Bill McCamley
“Taxes are important. President Bush’s tax proposals leave no rich person behind. Voters approve of President Bush helping the kind of people they wish they were one of.” – Andy Rooney
Most people don’t ask for much: the chance to work at a meaningful, decent paying job; the ability to feed and house their families; time to de-stress with Harry Potter, American Idol, football, etc.; freedom to pursue spiritual fulfillment in a way they choose. They’re just asking for a shot at a satisfying life.
But in the last few years most Americans’ ability to do those things have been shackled by recession, and it seems to be getting worse. The frustration with this has bubbled over recently into the Occupy movement. While varied in their opinions, they have a few focused concerns.
- Corporate incomes and CEO pay have skyrocketed to the highest levels since the 1950s. CEO pay is now between 300 and 400 times the average worker’s pay. Most occupy people say this wouldn’t be a problem if growth were shared by everybody. But that is not reality.
- Unemployment in the United States is now higher than at any point since the 1940s, with the exception of a short spike in the early 1980s. And people are staying out of work far longer than any time in the past 70 years. The result? While the bottom 90 percent of American earners only own 17 percent of the nation’s wealth, they also own 73 percent of its debt. Last week’s cover story in Time documents just how much harder it is becoming for a person born into one income bracket to make it in to another.
So the vast majority of Americans are finding it increasingly difficult to get that shot at a good life, while a very few at the top have amassed immense wealth.
However, the Occupy movement has not done a great job of pointing out solutions to this situation. While its participants have made attempts at proposals for financial reform, there are two bigger issues they might consider adopting.
Tax reform
First, tax reform. The role of our government in a free market is to provide people resources so they can make it in a competitive environment. These include meaningful education; access to basic food, housing, and clean water; reasonable transportation infrastructure so people can get to work; and prudent protections for everyday life with institutions like the military, police/fire services, and food inspectors. If you don’t have these resources, your chance of success drops significantly.
But these services require funding. The Tea Party is right that running up deficits is no way to fund them sustainably. They are, however, mistaken to ask for cuts to these services without instituting more progressive tax rates on the wealthy or, at the very least, getting rid of the tax havens and loopholes that allow rich people to pay fewer taxes than the middle class.
Arguments against “taxing the rich” usually take three forms:
- It isn’t fair to tax someone more than anyone else.
- Rich people earned their money; taking away from them decreases their (and everybody’s) incentive to work.
- Rich people are “job creators;” taxing them will hurt the economy because they won’t spend money to hire people here (the “trickle-down” economic theory).
First, fairness is relative. Let’s say there is a 10 percent flat tax. If I have $2 million, I pay $200,000 in taxes. If I have $20,000, I pay $2,000. So the person with more money still has $1.8 million left while the other person only has $18,000. The $2,000 that the second person loses might mean a choice between putting food on the table and paying for a child’s school supplies, while the first person may be able to only get a BMW instead of a Lamborghini.
In response to the second argument, take a look at Forbes’ top 10 richest Americans. While five of them earned their fortune and can be held up as examples of the American dream, another five either inherited or married in to vast sums of money. This is not to say that they didn’t work after being born, but they won the lottery by being born or marrying in to wealthy families.
Just because you win the lottery doesn’t mean you shouldn’t pay your fair share.
And Warren Buffet (in the self-made category of the top 10) advocates for higher taxes on wealthier Americans, including himself, because his secretary currently pays a higher portion of her income in taxes than he does.
As for the “job creator” argument, fact simply fails to back up the argument. During America’s economic boom years stretching between WWII and the early 1970s, top-bracket tax rates ran from 70 percent to 90 percent. During the 1990s, another strong period of the American economy, they were still around 40 percent. Since George W. Bush lowered these taxes 10 years ago, our debt has skyrocketed while our economy has stagnated.
And in today’s worldwide economy, there is a much better chance that a wealthy American with money to invest will become a “job creator” – but will do it in places like China, India, and Brazil.
Election reform
The second reform that the Occupiers should examine deals with campaigns. The amount of money required to run a successful campaign for any office is staggering. Over $4 billion was spent in last years’ congressional elections. That amount, however, was provided by a very few: 0.26 percent of Americans (819,000 people) gave more than $200 to a campaign, yet this group gave over 67 percent ($2.68 billion) of the total amount spent.
What does that mean? Money buys TV time. More TV time almost always means a win. So even public officials who mean well will give more access and influence to those with money who are willing to contribute. And these few people will more likely advocate for their self-interests, not favoring the population as a whole.
Therefore, if the Occupy movement were to be truly serious about things like tax and finance reform, an overhaul of the election system that allows people to get elected based on their character and ideas (not how good they are at fundraising) is absolutely essential.
Otherwise, all the camping out in the world, as fun as it is, won’t do any good.
Bill McCamley, a former Doña Ana County commissioner, is currently employed with ROJO Apparel (a Las Cruces clothing company).