As Rahm Emanuel would say, never let a serious crisis go to waste:
We've seen, in recent weeks, an outpouring of public outrage over the mega millions that keep flowing – despite the escalating economic meltdown – into the pockets of America's top bankers and corporate executives...
The amount of money that goes into executive pockets is staggering. So is the amount that comes out of those pockets in taxes: precious little. America's super-rich are paying far less of their incomes in taxes than average Americans who punch time clocks.
This of course is outrageously unfair, and has been for a long time. But just how unfair is it?
In 2006, the 400 highest-income Americans together reported $105 billion in income, an average of $263 million each...
[M]ost of the top 400 make their fortunes buying and selling assets, everything from stocks and bonds to the exotic paper that helped inflate the housing bubble.
Uncle Sam taxes income from those assets – whether that income be capital gains or dividends – at a much lower rate than income from work.
The current top tax rate on "ordinary" work income sits at 35 percent. But dividends and capital gains from the buying and selling of most assets face only a 15 percent top rate.
That's why in 2006, America's top 400 paid just 17.2 percent of their $263 million average incomes in federal tax.
Millions of middle-class American families, once you tally income and payroll taxes, pay far more of their incomes in tax.
The most famous example is probably billionaire Warren Buffett, who was outraged that his secretary, who made $60,000, paid 30 percent of her income in taxes while he only paid 17.7 percent of his.
It's time for this preferential treatment of dividends and capital gains to stop - they should be taxed like any other income.
Letting Bush's tax cuts for the wealthy expire is only one step toward clearing up the country's budget deficits and getting its financial house in order. The estate tax, which the super-rich have been trying to do away with for decades now, can't be allowed to be repealed. And why shouldn't there be a still-higher rate of tax on incomes over, say, $10 million per year? That should help fund universal health care.
Cutting the taxes of the wealthy was supposed to free up capital and lead to a golden age of wealth and productivity for all. Instead it fuelled speculation, sterile financial manipulations, public corruption, vast budget deficits, and a severe decline in public services and national infrastructure that has endangered the future of the country.
Other times of crisis in the country's history provide some precedent. After WWI the highest individual income tax rate was 77 percent, and after WWII it was 94 percent. The Revenue Act of 1964 reduced the top rate to 70 percent. Are the country's current needs much less now? There are 46 million without health care, the country's infrastructure is crumbling and holding back productivity after decades of neglect, millions are losing their jobs, their homes, their pensions, their savings.
Time for the rich to step up and do their share. Whether they want to or not.