple Game
(9,214 posts)Ah, Guantanamo Bay, I see now!
On edit: Welcome to DU.
Hoyt
(54,770 posts)Although the ATM only applies to certain types of tax exempt bonds. I doubt most super wealthy invest totally in tax exempts.
Anyway, increasing tax rates would be a better approach.
PowerToThePeople
(9,610 posts)Tax everything, all income and wealth, over some threshold at 100%.
Fund social security so no one lives in poverty after retirement.
maindawg
(1,151 posts)They worried about the US becoming just like the Europe after centuries of wealth hording that created a very top heavy economy. The very thing that Reagon did not understand.
We need to better educate our people on the original intent of the founders.
Enthusiast
(50,983 posts)People remain uniformed about the damage Bush did to the nation. It's a conspiracy of silence.
The media is filled with talking heads telling us how "entitlements" are drivers of the deficit. The media completely ignores the truth.
While they inform the people that entitlements are the culprit they point out that people without wealth are lazy moochers.
We ignore this rhetoric at our peril. They are not making these statements just for the fun of it. They are preparing us for the day of extreme austerity.
If you cannot see this you are not looking closely enough.
DiverDave
(4,886 posts)A guy got bent when I asked if faux could be changed on the tv in the waiting room.
He called me a "pinko" and I told him " you know these guys shilled to cut VA
money?" no response.
Then I told him that msm was owned by the rich and only showed what they
wanted us to see.
Man, I was called an idiot and some other names as he left.
His parting shot was that "the world is full of morons"
I said that it certainly was.
Oh, and I did apologize for causing any trouble...silence from him.
Enthusiast
(50,983 posts)They are out there by the millions.
LittleGirl
(8,287 posts)Overseas
(12,121 posts)to make sure that their supporters focus on other things.
adieu
(1,009 posts)He's an inheritor, although he did make some additional fortune through business. And in the slimiest way, too.
TheKentuckian
(25,026 posts)The TeaPubliKlans though are always trying to find a new frontier for the extreme but wealth is always preferred over work in both parties and thoroughly throughout establishment institutions of every sort.
Electric Monk
(13,869 posts)&U&G&M&A&N