The Showdown On Tax Cuts for the Rich

Tax Cuts for the Richrich get richer

The President met with Republican leaders at the White House Tuesday morning to talk about whether the Bush tax cuts should be extended to top taxpayers, at Republicans want.

No decision has been reached, but this is the first test of the President’s resolve with the new Congress — and he should be tough as nails. The economics and politics both dictate it.

Taxpayers in the top 1 percent don’t need it (they are now getting almost a quarter of all national income, the highest percent since 1928).

They don’t deserve it (they got the lion’s share of the benefits of the 2001 and 2003 Bush tax cuts, and have had no reason to expect a continuation of their windfall).

They won’t spend it to stimulate the economy (top earners save a much higher proportion of their income than the middle class).

And giving it to them blows a giant hole in the budget (the Joint Tax Committee estimates the cost of extending the Bush tax cuts for the top 1 percent to be $61 billion in 2011 alone.)

In political terms, a strong stand enables the President to clearly demonstrate who’s side he’s on (the working and middle class that’s still bearing the brunt of this lousy economy) and who’s side the Republicans are on (the powerful and privileged who brought much of this on, and who are now doing just fine).

Robert ReichThe only compromise he should be prepared to make is to extend the Bush tax cuts to the bottom 99 percent (rather than the bottom 98 percent), and for two years rather than ten. The top 1 percent begins at around $500,000 rather than $250,000.

This would allow the President to even more sharply illustrate the extraordinary concentration of income at the top, while robbing Republicans of their debating point about small business (just about all small business owners with payrolls earn under $500,000).

Robert Reich

Republished with permission.

Published by the LA Progressive on December 1, 2010
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About Robert Reich

Robert B. Reich is Professor of Public Policy at the Goldman School of Public Policy at the University of California at Berkeley. He has served in three national administrations, most recently as secretary of labor under President Bill Clinton. He has written eleven books, including The Work of Nations, which has been translated into 22 languages; the best-sellers The Future of Success and Locked in the Cabinet, and his most recent book, Supercapitalism. His articles have appeared in the New Yorker, Atlantic Monthly, New York Times, Washington Post, and Wall Street Journal. Mr. Reich is co-founding editor of The American Prospect magazine.

Reich has been a member of the faculties of Harvard’s John F. Kennedy School of Government and of Brandeis University. He received his B.A. from Dartmouth College, his M.A. from Oxford University, where he was a Rhodes Scholar, and his J.D. from Yale Law School.

Comments

  1. If we taxed the “rich” at 100% it would not pay for the increase spending in the last four years since Jan.5th, 2007 when the Democrats usurped all power in the House. It is not that we not been taxed enough. It is that you spend too much. The problem with the “rich” you refer to is they do not have to live in the US. They can move the means of production outside the US and eventually they will go with it.

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