Capitalist insolence and taxes

bank

Income inequality in the U.S. is the highest it's been since the 1920s. The top one hundredth of 1 percent now make $27 million a year while the average income for the bottom 90 percent is only $31,244, says Mother Jones.

Because these figures were calculated in 2007, before the crisis, today's numbers for working-class families are sure to be far worse. The foreclosure crisis has had a devastating impact on working-class wealth, with its sharpest edge directed at Latinos and African Americans.

Outrageously, many if not most of the top corporate thieves pay zero taxes. Thinkprogress reports that:

  • In 2009 Bank of America paid 0 corporate taxes.
  • Between 2008 and 2010, Boeing didn't pay a cent.
  • Citigroup's deferred taxes for the third quarter of 2010 allowed them to get off scot free
  • General Electric and Wells Fargo can be added to the list as well.

Wells Fargo, Bank of America and Citigroup were all deeply involved in the sub-prime mortgage crisis, which prompted the Great Recession and the huge budget deficits. Too-big-to-fail also means too-big-to-pay-taxes, apparently.

And to top it all off, the Bush tax cuts for these very corporations were extended by Congress for another two years.

Yet the Republican Party is now using budget deficits as an excuse to break the back of public worker unions and attack people-serving federal programs they dislike, claiming these are the cause of budget deficits.

Thinkprogress reports that former Minnesota GOP Governor Tim Pawlenty, a presidential hopeful, when asked if he thought it was fair that Bank of America paid no taxes, responded that "taxes are too high."

It is this capitalist insolence that is driving working-class outrage in Ohio, Indiana and Wisconsin.

When recently asked how long this worker's movement will last, Richard Trumka, head of the AFL-CIO, remarked: at least until 2012.

A new workers and people's movement has been born that is making the tea party look like, well, a tea party. Life is pushing this new movement in an anti-right, and anti-corporate direction as well. Arrogance and shamelessness will be the undoing of the ruling class.

R & B star John Legend had it right. "People fought to give me - a millionaire - a tax cut this year," he said. "I didn't need it. And all the other millionaires didn't need it either."

Image: They took our tax money, but they don't pay any taxes. Photo by Andy Melton // CC BY-SA 2.0

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  • I agree with the thrust of the argument - that income and effective tax rates are unfairly lopsided - but the numbers used are misleading.

    * Comparison of income for the top 0.01% to the bottom 90%. You could select the top 0.001% and make the disparity look even greater even though reality is the same. A more realistic picture would show the entire top 10%, which made $262,000 on average according to the referenced Mother Jones chart.

    * All these companies paying zero taxes during the recession = thieves! A good sound bite, but deferred losses are not a bad thing. Bank of America posted a loss last year AND paid almost $1 billion in taxes. 33% of Wells Fargo's profits last year went to taxes. Although I wouldn't defend GE...

    But for regular people the truth is this:

    * Income taxes on the top brackets are at historic lows.
    * The capital gains tax is essentially flat.
    * The payroll tax is regressive.
    * Sales taxes are flat.

    So what happens? Joe Schmoe makes $35,000. He pays $4,000 in income tax, $0 in capital gains, and $2,000 in payroll taxes: 17.1% of income to federal taxes alone.

    Meanwhile, Jack Millionaire makes $1 million from his corporate job and $1 million in investments. After deductions, he pays $150,000 in income tax, $150,000 in capital gains, and $19,000 in payroll taxes: 16.0% of income to federal taxes.

    Sales taxes only push the burden further on to Joe. A solution should entail some or all of the following: raise income taxes on the wealthy, lower income taxes on the poor/middle class, add higher capital gains tax brackets, and raise the cap on payroll taxes. Failing to do at least some of these minimums will leave the U.S. with an overall regressive effective tax which will continue to foster this income disparity.

    Posted by What's in a name?, 06/06/2011 4:51pm (3 years ago)

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