OK

This is only a Preview!

You must Publish this diary to make this visible to the public,
or click 'Edit Diary' to make further changes first.

Posting a Diary Entry

Daily Kos welcomes blog articles from readers, known as diaries. The Intro section to a diary should be about three paragraphs long, and is required. The body section is optional, as is the poll, which can have 1 to 15 choices. Descriptive tags are also required to help others find your diary by subject; please don't use "cute" tags.

When you're ready, scroll down below the tags and click Save & Preview. You can edit your diary after it's published by clicking Edit Diary. Polls cannot be edited once they are published.

If this is your first time creating a Diary since the Ajax upgrade, before you enter any text below, please press Ctrl-F5 and then hold down the Shift Key and press your browser's Reload button to refresh its cache with the new script files.

ATTENTION: READ THE RULES.

  1. One diary daily maximum.
  2. Substantive diaries only. If you don't have at least three solid, original paragraphs, you should probably post a comment in an Open Thread.
  3. No repetitive diaries. Take a moment to ensure your topic hasn't been blogged (you can search for Stories and Diaries that already cover this topic), though fresh original analysis is always welcome.
  4. Use the "Body" textbox if your diary entry is longer than three paragraphs.
  5. Any images in your posts must be hosted by an approved image hosting service (one of: imageshack.us, photobucket.com, flickr.com, smugmug.com, allyoucanupload.com, picturetrail.com, mac.com, webshots.com, editgrid.com).
  6. Copying and pasting entire copyrighted works is prohibited. If you do quote something, keep it brief, always provide a link to the original source, and use the <blockquote> tags to clearly identify the quoted material. Violating this rule is grounds for immediate banning.
  7. Be civil. Do not "call out" other users by name in diary titles. Do not use profanity in diary titles. Don't write diaries whose main purpose is to deliberately inflame.
For the complete list of DailyKos diary guidelines, please click here.

Please begin with an informative title:

Wall Street has always claimed that income from investments is entitled to lower taxes than other income. As The Street sees it, investments in the market deserve tax breaks because they grow jobs, grow companies, and boost the economy.

A tax system tied to that belief is a major driver of rising income inequality. Congress could bend the curve by restoring Ronald Reagan’s 1986 shock: equal taxes on income from wealth and income from work. The idea is back and thriving. First, let’s take a hard look at the Wall Street claim.

Buying stocks doesn’t grow jobs or grow the economy, it grows portfolios. The money that’s invested doesn’t go to companies, it goes to the prior owners of the stock. In fact, through dividends and stock buybacks, shareholders take money out of companies rather than put it in; they’re a drain on company funds, not a source.

Billions of shares trade hands every business day. Aside from the tiny number that raise money for the issuing companies, it’s all white noise. With few exceptions—easy for lawmakers to specify—there’s no reason for preferential taxes on investment income.

President Reagan tacitly admitted as much with his signature Tax Reform Act of 1986, which levied equal taxes on capital gains, dividends and ordinary income such as wages.  At the signing ceremony, he called the bill “a sweeping victory for fairness” and “the best job-creation program” ever to come out of Congress. Equal taxes soon reverted to unequal, and became more so with the Bush tax cuts of 2001 and 2003 (true, new levies in 2013 did reduce the spread for the most affluent.) Today though, Reagan’s policy is on the rebound.

Intro

You must enter an Intro for your Diary Entry between 300 and 1150 characters long (that's approximately 50-175 words without any html or formatting markup).

In 2010, when the federal deficit preoccupied all the Very Serious People in Washington, two bi-partisan groups looked at ways to put the nation’s fiscal house in order. The first was a Congressional body, President Obama’s debt commission, commonly known as Simpson-Bowles; the second was the Bipartisan Policy Center, a top D.C. think tank. The blueprints they drew up differed in many specifics, but in the large not so much. Both called for lower marginal rates and a broadened tax base, the pillars of the 1986 reform. Both broadened the base in large measure, as Reagan did, by taxing all income at the same rates.

Three billionaires say aye, each from a distinct vantage point.

Warren Buffett long ago famously asked why he should pay taxes at a lower effective rate than the secretaries in his office. The hedge fund guru Stanley Druckenmiller has spoken out at college campuses about America’s fiscal stacking of the deck against the young, in favor of the elderly. Tax favors for dividends and capital gains help fuel the unfairness, Druckenmiller says.

Pimco co-founder Bill Gross is the latest equal-tax convert; he published his epiphany in the investment giant’s November newsletter. Gross wrote with feeling about “the plight of labor.” He talked about his wealth having piled up on the backs of workers, about guilt setting in. Finally, this coda: “The era of taxing ‘capital’ at lower rates than ‘labor’ should now end.” Gross also said he had company: Stanley Druckenmiller and Warren Buffett.

President Obama grasps the damage being done by America’s runaway income inequality. As he said in early December, “it challenges the very essence of who we are as a people.” It also challenges him. The president should urge the nation toward greater equality, and make the case for equal taxes on income from wealth and income from work.

It isn’t about redistribution, it’s about tax fairness. Americans understand fairness, as The Gipper well knew.

-30-

(This piece first appeared at thehill.com.)

Extended (Optional)

EMAIL TO A FRIEND X
Your Email has been sent.