Buried in the new Morning Consult/Politico poll is an eye-popping statistic: Voters by a 2-to-1 margin prefer a $3 trillion infrastructure bill that includes tax hikes on $400K+ and corporations over one that excludes those tax hikes.
For most of my life, tax-cuts were the mantra of the generation and tax-raises were automatically bad. These tax cuts went overwhelmingly to the rich, but Americans, Canadians, and Brits were all for it.
As many observed, it seemed they believed that one day they would be rich, and therefore that high taxes on rich people were bad.
Now, that seems to have changed, and I suspect it’s that Americans have finally got it through their thick heads that no, most of them will never be rich, and moreover the reason they’ll never be rich is because the people who already are, are kneeling on their necks (fortunately, just on their windpipes, not a full blood choke. Well, for most people the rich are only on their windpipes — most.)
This changes things. Certainly many politicians want to do what the rich want done, because the rich will take care of them, their families, their friends, and their mistresses and boy-toys, but there are always some who are more interested in power and winning, and if the rich don’t offer the best path to victory, they’re perfectly happy to stick a shiv in them and display the bleeding body for the masses.
Yup, that’s where we are. The Pandemic, with the rich getting massively richer while the working class died, was evicted, and generally suffered so that the wealthy and upper middle class could sip delivered lattes in their houses while tapping delicately into their computers, having Zoom meetings, and feeling sorry for themselves may well have been the straw that finally broke the back on the delusion of being “pre-rich.”
We aren’t all in this together, and we never were. It’s been class warfare for as long as humans have lived in “civilizations” (and often enough, before). Some people benefit by hurting other people. Since about 79/80, the rich have been clearly winning the class wars, driving their enemies before them, and thrilling to the lamentations of their men and women.
It’s been glorious! The modern rich are the richest rich to have ever existed, richer than in the Gilded Age. Shitting in golden toilets is nothing; these people travel the world in yachts the size of a village or on private jets, between their half dozen mansions or hotels which charge $50K a night, whose entrance you or I would never be allowed to see.
All while overseeing economies which have broken the backs of the poor and middle class and are on track to kill half the world’s species and over a billion humans.
Clarity having arrived at last, it’s time to break the rich even more than the Great Crash, Great Depression, and marginal tax rates of 94 percent did. Slap on the wealth taxes, raise the marginal tax rate on income more than 10x median to 99 percent, tax corporations, disallow share buy backs, kick foreign money out of real-estate markets, tax empty homes, create a wealth tax on anything more than 30x median, and slap an estate tax on anything over the same; your kids don’t get to rule over everyone else because you were rich. (Yes, yes, put in an exemption for actual family (small) farms and actually family (small) businesses.)
Drive the rich to the edge of extinction, into utter despair. Thrill to the lamentations of their men and women.
And don’t feel bad about it, they’ll just have to get by with, say, three or five times the median per year.
What a horror. They might only live three to five times better than most people ever do.
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kj1313
I think the 2008 Financial crisis was the first crack at the pre-rich sentiment, the pandemic was the straw that broke the camel’s back.
Plague Species
Taxing corporations is effectively a pass-through tax that ends up being a regressive tax in the form of higher prices for goods and services if the corporation cannot find a way to avoid the taxes by utilizing all the various loopholes available to reduce their tax liability to zero or less (meaning a tax credit).
You have to tax the wealthy elite directly, otherwise the tax increase will be passed on regressively to the unwashed. The wealthy elite are cheaters, remember. They cheat at everything. Rigging the game in your favor is cheating and that’s what they’ve done and they do.
Eric Anderson
Taxes are the price poor people pay to have the privilege of watching the elite live in luxury.
— Oliver Wendell Holmes
bruce wilder
What is this “$3 trillion” infrastructure plan exactly? I mean, annually.
How much per year?
And, how does that compare to the rate of annual spending now? Or, say, in the 1960s, inflation-adjusted?
These are questions conspicuously not being answered in most news accounts of this “massive” plan.
bruce wilder
Contra P.S., a corporate income tax of 50% can be a very effective way both to draw off economic rents and improve the integrity of business accounting. But, it requires armies of auditors (only a minority public employees) to be applied to collecting it as well as appropriate controls on intra-corporate shell games.
A effective 50% corporate income tax combined with aggressive anti-trust attacks on financial and media conglomerates would hammer down the share of national income siphoned off by the rich.
Willoweed
Equality isn’t all about money and wealth. Wealth inequality is largely a function of power inequality. Most of Bill gates, and other technology and drug tycoons excessive wealth is because the government granted them the power of monopolies. CEO’s get such large salaries regardless if they crash their companies or improve them because they have power while the workers, and consumers are essentially powerless.
The rich use this power along with their wealth to extract more power and wealth from the masses by buying government.
Long ago most of use recognized that Democracy was a better and fairer form of government than dictatorships. Yet businesses are still governed like dictatorships. The masses have no say, and are ruled by the corporate oligarchs.
Workers, and/or consumers need to be given 50% control of corporate boards. Work places need to be unionized. All monopolies and semi-monopolies need to be broken up. No more government enforced monopolies (patents). Lawyers need to be randomly selected regardless of wealth. Corporations and rich people who spam out lawsuits to target their critics need to be severely punished and their victims compensated. Corporations that crash the banking system, commit any fraud a lot of fraud is legal today) poison the environment, and cause death need real punishments. Letting Bankers, drug corporation that lie about their drugs and so on get rich off their misbehavior with a slap on the wrist is the opposite of law and order. If a poor person killed and stole what the bankers, drug corporations, and fossil fuel corporations did they’d be jailed for life.
Make it so the rich don’t have all the power and more wealth equality with follow. Make it so the workers have a say in them being fired so the CEO can get a few million dollar bonus. Make it so consumers don’t have to pay 1,000% mark ups on drugs and technology because the government decided billionaires need more money and gave them monopolies.
tagio
PS, there are hard limits on the ability to pass through corporate taxes to customers. At a certain point, people won’t buy the goods or services because they are too expensive, so the corporation is stuck having to pay the tax on the profits.
Plus, the problem you identify could be solved by allowing corporations to deduct their dividends from profits (they already deduct interest on debt), reducing their tax liability by distributing out a lot of their profits. Since most stocks are owned by the rich, the rich would end up paying higher income taxes on the dividend income, which should be taxed like ordinary income and not given a special lower rate. Corporations don’t need to hang on to “accumulated earnings” for future capital needs or for M&A anymore, that justification for low corporate taxes is gone, because money is basically free these days – so much so that companies like Exxon BORROW money IN ORDER TO pay higher dividends and keep their stock values elevated.
Incentivizing distribution of dividends would help end the current fiasco of companies like Apple, with billions in undistributed cash just sitting idle like a war chest in American bank accounts but with a tax locus in Ireland, not subject to tax until they are “repatriated” via bookkeeping entries. Those income-shifting rules need to end.
Hugh
I was just thinking last night about how we used to post ways for tax and financial reform. They ran pages. But behind these were bigger questions, like how rich is too rich?, how poor is too poor? or put another way, what is enough for a decent and meaningful life and how much does anyone need beyond that?
We live in an era of super billionaires, with fortunes so large and unwarranted, that they are ridiculous. Not kind of or sort of, but in our faces everyday. And they and the politicians they own, quite simply, hate us and want us to die. Look at Bezos, or Musk, or even the thankfully late great Steve Jobs. They hated their workers. To them, they weren’t even serfs. Koch brothers it was the same way. They wanted us to be free to slave away for them, and then go die in a ditch.
So yes, high income, wealth, and estate taxes on the rich. Prison time and heavy fines, and confiscation, for those among them who loot us or avoid these taxes. No outs like renouncing their citizenship and keeping their fortunes. Turn off the multi-trillion dollar floodgates the Fed makes available to them. There need to be consequences and the rich need to know they are immune.
Plague Species
Derek Chauvin kneeling on George Floyd’s neck is perfect symbolism for the class war. It’s much longer that 9:29 though. The wealthy elite are more likened to John Wayne Gacy who liked to choke out his victims momentarily and then bring them back again and again so they would get multiple doses of horrific pain and suffering before they were gone for good.
The wealthy elite even make it difficult for the unwashed to check out in a dignified manner on our own terms. Even our deaths must be tortuous and violent. Naked Capitalism has a great post about it. I’ve been decrying this for years. When my time comes, I may just steal these drugs if they’re still illegal. It’s an unjust law and unjust laws are meant to be dishonored and broken especially when you have nothing to lose.
https://www.nakedcapitalism.com/2021/03/getting-a-prescription-to-die-remains-tricky-even-as-aid-in-dying-bills-gain-momentum.html
Fyi, my wife, my son and I have all received the Janssen vaccine. My wife and son had a reaction to it, I didn’t. They had flu-like symptoms, pretty significant, for a day. My arm was only very slightly sore but hardly noticeable. My daughter received her first shot of the Moderna a couple of weeks prior and is due to receive her second shot in two weeks. Her arm hurt very badly. It kept her up at night it hurt so bad. It was worse than her broken collar bone she had once upon a time. She had no flu-like symptoms. We’re all looking forward to packing into tight spaces unmasked with a bevy of people with little to no air ventilation. Back to normal, baby!! Right? The CDC says we can travel since we’re vaccinated. Normalcy, here we come!! Woo Hoo!!
Willy
You have to tax the wealthy elite directly, otherwise the tax increase will be passed on regressively to the unwashed. The wealthy elite are cheaters, remember. They cheat at everything. Rigging the game in your favor is cheating and that’s what they’ve done and they do.
I worked on a “standby home” for a superrich family once. It was a comfortable 5 bedroom in a nice suburban area which the techie had bought for his family to live in while their massive waterfront compound was being built. It was similar to Warren Buffets Nebraska home. After completion he’d kept the house as an investment and another family was renting it through a management company, I assume, so they wouldn’t have direct contact with the rental family. In my area, residential real estate is booming during this uncertain and painful time of Covid. Booming like it never has before. Homes here are unaffordable for most. Based on what we know about the superrich during Covid, draw your own conclusions.
I once spoke of the hypocrisy of U2’s Bono. Out there he’s a working mans hero, but in reality he’s a shrewd soon-to-be billionaire investor who rarely practices what he preaches. When it’s good to be the king, and everybody eventually knows it and sees how it’s done, the shit that works for them always eventually trickles down to the common culture.
I know millionaire founders and partners of companies, who have kids who cannot do what was expected of kids of previous millionaire founders and partners of companies. Outside of a handful of industries, these kids typically cannot be launched out into the world and expect to “earn” the same result as their parents had. Many live at home or are nepotistic hires into friendly companies whenever they cannot do the family business.
Moving lower, and based on observing “lesser” offspring of mere hundred thousandaires, it’s obvious how prospects, more specifically the fertile ground, has changed for the worse for most, in many cases the much worse. I can’t imagine how things are for the “not college material” types who aren’t good with their hands.
Ian Welsh
The prosperity of the late 40s, 50s and 60s was based on an economic regime which spent all its time making sure that prices and wages were both high, but prices for mass goods were purchaseable by the working class.
High wages allow high prices. What you have to do is keep asset prices from rising faster than wages (in this case, after crashing them by about 70% or so.)
Anyway, you tax both businesses and the rich, so that the rich don’t use businesses to hide their money and spend it on those jets and so on. (This also requires closing a TON of tax loopholes, but any regime like this should involve just throwing out the current tax code and creating a new one anywa.)
Ché Pasa
Say or think what you will about Biden (or those who are operating his corpse, according to the Dead Poll) he stated he intended to change the operating paradigm of government and the economy, and to change it on behalf of the People, not to further enrich the already obscenely well-off, and at least from appearances, he is setting out on that path and sticking with it. In many respects, that path mirrors the one Progressives have been advocating for decades now, the one Obama should have followed but didn’t, the path B Clinton could have blazed but didn’t. The path no Republican since Nixon would even consider.
We aren’t off the sinking neoLibCon barge yet, but more and more it looks like we’re abandoning ship. Good. Long overdue.
The opposition is so far muted. That probably won’t last, but for now, it’s a relief.
Hugh
The BLS jobs report covering Mar 2021 is out today. I look at the seasonally unadjusted data which reflect what actually happens in a month. Seasonally adjusted data which are used as the “official” figures factor in future anticipated gains and losses in jobs to smooth the data and produce a nice line on a graph, without these ups and downs. Looking at the larger establishment or business survey (does not look at the self-employed) of total nonfarm jobs (that is the public and private sectors combined), 1.323 million jobs were added in March. For comparison, in my reference year 2014, a year of solid jobs growth, 958,000 jobs were added in March, and in 2019, the last pre-covid year, 675,000 jobs were. So how far down are we? In March 2021, we are at 143.4 million total nonfarm jobs in March compared with 149.359 million in pre-covid 2019 or a deficit of 5.959 million. This drop does not take into account annual jobs growth. If we look at March to March jobs growth from 2013 to pre-covid 2019, it averages 2.41 million jobs. We have had two Marchs since then or 4.82 million expected jobs on top of 2019’s 149.359 million. So we should be at 154.179 million jobs, or a current covid jobs shortfall of 10.779 million. Again with the caveats that this does not take into account farm workers or many self-employed, and none of this has anything to do with job quality.
Looking just at the private sector, in March, we added 1.120 million jobs for 121.432 million in the private sector. In pre-covid March 2019, we were at 126.473 million. Similarly, adding in expected jobs growth we might have had without covid, we might expect private jobs to be 131.088 million or a shortfall of 9.656 million.
One way of looking at this is that we have a current shortfall in jobs of around 10 million, and taking into not counted groups, more. We would need to do half a million jobs better per month than our pre-covid growth for the next 20 months to erase this shortfall. Hard to see this happening and why multi-trillion dollar stimulus plans are not out of line given the size of this crisis.
someofparts
I think the wealthy know that their ability to fool most people won’t last. That’s why they are quietly putting more brutal enforcement systems in place. Our army can now occupy our towns and rendition us, thanks to Obama.
Taxing the stuffing out of them would not be enough, even if it were within our power. We would need big, public trials and mass deportations to gulags. We need Nuremberg 2.0. They must be hunted down, stripped of all their assets, and given some kind of physical brand so they can never hide their evil identities again.
This is a long read, but easy to follow. Hudson explains why our economic arrangements are too corrupt to reform.
https://michael-hudson.com/2021/03/what-flavour-oligarchy/
I think the good news here is that as the scams the oligarchs have used the greenback to engineer begin to unravel, China and Russia will be gaining strength, so the world won’t regress as it did when Rome fell.
nihil obstet
Dean Baker has a convincing plan for taxing corporations that can’t be scammed: The Simple Clean Route on Corporate Tax Reform. The plan is to require corporations to turn over an amount of stock equal to the tax rate goal to the government. Thereafter, anything that affects returns to shareholders or value of the stock also affects the government’s returns or value.
Purple Library Guy
On the subject of taxing corporations . . . there are lots of economic arguments to be made back and forth over whether they can just pass on the cost or whether it actually makes a difference. But in the real world, it’s obvious corporations and the wealthy are better off when corporations are taxed less, or they wouldn’t spend all those millions of dollars on lobbyists, propaganda (sorry, “public relations”), think tanks and bribes (sorry, “campaign contributions”) to try to get corporate tax rates reduced. If corporations are that convinced that lower tax rates save them money that they go to that much effort to make it happen, I’m also convinced.
A secondary point is that, since corporate taxes are on profits, high corporate taxes make it more worthwhile for corporations to actually reinvest income, because if they just rake off the profit it gets taxed. Not that I care; my opinion about corporations involves the proverbial shrinking down and drowning in bathtubs. I wanna see a mix of worker-owned and -controlled co-operatives with nationalized stuff.
Synoptocon
Take a look at the crosstabs on that poll and you won’t be so optimistic.
anon
I don’t see this happening anytime soon until Americans are convinced to vote for someone more effective than Bernie Sanders or any of the Squad members. That person would need to be an unapologetic Democratic socialist ready to expose the corruption of the Democratic Party head on. Someone who will undoubtedly be branded as a radical socialist by the MSM and both political parties. Sanders and the Squad have shown themselves to be too meek to publicly fight and embarrass Biden, Harris, Pelosi or any major members of the Democratic Party. Too many Americans who should vote for Sanders or someone better are still brainwashed by Republican bullshit and wedge issues. Even progressives are brainwashed by celebrity as shown with their support of Squad members who remain popular while being completely ineffective at getting anything done. A significant number of upper middle class Americans still support lower taxes and will vote for Biden over a Democratic socialist.
Mark Pontin
Nice writing, Ian.
Like someofparts, I recommend the M. Hudson interview at —
https://michael-hudson.com/2021/03/what-flavour-oligarchy/
Hudson touches on a number of themes in Ian’s post. One of them is that the rich are international.
To an extent most Americans — of whom less than 43 percent possess passports and have visited another country — cannot imagine, the rich are able to jump borders to find conditions that suit them. Constraining some of them to hold still for taxes will be more difficult than some people here assume, if comments are anything to go by.
Which is not to say it would be impossible.
I’ve sometimes wondered whether it’s possible in a near-future U.S., after collapse proceeds further, that some very different regime might come to power and re-direct extraordinary rendition, developed for the Global War on Terror, towards pursuing and bringing to justice fleeing American oligarchs and financial criminals overseas. Sending out Special Forces and armed government agents might be what it would take, unfortunately.
Ian Welsh
Yeah, the international nature of elites is something I’ve mentioned in the past.
To the extent they aren’t, you tend to see better behaviour in certain ways, actually. Vietnam’s aren’t. Russia and China’s only half are, Japan’s likewise.
I get the impression this is beginning to change. Euros don’t feel as at home in the US and Britain as they once did; Russians are still welcome in the UK, to some extent, but US sanctions are breaking up the international nature of elites outside of the core allies.
It’s not that hard to stop them from taking their money with them IF you get serious about it. But it does require the major states to take a hand: the US, Europe, Britain, Japan and China. Don’t need all of those: America and two others. Tax havens aren’t a significant issue IF the great powers get serious: they broke Switzerland, they can break the Caymans, Panama etc… any time they want to.
Currency controls for large transfers (not just of money) are possible, but they will only be enforced if you put in criminal charges.
https://www.ianwelsh.net/yes-you-can-tax-the-rich/
(Maybe I’ll kick this back to the top next week.)
The other issue is that there are only a few places the rich really want to live and can do business from.
bruce wilder
The flight of the oligarch and the flight of the oligarch’s money are not inherently as problematic as the selection and survival of a cadre competent to wield state power for public purpose and able to lead a popular movement that understands and supports strong public institutions.
Stirling S Newberry
As the last “rich because their parents gave it to us” dies there will be a world of hurt. My grandparents save “because you never know why 1929 will happen.” They lived through it and believed every word. Therefore, the was plenty of money to abscond with. Now a majority of companies are betting that they can take more money out than they put back it. (There are survey on this, from a variety of sources) (the spellscubber think that “make” is better than “take” Capitalism in action…)
In the cosmic scales of things, when need a new energy supply to reinvigorate the economy (and some free labor, it’s capitalism …)
garybuseysteeth
“Clarity having arrived at last…”
In what universe has “clarity arrived at last”? What a delusional statement. Because Americans may prefer minor tax hike? How many support tax rates like those under FDR or Eisenhower? A mini-recovery will happen and everyone will go back to being temporarily embarrassed millionaires.
js
I don’t know that most people have been temporarily embarrassed millionaires in awhile or maybe ever were – relatively powerless though, yep.
However just throwing money at a problem might not solve it either, even though it’s like “woah we’re going to be surfing a wave of money!”. If you are left of Obama you don’t always point out that just spending money isn’t enough, because someone thinks you must support the right, when the truth is the right is terrible and offer nothing of value to almost anyone. But functioning social democracies care a lot about how well their money is spent.
When I hear the Biden infrastructure plan includes say broadband internet I just groan. Not because I am against high speed internet. But WE HAVE ALREADY PAID for this multiple times over, and the money was just stolen by AT&T and Verizon etc.. So pay for it again and what is to prevent that from getting stolen again? We have been overcharged on our bills, and they have been given tax breaks and subsides of 1/2 a trillion dollars to pay for broadband expansion already. At the least going forward none of this should ever be a public private partnerships when the private partners are in this case outright thieves, either have the government build the copper networks directly or forget it. Or cheer the Biden money train and don’t ask too many questions … because it’s a triumph for liberalism, a BADLY RUN liberalism isn’t going to be a triumph for much of anything.
different clue
The “temporarily embarrassed millionaires” was attributed to John Steinbeck. Here is a quote about the quote.
“John Steinbeck once said that socialism never took root in America because the poor see themselves not as an exploited proletariat but as temporarily embarrassed millionaires.”
― Ronald Wright, A Short History of Progress
Maybe it was Ronald Wright who actually made up that sentence, and decided it would go farther if he attributed it to John Steinbeck.
Though there were several decades where the New Immigrant Poor did see themselves as an exploited proletariat, and tried to counter that exploitation. A socialist movement got somewhere and so did the Socialist Party. America’s most evil Twentieth Century President, Woodrow Wilson, took advantage of the War he tricked America into to tear up and destroy that Socialist Party and socialist movement.
Meanwhile, the farmers began seeing themselves as an exploited peasantariat to the point of growing a Populist Movement and a Populist Party, which was approaching some real power and then wrecked and sank itself on running ” its” candidate ( Bryan) as a Democrat.
No use crying over spilled milk, but I think we can take a few minutes to cry over the whole dead cow.
David Goldman
My 87 years in close proximity I can look back and see how wonderful my life has been after working and saving I was able to remember the hardship of my wonderful past when for a $.5 cent beer you received a free lunch now I see how the free lunch is gone and so will America’s past and future vanish unless greed is done away with and we all become friends but that is nuts. Hate must become a thing of the past or we will definitely lose freedom be careful what you sow or drown we all will. Me