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Mark Shields: Lightening the Burden of the Super Rich
The owners of the Los Angeles Dodgers baseball team, Frank McCourt and his wife, Jamie, are mired in a messy divorce. According to papers filed in Los Angeles Superior Court, the McCourts — from 2004 to 2009 — collected income totaling $108 million. According to those same court papers, on that $108 million, the multimillionaire McCourts did not pay a single dime in either California or U.S. taxes.
Obviously, this un-fun couple must be fans of the values of the late New York hotel owner and convicted tax evader Leona Helmsley, who, according to the sworn testimony of her former housekeeper, announced: “We don’t pay taxes. Only the little people pay taxes.”
That’s certainly the way things look to be heading after the IRS revealed that the effective federal tax rate for the 400 highest-earners in the United States in 2007 was 45 percent lower than it had been in 1995. The average annual income of the 400 highest earners was $345 million.
In 1995, when Bill Clinton was president, the top 400 earned an average of $50.9 million and paid U.S. taxes at an effective rate of 30 percent. Twelve years later, after the enactment of George W. Bush’s generous tax cuts on upper-income individuals, the effective federal tax rate paid by the richest 400 averaged just 16.6 percent — or about 45 percent less than in 1995.
Not only did the pre-tax income of the highest earners increase dramatically during the Bush years, but because of the tax cuts, their after-tax income went up even faster.
According to the research of Avi Feller and Chuck Marr of the Center on Budget and Policy Priorities, those changes produced “a tax cut of $46 million per filer in 2007, or a total of $18 billion in tax cuts for these households per year.”
Yes, all of the 400 highest earners individually were getting much bigger paydays in 2007, but collectively this privileged group’s share of the nation’s total adjusted gross income — 1.59 percent — had tripled in size of what it had been in the 1990s.
Republicans, we know, proudly believe in the genius and sanctity of tax cuts for the wealthy — make that, “the productive.” The Republican Party’s answer to any problem — from declining Sunday school attendance to increased rush-hour congestion — has always been predictable: Cut taxes, especially the capital gains tax.
Their reasoning, as John Kenneth Galbraith once observed, seemed to be based on the “horse and sparrow” theory of taxation: If you feed the horse enough oats, some will pass through to the road for the sparrows.”
But why aren’t the majority Democrats, the self-proclaimed tribunes of working people, storming the barricades and demanding tax justice beginning with the immediate repeal of the tax preferences for the most affluent? Could the Democrats’ passive lack of urgency about changing the nation’s manifestly unjust tax laws have anything to do with the fact that candidates of the party of Thomas Jefferson and Andrew Jackson have lately been the principal beneficiaries of Wall Street contributions? It’s time for them to prove otherwise.
As Sen. Byron Dorgan, D-N.D., once asked during a Senate debate on shrinking even further the tax rate on capital gains (now barely half what it was when President Ronald Reagan was in the White House), “Why don’t we go all the way and simply take the rich off the tax rolls altogether?”
— Mark Shields is one of the most widely recognized political commentators in the United States. The former Washington Post editorial columnist appears regularly on CNN, on public television and on radio. Click here to contact him.
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» on 02.28.10 @ 03:09 PM
Why the surprise and indignation?
The previous administration was (very openly) of, by, and for the rich and
powerful.
They had a clear goal coming in, to help their donors, and their economic class,
to prosper more. They succeeded. At the expense of everybody and everything
else.
If their “trickle down” malarky works so well, the nationwide economic chasm
we fell in to must be just an illusion.
Too bad someone didn’t ask Karl Rove about all this prosperity he left behind
when he spoke hear a few days ago.
If Shields were fairer, he would also note that Glass-Stegall repeal began under Clinton. So did massive corporate (Enron) corruption and dummy accounting.
The mass export of U.S. jobs overseas began under Clinton too. Free Trade, we were told.
And many of the riskiest investment mechanisms that exploded at the end of the Rove-Cheney-Bush era were enthusiastically primed by people like Larry Summers and Alan Greenspan, who worked for Clinton.
Finally, as an “exception” to Shields’ view, the Clintons themselves emerged
from impeachment, and eight years of the Bush era, as multi-millionaires
after years of non-stop “selling”... something.
So the accural of capital and wealth was not entirely flowing to supporters of
just one political party, either.
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» on 03.01.10 @ 06:42 AM
Does Mr. Shields even measure or do any math to see how much the tax savings is put back into the American economy? How many jobs created? Don’t forget the tax cuts brought us 4.5% nationwide wide unemployment and raised the largest revenues in history. Spending is the problem!
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» on 03.01.10 @ 11:19 AM
Ah, Mark, most of the richest people in our country are democrats. Wanna know why? Because they know that the socialist tendencies of the democrat party will actually do a better job of preserving their wealth from competition. The rich do not pay tax, we do Mark. Why? Because most of the money the wealthy make is REINVESTED into the economy stupid and is therefore tax exempt. They can pass on their increased taxes to the rest of us. The whole idea of taxing the rich is rooted in the old class warfare attitude first promoted by the Bolsheviks in the early part of last century. But the whole idea of a free market, and limited government is to give us all an opportunity to go after the rich guys empire using his own methods, it’s very Darwinian really and should be fully appreciated and embraced by you secular socialists. After all it’s all about survival of the fittest isn’t it? Oh, no, says your boss George Soros, it’s all about me getting to the top in the most greedy and selfish manner possible and then gaming the system to keep everyone else out. That is your democrat party today Mark.
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