Afterall those uber rich top .1%ers got it all going on. We can use the money to stimulate the economy and create jobs, right? Not exactly.
When tax rates were higher we had more exemptions and deductions, over 30 yrs ago, the effective top tax rates were within 30% to 36% roughly speaking. In 1986 most exemptions and deductions were removed, this allowed Clintons top tax rate of 39.6% to yield an effective rate of 35 or 36% for all top rate payers. Lets call this the "level playing field".
Those exemptions and deductions are a great way to make capital flow where we want it to, instead of willy nilly everywhere like we see now. The right wing likes low taxes with fewer exemptions and deductions to "level the playing field". But what that does is make currency and commodities speculation more profitable than say building factories that produce solar panels and create US jobs......
The right wing "Market ideologists" dont like to pick winners and losers in a market, so the "level playing field" becomes this alter that some grovel before. And how much profit a corporation makes in the next fiscal year becomes more important than more long term thinking, like industrial and energy policy looking forward 20 or 30 years.
Adding more brackets, for the current 6 to maybe 10 or 15 brackets will help with fairness. The Peoples Budget adds 5 brackets, with a top rate of 49%, I would go to at least 60% and add exemptions and deductions targeting emerging tech and markets (like solar and wind). This increase in the to rate would tax income from currency, commodities and derivative speculation, and yet give big breaks to capital that built factories for solar and wind.
Otherwise:
Why should I build factories to build solar panels for a 5%, 6%, 7%, annual return...when I can engage in commodities speculation and make a 15% to 25% annually. This is what the "level playing field" yields. Capital tends to flow very well, it flows nearly everywhere, including places that maybe we don't need a high volume of capital to flow to.
Older, mature large markets will dominate, become hard to control, steer, and tend towards senescence and receive legislative favoritism. Emerging markets are overwhelmed. And until the regulatory and tax policies are changed, this will continue.
In the face of the BP blowout and more recently the meltdowns at Fukushima its clear that building out windpower to get 20% of our electricity from wind in 20 years, and 20% from solar in 20 years is the only way to expand the US energy portfolio looking forward. But smart investments don't curry the favor of Accountants and Tax Attorneys with a 5% return when the alternatives provide a return 3 to 5 times more.
20% in 20 years is a reasonable goal, actually 40% in 20 years. From what I have read both the solar and wind industry associations say they can do it. Creating nearly a million jobs a year for the foreseeable future. Smartgird advancements with High Voltage DC for long distance transmission can create another 500k jobs a year. Infrastructure investment is at 2.4% of GDP per year it should be at 5 or 6%, like most developed industrialized economies. Now we are talking about at least 3 million jobs, maybe 4 or 5. Good paying jobs in emerging markets will be around for a while.
Widespread job creation and real wage growth will reverse income disparity, allow families to take care of their own, provide more FICA contributions for Social Security, and drive the economy forward for the many, not the few.
A neat chart from think progress I just found.
This diary came from a comment I rewrote.