Category: From Robert Reich

The 12 Biggest Myths about Raising Taxes on the Rich

Robert Reich

Robert Reich Former U.S. Secretary of Labor, Professor at Berkeley

Some politicians are calling for higher taxes on the rich. Naturally, these proposals have unleashed a torrent of opposition – mostly from…the rich. Here are the 12 biggest myths they’re propounding: 

Myth 1: A top marginal tax rate applies to all of a rich person’s total income or wealth.

Wrong. It would only apply to dollars in excess of a certain level. The 70 percent income tax rate proposed by Congresswoman Alexandria Ocasio-Cortez would apply only to dollars in excess of 10 million dollars a year. The 2 percent wealth tax proposed by Elizabeth Warren would apply only to wealth in excess of 50 million dollars.

Myth 2 : Raising taxes on the rich is a far-left idea.

Baloney. 70 percent of Americans – including 54 percent of Republicans – support raising taxes on families making more than 10 million dollars a year.  And expecting the rich to pay their fair share is a traditional American idea. From 1930 to 1980, the average top marginal income tax rate was  78 percent. From 1951 to 1963 it exceeded 90 percent – again, only on dollars in excess of a very high threshold. Even considering all deductions and tax credits, the very rich paid over half of their top incomes in taxes.  

Myth 3: A wealth tax is unconstitutional.

Rubbish. Most locales already impose an annual wealth tax on the value of peoples’ homes – the main source of household wealth for most people. It’s called the property tax. The rich hold most of their wealth in stocks and bonds, so why should these forms of wealth escape taxation?  Article I Section 8 of the Constitution gives “Congress [the] power to lay and collect taxes.”

Myth 4: When taxes on the rich are cut, they invest more and everyone benefits, when taxes on the rich are increased, economic growth slows.

Utter baloney. Trickle-down economics is a cruel joke. Donald Trump, George W. Bush, and Ronald Reagan all cut taxes on the rich, and nothing trickled down. There’s no evidence that higher taxes on the rich slows economic growth. To the contrary, when the top marginal tax rate has been high – between 71 to 92 percent – growth has averaged 4 percent a year. But when top rate has been low – between 28 and 39 percent – growth has averaged only 2.1 percent.

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The Myth of Meritocracy

Robert Reich

Robert Reich Former U.S. Secretary of Labor, Professor at Berkeley

Most Americans still cling to the meritocratic notion that people are rewarded according to their efforts and abilities. But meritocracy is becoming a cruel joke.

The Justice Department recently announced indictments of dozens of wealthy parents for using bribery and fraud to get their children into prestigious colleges.

But the real scandal isn’t how far a few wealthy parents will go to get their kids admitted (apparently $1.2 million in illegal payoffs), but how commonplace it has become for them to go almost as far without breaking any laws – shelling out big bucks for essay tutors, testing tutors, admissions counselors, and “enrichment” courses (not to mention sky-high tuition at private schools feeding into the Ivy League).  

Inequality is lurking behind all this, and not just because the wealthy can afford it. Researchers Daniel Schneider, Orestes Hastings, and Joe LaBriola found that in states with the biggest gaps between rich and poor, well-to-do parents spend the most trying to get their children into elite colleges.

America’s unprecedented concentration of wealth combined with seemingly bottomless poverty have increased parental anxiety – raising the stakes, and the competition, for admission.

While some entrepreneurs in America’s billionaire class lack a prestigious degree, it’s become harder to become a run-of-the-mill multimillionaire in America without one.

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Trump Wants Socialism for the Rich, Harsh Capitalism for the Rest

Robert Reich

Robert Reich Former U.S. Secretary of Labor, Professor at Berkeley

“America will never be a socialist country,” Donald Trump declared in his State of the Union address. Someone should alert Trump that America is now a hotbed of socialism. But it is socialism for the rich. Everyone else is treated to harsh capitalism.

In the conservative mind, socialism means getting something for doing nothing. That pretty much describes the $21 billion saved by the nation’s largest banks last year thanks to Trump’s tax cuts, some of which went into massive bonuses for bank executives. On the other hand, more than 4,000 lower-level bank employees got a big dose of harsh capitalism. They lost their jobs.

Banks that are too big to fail – courtesy of the 2008 bank bailout – enjoy a hidden subsidy of some $83 billion a year, because creditors facing less risk accept lower interest on deposits and loans. Last year, Wall Street’s bonus pool was $31.4 billion. Take away the hidden subsidy and the bonus pool disappears.

Trump and his appointees at the Federal Reserve are easing bank requirements put in place after the bailout. They’ll make sure the biggest banks remain too big to fail.

Trump is promoting socialism for the rich and harsh capitalism for everyone else in other ways. Since he was elected, GM has got more than $600 million in federal contracts plus $500 million in tax breaks. Some of this has gone into the pockets of GM executives. Chairman and CEO Mary Barra raked in almost $22m in total compensation in 2017 alone.

But GM employees are subject to harsh capitalism. GM is planning to lay off more than 14,000 workers and close three assembly plants and two component factories in North America by the end of 2019.

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Public Workers’ Trump Card

Robert Reich

Robert Reich Former U.S. Secretary of Labor, Professor at Berkeley

Air traffic controllers hold the trump card (pardon the expression) in upcoming negotiations between Donald Trump and congressional Democrats over border security.

That’s because the president and the Republicans know that another shutdown would likely cause a repeat of what happened last Friday, when so many of the nation’s air traffic controllers called in sick that America’s air traffic came to a near standstill. Hours later, Trump agreed to reopen the government without funding for his wall.

Never underestimate the power of airport delays to arouse the nation. Nancy Pelosi deserves credit for sticking to her guns, but the controllers brought the country to its knees.

Trump is threatening another shutdown if he doesn’t get his way by 15 February, when government funding will run out again. “Does anybody really think I won’t build the WALL?” he tweeted Sunday, after his acting chief of staff said that he was prepared to shutter the government for a second time.

But his threat is for the cameras. If there’s no agreement this time around, the controllers won’t work another 35 days without pay. Now that they understand their power, they will shut down the shutdown right away. Trump knows this.

Ironically, it was Ronald Reagan’s audacious decision in 1981 to fire and replace more than 11,000 air traffic controllers who were then striking illegally that legitimized decades of union busting. It signaled to employers around the country that unions – both public and private-sector – were fair game.

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Living in a New Gilded Age

Robert Reich

Robert Reich Former U.S. Secretary of Labor, Professor at Berkeley

The Trump Justice Department has approved a $69 billion merger between CVS, the nation’s largest drugstore chain, and insurance giant Aetna. It’s the largest health insurance deal in history.

Executives say the combination will make their companies more efficient, allowing them to gain economies of scale and squeeze waste out of the system.

Rubbish. This is what big companies always say when they merge.

The real purpose is to give Aetna and CVS more bargaining power over their consumers and employees, as well as pharmaceutical companies and healthcare providers (which have also been consolidating).

The result: Higher prices. Americans already spend far more on healthcare and medications per person than do citizens in any other developed country – and our health is among the worst.

America used to have antitrust laws that permanently stopped corporations from monopolizing markets, and often broke up the biggest culprits. 

But now, especially with Trump as president and lobbyists and CEOs running much of the government, giant corporations like Aetna and CVS are busily weakening antitrust enforcement and taking over the economy.

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Why I’m Betting on Millennials, this November 6th

Robert Reich

Robert Reich Former U.S. Secretary of Labor, Professor at Berkeley

Millennials (and their younger siblings, generation Z’s) are the largest, most diverse and progressive group of potential voters in American history, comprising fully 30 percent of the voting age population.

On November 6th, they’ll have the power to alter the course of American politics – flipping Congress, changing the leadership of states and cities, making lawmakers act and look more like the people who are literally the nation’s future.

But will they vote?

In the last midterm election, in 2014, only 16 percent of eligible voters between the ages of 18 and 29 bothered.

In midterms over the last two decades, turnout by young people has averaged about 38 points below the turnout rate of people 60 and older. Which has given older voters a huge say over where the nation is likely to be by the time those younger people reach middle age and the older voters have passed on.

I’m not criticizing younger non-voters. They have a lot on their minds – starting jobs, careers, families. Voting isn’t likely to be high on their list of priorities.  

Also, unlike their grand parents – boomers who were involved in civil rights, voting rights, women’s rights, the anti-Vietnam War movement – most young people today don’t remember a time when political action changed America for the better.

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The Meaning of America

Robert Reich

Robert Reich Former U.S. Secretary of Labor, Professor at Berkeley

When Trump and his followers refer to “America,” what do they mean?

Some see a country of white English-speaking Christians.

Others want a land inhabited by self-seeking individuals free to accumulate as much money and power as possible, who pay taxes only to protect their assets from criminals and foreign aggressors.

Others think mainly about flags, national anthems, pledges of allegiance, military parades, and secure borders. 

Trump encourages a combination of all three – tribalism, libertarianism, and loyalty. 

But the core of our national identity has not been any of this. It has been found in the ideals we share – political equality, equal opportunity, freedom of speech and of the press, a dedication to open inquiry and truth, and to democracy and the rule of law. 

We are not a race. We are not a creed. We are a conviction – that all people are created equal, that people should be judged by the content of their character rather than the color of their skin, and that government should be of the people, by the people, and for the people.

Political scientist Carl Friedrich, comparing Americans to Gallic people, noted that “to be an American is an ideal, while to be a Frenchman is a fact.”

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Robert Reich: We Can't Abolish the Electoral College, but We Can Make It Irrelevant

We must make sure our democracy doesn’t ever again elect a candidate who loses the popular vote. That means making the Electoral College irrelevant.

Here’s how: As you probably know, the Constitution assigns each state a number of electors based on the state’s population. The total number of electors is 538, so any candidate who gets 270 of those Electoral College votes becomes president. 

Article II of the Constitution says states can award their electors any way they want. So all that’s needed in order to make the Electoral College irrelevant is for states with a total of at least 270 electors to agree to award all their electoral votes to the presidential candidate who wins the popular vote. 

If they do that, then automatically the winner of the popular vote gets the 270 electoral college votes he or she needs to become president.   

Already 10 states and the District of Columbia have passed laws to do this – awarding all their electoral votes to the candidate who wins the popular vote, as soon as the 270 elector goal is met. Together, these states total 165 electoral votes.

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Why Corporate Tax Deserters Shouldn’t Get The Benefit Of Being American Corporations

Robert Reich

Robert Reich Former U.S. Secretary of Labor, Professor at Berkeley

Apple is only the latest big global American corporation to use foreign tax shelters to avoiding paying its fair share of U.S. taxes. It’s just another form of corporate desertion.

Corporations are deserting America by hiding their profits abroad or even shifting their corporate headquarters to another nation because they want lower taxes abroad. And some politicians say the only way to stop these desertions is to reduce corporate tax rates in the U.S. so they won’t leave.

Wrong. If we start trying to match lower corporate tax rates around the world, there’s no end to it.

Instead, the President should use his executive power to end the financial incentives that encourage this type of corporate desertion. President Obama has already begun, but there is much left that could be done.

In addition, corporations that desert America by sheltering a large portion of their profits abroad or moving their headquarters to another country should no longer be entitled to the advantages of being American.

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Why You Really Must Get Behind Hillary Now

Robert Reich

Robert Reich Former U.S. Secretary of Labor, Professor at Berkeley

Can we have a word? I continue to hear from many of you who say you won’t vote for Hillary Clinton because, you claim, (1) she’s no better than Donald Trump, or (2) even if she’s better, she’s still corrupt, and you refuse to vote for the “lesser of two evils,” or (3) you don’t want to reward the Democratic Party for corrupt primaries that gave the nomination to Hillary instead of Bernie Sanders.

Please allow me to respond.

(1) Anyone who equates Donald Trump with Hillary Clinton hasn’t been paying attention. Trump is a dangerous, bigoted, narcissistic megalomaniac with fascist tendencies who could wreak huge damage on America and the world. Hillary isn’t perfect but she’s able and experienced. There is simply no comparison.

(2) Even if you see Hillary Clinton as the “lesser of two evils,” the greater of two evils in this case (if you see the choice in these terms) is seriously evil. You’ve probably had occasion in the past to vote for someone who doesn’t meet your ideals, when the alternative is someone who falls much further from those ideals. This doesn’t mean you’ve sold out or compromised your principles. You’ve just been realistic and practical. Realism and practicality are critically important now.

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Union Matters

America’s Wealthy: Ever Eager to Pay Their Taxes!

Sam Pizzigati

Sam Pizzigati Editor, Too Much online magazine

Why do many of the wealthiest people in America oppose a “wealth tax,” an annual levy on grand fortune? Could their distaste reflect a simple reluctance to pay their fair tax share? Oh no, JPMorganChase CEO Jamie Dimon recently told the Business Roundtable: “I know a lot of wealthy people who would be happy to pay more in taxes; they just think it’ll be wasted and be given to interest groups and stuff like that.” Could Dimon have in mind the interest group he knows best, Wall Street? In the 2008 financial crisis, federal bailouts kept the banking industry from imploding. JPMorgan alone, notes the ProPublica Bailout Tracker, collected $25 billion worth of federal largesse, an act of generosity that’s helped Dimon lock down a $1.5-billion personal fortune. Under the Elizabeth Warren wealth tax plan, Dimon would pay an annual 3 percent tax on that much net worth. Fortunes between $1 billion and $2.5 billion would face a 5 percent annual tax under the Bernie Sanders plan.

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No Such Thing as Good Greed

No Such Thing as Good Greed