Robert Reich---The Great Switch by the Super Rich

The Great Switch by the Super Rich

Tuesday, May 17, 2011

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So what are America’s super rich doing with all this money? They’re investing it all over the world, wherever they can get the best return for any given level of risk. Treasury bills – essentially loans to the U.S. government — have proven good and safe investments, particularly during these last few tumultuous years.

You hear a lot of worries about foreigners dumping Treasuries if they lose confidence in the dollar because of our future budget deficits. What you hear less about are these super-rich Americans, who are just as likely to abandon Treasuries if spooked by future budget deficits.

The great irony is if America’s super rich financed the U.S. government the way they used to – by paying taxes rather than lending the government money – that long-term budget deficit would be far lower.

This is why a tax increase on the super rich must be part of any budget agreement. Otherwise the great switch by the super rich will make the income and wealth gap far wider.



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http://robertreich.org/post/5583016733

man. nt

than virtually anyone else on matters economic. Brilliant man who writes and speaks in a direct, forthright manner devoid of economists' jargon.

Reich confuses tax rates with tax receipts.

"In 1980, with Jimmy Carter still as president, the top 1 percent of filers, those who reported an adjusted growth income of $80,580 or more, paid 19 percent of all federal income taxes. That was actually less than the total tax share of people collectively in the 11th to 25th percentiles, that is, middle income taxpayers making roughly between $24,000 and $35,000 (in 1980 dollars), and also less than the total share of those earning between $13,000 and $24,000, who represented the 26th to 50th percentiles.

A decade later, despite tax cuts in the 1980s that many critics claimed benefited the rich, our top 1 percent of filers were paying more of the total--25 percent of the country’s tax bill—than anyone else. The portion of taxes paid by the top filers continue to grow throughout the 1990s and into the new century, pausing only for recessions, which are generally periods in which the share of taxes paid by the rich falls because their incomes tend to decline the most. By 2005, the most recent year data are available, our top 1 percent of filers were paying nearly 40 percent of the federal income tax bill, while those in the 2nd to 5th percentile paid another 20 percent. Every other group saw its share of the tax bill decline, sometimes substantially. Those taxpayers in the 26th to 50th percentile (that is, with an adjusted gross income roughly between $31,000 and $62,000) paid 11 percent of all federal income taxes, down from 20 percent back in 1980, while those in the 11th to 25th percentiles (earning between $62,000 and $104,000 today), paid 16 percent of the federal tax bill, down from 24 percent in 1980.

The fact is 'the rich' carry a heavier burden of federal income taxes than ever before.
If you tell the 'super rich' you're going to soak them in with higher income taxes they'll just shuffle their money into tax free munis, or find ways to let their capital earn money offshore, and you'll see even smaller tax receipts even though you instituted higher rates. If you keep the rates lower they'll be more willing to invest here and pay the bill. We can't let envy override an objective observation of what effect different rates have. This isn't the 1950s, capital has more mobility than ever before.

class need to pay more taxes, not the wealthy."

Your opinion isn't widely shared - the latest polls show anywhere from 75% 95% of Americans disagree. Maybe you should try http://www.paid_poster_tools_of_billionaires.com, although I think you've already visited that site.

You will never be wealthy, so why are you so concerned about their plight?

You are just a willing tool for those that wouldn't lower themselves to wipe their shoes on you.

You also forgot to mention falling incomes for the vast majority of working Americans for the last thirty years, which translates into falling tax revenue from us as a class.

The rich are paying more in taxes, while others are paying less, because the rich have gotten MASSIVELY RICHER, while everyone else is either barely staying afloat, or losing ground. Your post is worthy of citation in freeperville.

Should not this be planted in the mind of every voter before the next election? Repetitiously. Then the voters could choose if they wanted to raise taxes on the super wealthy or to continue sticking it to the working and middle class. However, if they are not educated and given the choice, who knows what crap they might believe?

"You do not need the Capitalists. He could not exist an instant without you. You would just begin to live without him. You do everything and he has everything.

Some of you have imagined that if it were not for him you would have no work. As a matter of fact, he does not employ you at all. You employ HIM to take from you all that you produce and he faithfully sticks to his task. If you can stand it, he can. And if you don't change this relation, I am sure that he won't.

You make the automobile... He rides in it. If it were not for you, he would walk. And if it were not for him, you would ride."

Eugene Debs - 1905