Raise Rates…

I have to tell you, I’m a little surprised at the Biden administration so far. He keeps doing things – or trying to do things – I like. None of them are radical, though you would never know that talking to a con. To me, he’s kind of doing things the left SHOULD do and should have been doing all along. By now, anybody with an historical bent and intellectual honesty knows that Bill Clinton took the Democratic party to the right of center – I’ve said many times that Clinton was the best president the Republicans have had in decades – and it has kind of stayed there ever since. (I really do enjoy listening to cons complaining about “far left” policies. There IS no viable “far left” in the US.) So, when I cast my ballot for Biden it wasn’t because I expected him to do anything I would admire. It was because he wasn’t Donald Trump. I mean, it really WAS that simple. I’m sure that’s the case for most of us who voted with the Democrats.

I should add, I wasn’t anti-Biden. I planned to vote for Biden the first time he ran for office. That would be 1988. He got sidelined in that campaign by a plagiarism scandal. (Plagiarism? How quaint…) Afterwards, though, he pretty much went along with the Democratic tide. He supported things I didn’t like and things I expected to be problems. (They were.) So, when he moved to the front of the pack in 2020, I was not excited. But, again, he wasn’t Trump. All I was hoping for was normalcy; peace and quiet for a few years. But Biden has stepped up with some rather progressive programs. It’s important to note that Clinton got away with his “faux Republican Presidency” because people had become exasperated by the actual Republicans. So when the charismatic Clinton smiled and promised to focus on our pain like a laser beam, we all relaxed, breathed a sigh of relief, and went about our business. While nobody was paying attention, Clinton was enacting and supporting conservative policies like a spawn of Goldwater. That little aside is to acknowledge the possibility that Biden might be up to the same tricks but I haven’t seen it, yet.

One of the things Biden is going to have to do is pay for his programs and to this end he’s talking about raising the Capital Gains tax. This is a good thing and I hope he can. DINO’s Joe Manchin and Kyrsten Sinema are likely to be a problem, though. Through the course of America’s Neo-liberal nightmare the tax laws have changed to make rich people richer and richer and leave the ever-expanding lower class struggling. High taxes on the wealthy once created the greatest middle class the world had ever seen. Now that middle class is shrinking and, left unchecked, will, at some point, become a very small class dedicated to serving the wealthy – at the pleasure of the wealthy. One of their best tricks was to use the Capital Gains tax cuts.

As painlessly as possible, there are two types of income, earned and unearned. They are just what they sound like. Money you get paid from going to work is earned income. (Duh!) Money you get from someone else’s work is unearned income. That is, you didn’t have to DO anything for that money. You made an investment and held it for awhile. The value of the investment grew (because somebody, somewhere was working) you cashed out the investment and – viola! – you made money. But you didn’t EARN the money. You just kept the money. So, our corrupt Congress critters changed the tax laws and made the Capital Gains tax rate lower – FAR lower in many cases – than the earned income tax rate.

But that was just step one. Step two was to change laws so, say, a CEO could be compensated with company stocks. See, the story was, if the income of the CEO was dependent on the performance of the CEO, the CEO would do everything in his power to protect stock prices. That story did NOT include the reality that depressing wages for the workers – the people producing the revenues in the first place – is a GREAT way to improve a company’s bottom line and increase the stock price which, in turn, makes the CEO that much richer, you see? The more harm he does to his employees, the greater the benefit he brings to himself. Sure, it’s a crap system but of course it is. It was built by the people who stand to benefit from it the most. But wait, there’s more. See, when it’s time for the CEO to pay taxes on the income he kept (from the work YOU did), much of his income came in the form of stock, which means he pays the Capital Gains rate, currently 20% for the richest rich people. Compare that to the 37% those same people would pay for earned income – if they actually earned anything. (By the way, these are book rates – where the rate starts. Effective rates – what people actually pay – are always lower…)

I’ve long held a position I call “Backs or Bucks.” It holds that everyone who can should contribute to the society in which we live. People who work contribute to society with their backs, that is, the work they do. People who only move money around should, by rights, contribute to society with bucks. This means investment tax rates should always be higher than earned income rates, at least to my mind. For the vast majority of Americans, the largest Capital Gain they’ll ever realize in their puny little lifetimes is from the sale of a house. This obvious truth can be addressed with a progressive rate structure. That is, the first, say, $500,000 in gains might not be taxed at all, with the next $500,000 taxed at, say, 5%. So for the first MILLION dollars in Capital Gains, one would pay 2.5% in taxes. After that, it should go up. WAY up.

Always-wrong conservatives rend garments at the suggestion and cry out that higher taxes will be job killers. As usual, there’s no evidence to support their pretended belief. In fact, the only available evidence indicates that high taxes on the wealthy cause them to actually do what they always promise low taxes might someday encourage them to do. The upside to the conservative contrarianism is that when they start predicting disaster, you can take comfort that there will be no disaster and that the tax increase is the right thing to do.

Of course, conservative media will start in about how such a tax increase will harm the average American. It won’t. Biden’s proposed tax increase will only affect you if your primary compensation comes in the form of stock. Most likely, yours doesn’t. Most likely, you get a paycheck. Most likely, you pay more in income taxes (as a percent of income) than, say, Jeff Bezos and that’s just wrong. Biden wants to fix it. I think working Americans should support the effort. Call your Congress critter. He or she is likely rolling in dough they took from unearned income so it’s going to be difficult to get them to do this, but the future of a once-great nation depends upon it…