Between The Lines Q&A: Tax Cuts for the Rich
Between The Lines Q&A
Tax Cuts for the Rich
Exacerbate Income Inequality
Interview with Brian
executive director of United for a Fair Economy,
conducted by Scott Harris
Despite strong opposition from progressive activists and some legislators, President Obama's deal with Republicans to maintain the Bush-era tax cuts for the wealthiest Americans over the next two years won approval in both the House and Senate and was signed into law on Dec. 17. While the tax measure continues unemployment benefits for another 13 months and cuts payroll taxes by two percent, the extension of tax cuts for America's richest citizens maintains the Republican "trickle down" policy that is one of the least effective ways to create new jobs, according to most economists.
One aspect of the tax deal that generated much anger on the left was the roll back of the estate tax. Instead of imposing the scheduled tax rate of 55 percent for individuals worth more than $1 million in 2011, the Obama-GOP deal will allow individuals to exempt estates up to $5 million for individuals and $10 million for couples, paying a 35 percent tax rate beyond that. This dramatic reduction in the estate tax rate -- that only affects the nation's wealthiest families -- is at its lowest rate since 1928.
Lines' Scott Harris spoke with Brian Miller, executive
director of United for a
Fair Economy who talks about the consequences of extending tax cuts for the wealthy, growing income inequality in the U.S. and his group's effort to build a movement for tax fairness and a more just and inclusive economy.
BRIAN MILLER: It was an unnecessary and very expensive tax giveaway. The Obama-GOP tax deal will cost $800 billion over the next two years, and that's the tax cut portion of that. And 25 percent of those cuts are going to go to the top 1 percent of income earners alone. And, you know, this on top of the $2.5 trillion that the Bush tax cuts have already cost us since it was initially passed. So it's been a very expensive game that we've been playing and it's been driving up deficits and those deficits are being used for justification for cutting back on important things like unemployment insurance, like important job creation programs that actually do create more meaningful jobs. So, you know, it's not pretty for the next two years, but we're obviously going to be doing a lot of work to put the nation on more solid financial grounds, and more solid footing for the kind of economic development policies that are actually going to create real jobs for working Americans and promote a more broadly shared prosperity. And that's not what just passed, unfortunately, it's going to be a different package. But that's what we're going to be fighting for in 2012.
BETWEEN THE LINES: Brian, tell us a little bit about one of the very important aspects of this tax cut package, which was lowering the estate tax for the wealthiest Americans to an 80-year low. What's the short- and long-term impact of that big tax cut?
BRIAN MILLER: Sure. The measure you mentioned, that was one that generated the most outrage among members of the progressive, Democratic caucus, the congressional Black Caucus and others, was that the estate state tax was established nearly a hundred years ago as an important, fundamental bedrock feature of preventing America from becoming the kind of aristocracies that we saw in old Europe, where a few families, through inherited wealth, through wealth transfer from generation to generation come to dominate the entire economy and the political sphere at the same time. They recognized at the early part of the century and they passed the estate tax in order to help rein in that, and promote an economic system that really encourages meritocracy, which means each generation that comes into this world is able to achieve or fail on their own accord, not based on who their parents or their grandparents were.
And any further weakening of the estate tax really erodes that core value system that's important to our nation. You know, in a real dollar-for-dollar standpoint and it's important to remember how weak the estate tax already was in 2009. In 2009, the child of a wealthy couple could inherit more tax-free, than than the average American earns in four lifetimes. But that wasn't weak enough. So the Republicans pushed to make it even weaker. So now instead of a $3.5 million exemption, we have a $5 million exemption, $10 million for couples. This is only going deepen the wealth dividing us. It's only going to further concentrate wealth in the hands of a few. And we need to turn this country back and start promoting policies that actually lift up Main Street and promote a more broadly shared prosperity and again, that's what we're going to be working for in the next two years.
BETWEEN THE LINES: I wanted to ask you, further, Brian, about this. How do the Republican tax cuts in their general trickle-down economic philosophy championed by (President Ronald) Reagan and his disciples, how has that, if at all, affected the redistribution of wealth from the poor and middle class, to the nation's wealthiest citizens and how does it relate to the growing disparity between rich and poor in the United States?
BRIAN MILLER: What we've seen since the days of Ronald Reagan -- that's really the benchmark -- it was during Ronald Reagan's tenure that the top income tax bracket, and we used to have top income tax brackets of 70 percent when Reagan came in office. That got cut down to 28 percent during his tenure. Now, granted, that only applied to people who only had very, very high incomes. Even now, you have to earn almost $400,000 before you hit the top 35 percent bracket. But that, coupled with the type of large-scale public investments that our government did in the 1960s when we built the interstate highway system, we were launching rockets and were sending spaceships to the moon. We were doing massive investments in the aerospace industry and our transportation infrastructure and it created a huge economic boom for Americans, that coupled with the strong unions, the progressive tax systems, between the late 1940s and late 1970s, income across board grew. From the bottom 20 percent income earners to the top 20 percent income earners. Everyone saw dramatic growth in their personal income.
If you look at what's happened over the last 30 years since Reagan and the trickle-down philosophies came to rule the policy decisions, what we've seen since is that almost all the income growth has gone to the very top, in that the bottom 60 to 80 percent of Americans have seen very little, if any real growth in their income after you adjust for inflation. And that is really what is fundamentally weakening our economy right now.
The basic crux of the congressional Republicans' argument is that the reason the economy is not doing well is that rich people don't have enough money, and that if we just give them more tax breaks, they'll create more jobs and so forth. But it's a complete misread. Right now, income inequality is at the highest level it's been since 1928, just before the Great Depression. And yet, they're still holding to this argument that the problem with our economy is that rich people don't have enough money. The real problem with this economy is that the middle class has been eroding and weakened over the last 30 years to the point that they don't have the purchasing power to buy the goods our economy produces anymore. And until we start rebuilding and re-investing in that middle class, we're not going to get our nation back on track again.