One of America’s foremost liberal writers, Robert Reich, a Professor of Public Policy at UC Berkeley, argues in his latest book, “Beyond Outrage”, that “America’s economy and democracy are working for the benefit of ever-fewer privileged and powerful people.” He presents “a plan for action for everyone who cares about the future of America.” Mr. Reich’s tax policy:
- Raise the tax rate on the rich to what it was before 1981
“Sixty years ago Americans earning over $1 million in today’s dollars paid 55.2 percent of it in income taxes, after taking all deductions and credits. If they were taxed at that rate now, they’d be paying at least $80 billion more annually.”
- Put a two percent surtax on the wealth of the richest one-half of one percent
“The richest on-half of one percent of Americans, each with over $7.2 million of assets, own 28 percent of the nation’s total wealth. Given this almost unprecedented concentration, and considering what the nation needs to do to rebuild our schools and infrastructure, as well as tame the budget deficit, a surtax is warranted. It would generate another $70 billion a year.”
- Put a one-half of one percent tax on all financial transactions
“This would bring in more than $25 billion per year.”
These new tax provisions would together raise tax revenue by $175 billion per year. But our deficit this fiscal year, ending September 30, 2013, is about $700 billion. In a few years, without significant changes in either discretionary or entitlement spending, annual deficits will be back up over a trillion dollars per year and climbing. Mr. Reich’s steep taxes on wealth and wealth creation are not enough to seriously tame deficit spending, let alone end it.
Let’s be honest and admit that some new tax revenue is probably going to be necessary in the future if we are ever going to be able to eliminate the deficit. But it makes no sense to start out with a tax increase which will be strongly opposed anyway. It is far more sensible to first wring out the hundreds of billions of dollars in wasteful federal spending which now exists. After this is done there likely will still be a big deficit. Then, and only then, would it be appropriate to generate significant new revenue by raising taxes.