If Corporations and the Rich Paid 1960s-Level Taxes, the Debt Would Vanish

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    Jul 25, 2011 1:12 PM GMT
    It's increasingly clear that we have a revenue problem...

    Sam PizzigatiToday, the rich and their corporations no longer bear anything close to their rightful share of the nation's tax burden. The federal government, given this revenue shortfall, is having a harder and harder time funding initiatives that help average working families. The result: a “debt crisis.”

    This “debt crisis” in no way had to happen. No natural disaster, no tsunami, has suddenly pounded the United States out of fiscal balance. We have simply suffered a colossal political failure. Our powers that be, by feeding the rich and their corporations one massive tax break after another, have thrown a monstrous monkey wrench into our national finances.

    Some numbers — from an Institute for Policy Studies report released this past spring — can help us better visualize just how monumental this political failure has been.

    If corporations and households taking in $1 million or more in income each year were now paying taxes at the same annual rates as they did back in 1961, the IPS researchers found, the federal treasury would be collecting an additional $716 billion a year.

    In other words, if the federal government started taxing the wealthy and their corporations at the same rates in effect a half-century ago, the federal debt to investors would almost totally vanish over the next decade.

    Similarly stunning numbers have come, earlier this month, from MIT economist Peter Diamond and the University of California's Emmanuel Saez, the world's top authority on the incomes of the ultra-rich. These two scholars have shared some fascinating “what ifs” that dramatize how spectacularly the incomes of our wealthiest have soared over recent decades.

    In 2007, Diamond and Saez point out, taxpayers in the nation's top 1 percent actually paid, on average, 22.4 percent of their incomes in federal taxes. If that actual tax burden were to about double to 43.5 percent, the top 1 percenter share of our national after-tax income would still be twice as high as the top 1 percent’s after-tax income share in 1970.

    So why aren't we taxing the rich? Why are we now suffering such fearsome “debt crisis” angst? Why are our politicos so intent on shoving the “fiscal discipline” of layoffs and cutbacks — austerity — down the throats of average Americans?

    No mystery here. Our political system is failing to tax the rich because the rich have fortunes large enough to buy off the political system. Again, some numbers can help us better visualize that plutocratic big picture.

    In 2008, the IRS revealed this past May, 400 Americans reported at least $110 million in income on their federal tax returns. These 400 averaged $270.5 million each, the second-highest U.S. top 400 average income on record.

    In 1955, by contrast, America’s top 400 averaged — in 2008 dollars — a mere $13.3 million. In other words, the top 400 in 2008 reported incomes that, after taking inflation into account, amounted to more than 20 times the incomes of America’s top 400 a half-century ago.


    But 1955’s top 400 didn’t just make far less than 2008’s top 400. The rich in 1955 paid far more of their income in taxes than today’s rich. In 2008, the new IRS data show, the top 400 paid only 18.1 percent of their total incomes in federal income tax. The top 400 in 1955 paid 51.2 percent of their total incomes in tax.

    The bottom line: After taxes, and after adjusting for inflation, 2008’s top 400 had a staggering $38.5 billion more left in their pockets than 1955’s most awesomely affluent.

    Multiply that near $40 billion by the annual tax savings the rest of America's richest 1 percent have enjoyed over recent years and you have an enormous war chest for waging class war, billions upon billions of dollars available for bankrolling think tanks and candidates and right-wing media.

    In the face of these billions, should the rest of us, America's vast non-rich majority, just toss in the towel? Our counterparts a century ago certainly didn't. They challenged their rich, on every battlefront imaginable. They eventually prevailed. They sheared their rich down to democratic size.

    We can do the same.


    Another good indicator:

    Chuck Collins, Alison Goldberg, Scott Klinger, Sam Pizzigati

    Key Tax Facts

    15,753: The number of households in 1961 with $1 million in taxable income (adjusted for inflation).

    361,000: The number of households in 2011 estimated to have $1 million in taxable income.

    43.1: Percent of total reported income that Americans earning $1 million paid in taxes in 1961 (adjusted for 2011 dollars)

    23.1: Percent of total reported income that Americans earning $1 million are likely to pay in taxes in 2011, estimated from latest IRS data.

    47.4: Percent of profits corporations paid in taxes in 1961.

    11.1: Percent of profits corporations paid in taxes in 2011.

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    Jul 25, 2011 1:20 PM GMT
    Christian - seriously? What was this from Alternet? The sources you pull from, and the passages of opinion you highlight are demonstrative of how desperate you need to go in order to support your view that it is a revenue problem.

    Nevermind that higher corporate taxes will result in lower employment, and fewer corporations (high networth individuals have the option just not to earn more money if they already have it), what is actually clear is that there is probably both a spending and a revenue problem but that the problem is primarily in spending.

    This is a graph both produced by factcheck.org and also reproduced by the Economist:
    Outlays%20vs%20Revenues%20Since%201930(1
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    Jul 25, 2011 1:57 PM GMT
    The highlighted portions are not opinions but facts highlighted from two new reports illustrating the extent to which the rich have rigged the system against the middle and working classes.

    http://elsa.berkeley.edu/~saez/diamond-saezJEP11opttax.pdf

    http://www.ips-dc.org/files/3053/unnecessary-austerity-unnecessary-government-shutdown.pdf
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    Jul 25, 2011 2:19 PM GMT
    Christian73 saidThe highlighted portions are not opinions but facts highlighted from two new reports illustrating the extent to which the rich have rigged the system against the middle and working classes.

    http://elsa.berkeley.edu/~saez/diamond-saezJEP11opttax.pdf

    http://www.ips-dc.org/files/3053/unnecessary-austerity-unnecessary-government-shutdown.pdf


    Again Christian, like really?

    "Multiply that near $40 billion by the annual tax savings the rest of America's richest 1 percent have enjoyed over recent years and you have an enormous war chest for waging class war, billions upon billions of dollars available for bankrolling think tanks and candidates and right-wing media."

    Fact? Sounds like the only one trying to forment a classwar is the extremist left wing author who assumes wealth is being appropriated by the rich (which is not the case for at least one of the economists he cites). Further, I don't suppose you have heard of either Warren Buffet or George Soros?
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    Jul 25, 2011 2:50 PM GMT
    riddler78 said
    Christian73 saidThe highlighted portions are not opinions but facts highlighted from two new reports illustrating the extent to which the rich have rigged the system against the middle and working classes.

    http://elsa.berkeley.edu/~saez/diamond-saezJEP11opttax.pdf

    http://www.ips-dc.org/files/3053/unnecessary-austerity-unnecessary-government-shutdown.pdf


    Again Christian, like really?

    "Multiply that near $40 billion by the annual tax savings the rest of America's richest 1 percent have enjoyed over recent years and you have an enormous war chest for waging class war, billions upon billions of dollars available for bankrolling think tanks and candidates and right-wing media."

    Fact? Sounds like the only one trying to forment a classwar is the extremist left wing author who assumes wealth is being appropriated by the rich (which is not the case for at least one of the economists he cites). Further, I don't suppose you have heard of either Warren Buffet or George Soros?


    Yes. In fact, Warren Buffett has called on his peers to stop engaging in class warfare and pay their fair share. And the xenophobic bogey man of Soros is just really silly at this point, particularly given that the historical facts are that a portion of the top 1% has, indeed, used their wealth over the last 30+ years to bankroll think tanks (Heritage, Cato, ALEC), and candidates (too many to name), and right-wing media (talk radio, Faux News) to pummel the middle class and keep an ever-greater share of the profits results from the labor of working Americans.
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    Jul 25, 2011 3:28 PM GMT
    southbeach1500 said
    Christian73 saidIt's increasingly clear that we have a revenue problem...


    ... because there simply isn't enough money to feed the insatiable appetite of the Democrats and their monstrous Federal spending goals. When the sky's the limit when it comes to spending, of course there will be insufficient money to meet that unlimited spending requirement.


    Wrong. Wrong. Wrong.

    Three biggest drivers of the deficit are:

    Bush tax cuts

    Wars in Iraq and Afghanistan

    Financial crisis

    None of those are Democratic policies or resulting therefrom.
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    Jul 25, 2011 8:46 PM GMT
    NY Times figure via Ezra Klein:

    debt%20changes%20under%20bush%20obama.jp
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    Jul 25, 2011 9:26 PM GMT
    q1w2e3 saidNY Times figure via Ezra Klein:

    debt%20changes%20under%20bush%20obama.jp


    Which might have made sense if it weren't for the fact that 2009 is counted solely under Bush - particularly when Bush gave the transitional team substantial access to crafting the response to the financial crisis among other budget items. You might um try reading some of this stuff before posting it ;)

    Further, the numbers just don't make sense considering the more than doubling of the deficits post Bush.
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    Jul 25, 2011 9:30 PM GMT
    NEW policies, man. Obama inherited the ongoing costs from Bush policies. That's why they are not on the graph.

    Obama came into office "with a $1.3 trillion deficit before I had passed any law. ... We came in with $8 trillion worth of debt over the next decade."

    Rated Mostly True (and the mostly is added because of different projections)

    http://www.politifact.com/truth-o-meter/statements/2010/jan/29/barack-obama/obama-inherited-deficits-bush-administration/
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    Jul 25, 2011 9:32 PM GMT
    q1w2e3 saidNEW policies, man. Obama inherited the ongoing costs from Bush policies. That's why they are not on the graph.


    What so your claim is that Obama is therefore just reinvesting and doubling up on Bush's policies? What happened to the change?
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    Jul 25, 2011 9:33 PM GMT
    riddler78 said
    q1w2e3 saidNEW policies, man. Obama inherited the ongoing costs from Bush policies. That's why they are not on the graph.


    What so your claim is that Obama is therefore just reinvesting and doubling up on Bush's policies? What happened to the change?


    The change you can see with the black sliver above the Obama bar.

    And I'm not saying he's perfect--heck, he's the one who capitulated to extending the Bush tax cuts.
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    Jul 25, 2011 9:33 PM GMT
    riddler78 said
    q1w2e3 saidNY Times figure via Ezra Klein:

    debt%20changes%20under%20bush%20obama.jp


    Which might have made sense if it weren't for the fact that 2009 is counted solely under Bush - particularly when Bush gave the transitional team substantial access to crafting the response to the financial crisis among other budget items. You might um try reading some of this stuff before posting it ;)

    Further, the numbers just don't make sense considering the more than doubling of the deficits post Bush.


    The figure is based on the results of "new policies under each administration" not on the fiscal year spending. And the federal budget goes from October to September so in January 2009, Obama inherited 9 1/2 months of Bush's last budget. Unless, like SouthBeach, you believe that the minute someone takes office the slate is wiped clean.
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    Jul 25, 2011 9:39 PM GMT
    Don't forget that Bush's budgets did not include the emergency supplemental appropriation bills for his wars.
    http://en.wikipedia.org/wiki/United_States_federal_budget
    According to the CBO, defense spending grew 9% annually on average from fiscal year 2000-2009.[42] Much of the costs for the wars in Iraq and Afghanistan have not been funded through regular appropriations bills, but through emergency supplemental appropriations bills. As such, most of these expenses were not included in the budget deficit calculation prior to FY2010.


    That's why the FactCheck graph (and others like it) are so misleading.
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    Jul 25, 2011 9:46 PM GMT
    Christian73 said
    riddler78 said
    q1w2e3 saidNY Times figure via Ezra Klein:

    debt%20changes%20under%20bush%20obama.jp


    Which might have made sense if it weren't for the fact that 2009 is counted solely under Bush - particularly when Bush gave the transitional team substantial access to crafting the response to the financial crisis among other budget items. You might um try reading some of this stuff before posting it ;)

    Further, the numbers just don't make sense considering the more than doubling of the deficits post Bush.


    The figure is based on the results of "new policies under each administration" not on the fiscal year spending. And the federal budget goes from October to September so in January 2009, Obama inherited 9 1/2 months of Bush's last budget. Unless, like SouthBeach, you believe that the minute someone takes office the slate is wiped clean.


    There were a number of articles about the transition team and how how they worked with the Bush Administration on budgetary items and working through the financial crisis. Obama is at least in part responsible for those costs.
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    Jul 25, 2011 9:48 PM GMT
    q1w2e3 saidDon't forget that Bush's budgets did not include the emergency supplemental appropriation bills for his wars.
    http://en.wikipedia.org/wiki/United_States_federal_budget
    According to the CBO, defense spending grew 9% annually on average from fiscal year 2000-2009.[42] Much of the costs for the wars in Iraq and Afghanistan have not been funded through regular appropriations bills, but through emergency supplemental appropriations bills. As such, most of these expenses were not included in the budget deficit calculation prior to FY2010.


    That's why the FactCheck graph (and others like it) are so misleading.


    Except that those budget numbers are complete. Budgets themselves did not include the emergency supplemental appropriations bills but these were accounted for afterwards. In fact the graph showing the deficits from the Washington Post specifically noted their inclusion.
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    Jul 25, 2011 9:58 PM GMT
    Can you point out where they said the emergency appropriation money is accounted for in their chart?
    http://factcheck.org/2011/07/fiscal-factcheck/

    Not in this one, your favorite graph:

    wapoobamabudget1.jpg

    I mean, come on, Bush added $5 trillion to the deficit (counting from the day he came into office until Obama came on).
    http://www.politifact.com/truth-o-meter/statements/2009/jan/22/rahm-emanuel/5-trillion-added-national-debt-under-bush/

    If all his deficits were <400 billion, multiply that by 8 and you get barely 3.2 trillion max.
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    Jul 25, 2011 10:14 PM GMT
    q1w2e3 saidCan you point out where they said the emergency appropriation money is accounted for in their chart?

    Not in this one, your favorite graph:

    wapoobamabudget1.jpg


    Except that the deficits tie to the CBO numbers *after* calculating for the emergency appropriations. You should check the Wikipedia article you referenced - which uses this article to make the point that the emergency appropriations are not included in budgets -

    http://csis.org/publication/resourcing-defeat-0

    This is *before* the fact. Not after. Budget deficit numbers after the year is completed do include all spending ex-unfunded liabilities like Social Security.
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    Jul 25, 2011 10:15 PM GMT
    riddler78 said
    There were a number of articles about the transition team and how how they worked with the Bush Administration on budgetary items and working through the financial crisis. Obama is at least in part responsible for those costs.


    You can give Obama ALL the 2008 stimulus expenditures for all I care.

    Once again, I quote Christian:

    "Three biggest drivers of the deficit are:

    Bush tax cuts

    Wars in Iraq and Afghanistan

    Financial crisis

    None of those are Democratic policies or resulting therefrom. "
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    Jul 25, 2011 10:16 PM GMT
    q1w2e3 saidIf all his deficits were <400 billion, multiply that by 8 and you get barely 3.2 trillion max.


    Except not all spending is actually spending - but they are accounted for as balance sheet items like parts of TARP that were loans some of which were repaid.
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    Jul 25, 2011 10:18 PM GMT
    q1w2e3 said
    riddler78 said
    There were a number of articles about the transition team and how how they worked with the Bush Administration on budgetary items and working through the financial crisis. Obama is at least in part responsible for those costs.


    You can give Obama ALL the 2008 stimulus expenditures for all I care.

    Once again, I quote Christian:

    "Three biggest drivers of the deficit are:

    Bush tax cuts

    Wars in Iraq and Afghanistan

    Financial crisis

    None of those are Democratic policies or resulting therefrom. "


    Yeah because September 11th was the result of Bush's policies? You act as if Obama was some big victim and helpless in all of this when the reality is that he adopted most of the same policies that he suggested he would change. Was Iraq an optional war? I assume you've bothered to watch some of Al Gore's speeches in 2000 on Iraq? These are now Obama's policies, like it or not.
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    Jul 25, 2011 10:26 PM GMT
    Iraq was an optional war. To wind it down responsibly is a huge task.

    Here's what your Heritage graph conveniently decides to ignore:
    http://en.wikipedia.org/wiki/United_States_federal_budgetDifferences between the annual deficit and annual change in the national debt include the treatment of the surplus Social Security payroll tax revenues (which increase the debt but not the deficit), supplemental appropriations for the Iraq and Afghanistan wars, and earmarks.

    800px-Deficits_vs._Debt_Increases_-_2009

    I dunno, the total of those red bars do add up quite nicely to $5 trillion! (the amount Bush put the debt higher by) icon_lol.gif
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    Jul 25, 2011 10:29 PM GMT
    southbeach1500 said
    Christian73 saidIt's increasingly clear that we have a revenue problem...


    ... because there simply isn't enough money to feed the insatiable appetite of the Democrats and their monstrous Federal spending goals. When the sky's the limit when it comes to spending, of course there will be insufficient money to meet that unlimited spending requirement.




    LOL!
    The Repubs have outspent and outborrowed the Dems for decades.
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    Jul 25, 2011 10:30 PM GMT
    http://csis.org/publication/resourcing-defeat-0These years of underfunding the Afghan conflict have created a dilemma for the Obama Administration where it must now pay far more to compensate for a past Administration’s grand strategic failures or risk losing the war in Afghanistan. Moreover, neither DOD nor the State Department budgets now fund an adequate or well-defined plan for the civil side of either war, and it is unclear that the Department of Defense plans to sustain the US military advisory effort in Iraq at anything like the level required. The US finds it easy to announce “strategies” and concepts; it has yet to show that it can back them with efficient and effective plans, programs, and budgets.

    The end result is that President Obama must now deal with two badly managed and budgeted wars. In the case of Iraq, he must deal with the withdrawal of US combat forces from a war with no clear plan or funding for making the transition to a civilian-dominated nation building effort or supporting the development of Iraqi security forces. It the case of Afghanistan, he must either make unpopular and costly decisions to compensate for seven crippling years of underresourcing the war, or risk losing it.
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    Jul 25, 2011 10:30 PM GMT
    q1w2e3 saidIraq was an optional war.

    Here's what your Heritage graph conveniently decides to ignore:
    http://en.wikipedia.org/wiki/United_States_federal_budgetDifferences between the annual deficit and annual change in the national debt include the treatment of the surplus Social Security payroll tax revenues (which increase the debt but not the deficit), supplemental appropriations for the Iraq and Afghanistan wars, and earmarks.

    800px-Deficits_vs._Debt_Increases_-_2009


    Except it doesn't:

    http://blog.heritage.org/2009/03/24/bush-deficit-vs-obama-deficit-in-pictures/

    Many Obama defenders in the comments are claiming that the numbers above do not include spending on Iraq and Afghanistan during the Bush years. They most certainly do. While Bush did fund the wars through emergency supplementals (not the regular budget process), that spending did not simply vanish. It is included in the numbers above. Also, some Obama defenders are claiming the graphic above represents biased Heritage Foundation numbers. While we stand behind the numbers we put out 100%, the numbers, and the graphic itself, above are from the Washington Post. We originally left out the link to WaPo. It has now been added.


    You seem terribly invested in the idea that this isn't Obama's responsibility. I would openly suggest that Bush is hardly blameless but the reality is that when you have numbers like this:

    wapoobamabudget1.jpg the idea that Obama should not take responsibility for the massive rise in debt, is laughable on its face.
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    Jul 25, 2011 10:34 PM GMT
    riddler78 said

    Except it doesn't:


    But it does. $5 trillion (the national debt increase under Bush) cannot be obtained from your Heritage graph. It can be from this:
    800px-Deficits_vs._Debt_Increases_-_2009