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If he was alive today and paying even modest attention to the American budget and debt melodrama, Winston Churchill, the iconic and quotable former British Prime Minister, would likely add some insightful and memorable words.  He might adapt a bit of his previous wisdom and say that “never have so few with so much held hostage so many for so little.”  

President Barack Obama and the Congressional Democrats have proposed allowing the expiration of the tax cuts created during the presidency of George W. Bush for all annual income above $250,000.  With no action by Congress or the President, all Bush era tax cuts, for all income levels, will expire at midnight on December 31st of this year.  The Democrats propose to extend the tax cuts for all income beneath the $250,000 threshold and their Republican counterparts desire to extend them for all income levels.  

Returning to the fictional Churchill words of wisdom – the “so few” are the 3% of Americans that make greater than $250,000 per year and the “so many” is everyone else.  

“Yes we can, tax the rich.”  A few days ago, that statement was displayed prominently on the official website of the Rush Limbaugh show.  The statement was displayed across a picture of President Obama and a pile of $100 bills.  The mocking reference to the famous “Yes we can” Obama campaign slogan, is included on the same page as a transcript of a recent Limbaugh radio show.  Within the transcript, the cantankerous voice of the far right angrily predicts that Congressional Republicans will “cave” on the issue of tax increases for the rich as part of the much discussed ‘grand bargain’ that is sought by the two political parties to solve our national budget and debt crisis.  

Without that bargain, our economy may fall over the notorious ‘fiscal cliff’ as the new year begins, the tax cuts expire and a wide range of automatic spending cuts become effective.  Figuratively falling over that cliff might cause the beginning of another economic recession period and increased unemployment.    

The cantankerous Rush Limbaugh earns roughly $40 million annually (or an estimated $167,000 per workday, $21,000 per work hour, and $350 per work minute).  Limbaugh is most certainly among the wealthy that have “so much,” as the fictional Churchill words profess.  Despite his wealth far beyond what he might reasonably use, Limbaugh speaks nothing but vitriol for any serious proposal that would require wealthy Americans to carry any of the burden in a ‘grand bargain.’  

Clearly, Rush Limbaugh is not representative of all taxpayers earning over $250,000 annually.  However, even a $250,000 income will place its earner within the top 3% of American earners.  
Something else should be noted that doesn’t get stated often.  We repeatedly hear statements about how “taxes will be raised for those making greater than $250,000.”  The statement is misleading, and often intentionally so.  It is more accurate and complete to note that “taxes will be raised for those making greater than $250,000 on only their income over $250,000.”  Under the Democratic budget proposal, a person making $300,000 annually would incur no increase whatsoever for 83% of their income (i.e., their income under $250,000).    

Congressional Republicans have claimed that the cure to our country’s soaring national debt is a drastic reduction in the nation’s expenses.  They primarily target spending cuts in three of the four largest expenditure areas: in the federal ‘entitlement programs’ of Social Security, Medicare and Medicaid.  They generally consider the bloated military spending budget off limits for any cuts.  

The ‘entitlement programs’ on the chopping block are important and necessary aids relied upon by poor and middle class Americans.  They are generally not needed by the wealthy top 3% and any ‘grand bargain’ that cuts those programs’ benefits, without any increased taxes for the highest earners, would place all of the resulting ‘pain’ squarely upon the poor and middle class.  

Congressional Republicans also object to any increase in revenue through even the modest tax increases that would occur if the Bush era cuts expired on the top 3% of earners and their top rates returned to the rates that applied during the prosperous presidential years of Bill Clinton.  

The principal obstacle in the ‘grand bargain’ effort has been the Republican refusal to agree to any roll-back of the rate cuts for that top 3%.  In response, President Obama has said that the House Republicans “shouldn’t hold the middle class hostage.”    

Those Republican Congressman, and their wealthy supporters that supply their motivation, should benefit from a little historical perspective.  The top income tax rate was 94% in 1944 and 1945.  During the 24 years between 1940 and 1964, the top rate never fell below 80%.  It should be noted that the period includes some of the most economically prosperous years in our country’s history.  

The average top federal tax rate was 61.4% over the 96-year period from 1916 through today.

A glimpse at the top tax rates in other wealthy countries provides further perspective.  The top tax rate in France is 75%.  The top rates in England and Japan are 50%.  It is 45% in Germany and near or above 50% in various other European countries.  

Today’s highest U.S. rate of income tax is 35%, which is a full 59% below our highest historical rate and 26.4% below our historical average.  A return to the 39% top tax rate of the Clinton presidency would require a mere 4% increase.  Given the history of higher rates, even during times of much less need for revenue, the proposed 4% increase is deservingly the “so little” in the fictional Churchill wisdom.  

Never have so few wealthy Americans with so much income held hostage legislation, through their control of House Republicans, that is needed by so many other Americans because of such a historically small potential tax increase.  Or more eloquently, “never have so few with so much held hostage so many for so little.”  

Originally posted to Rob Elders on Mon Nov 19, 2012 at 10:06 PM PST.

Also republished by Community Spotlight.

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Comment Preferences

  •  Evil rich people have no souls so what are they (4+ / 0-)

    Going to sacrifice?

    Austerity is for suckers aka the American middle class is ok as long as POC get screwed. Little do they know that they get screwed also.

    The radical Republican party is the party of oppression, fear, loathing and above all more money and power for the people who robbed us.

    by a2nite on Mon Nov 19, 2012 at 10:27:01 PM PST

    •  In A Few Years When My Parents Pass Away (7+ / 0-)

      I will be worth more money than I can spend in a lifetime. Millions and millions. Tens of millions.

      My parents came to this money cause of my dad's father. Inherited.

      They are giving away a lot of it as fast as they can. I will do the same, cause I don't need it.

      If I keep a few million in the bank I can live just off the investment ....

      Those with so much make me sick to my stomach. I don't need a yacht. Three houses. I like nice stuff, but a $3,000 Tom James suit isn't the same as buying a $40,000 dress for my girlfriend.

      When opportunity calls pick up the phone and give it directions to your house.

      by webranding on Mon Nov 19, 2012 at 10:50:59 PM PST

      [ Parent ]

      •  That's great! (2+ / 0-)

        Might I suggest you look into ?

      •  Wow, Sounds Like the Warren Buffet Philosophy (5+ / 0-)

        I confess I don't know if it was him or Bill Gates, but the quote goes something like:  "I want to leave my children enough wealth to do anything they want.  But I won't leave them enough so they don't have to do anything"

        I guess the trick (at least for me) would be trying to figure out how not to be giving it away to thieves.  I would like to be able to make a difference in the world, not fatten up a thief.  There are many examples, for instance huge public land grants from private estates as seen on a plaque at the top of a really nice hiking peak in New Hampshire.  Louis S Tainter - Whiteface Mountain  Died in 1920, unknown today, but his name attached to a piece of granite to commemorate his gift for eternity.

      •  It's all relative (0+ / 0-)

        My household makes north of $140K, which is pushing the 90th percentile nationally, although it isn't that much given where we live and the fact that we have a lot going on -- frail-elderly parent, no other extended family, severely autistic kid, me in the middle trying to not go nuts, you get the idea.  Still, by definition, we are well-off relative to a lot of our fellow citizens, a lot of whom make a fraction of what we do (and have less education etc.) and have the exact same types of challenges.

        And hell yes, we need to be expanding the safety net -- anything else is insane and heartless.  It always irks me when Obama talks about "millionaires paying a little more".  A "little"?  Given our history of marginal tax rates, which we and politicians and talking heads know perfectly well to be the case?  What kind of Dickensian P.C. is this, where it's unseemly to talk about reversing the redistribution of wealth?

        If he folds on the "grand bargain" it will be SUCH a buzzkill.  Yeah, buzzkill for me, disaster for others.

        Anyway.  If I had that kind of money you're talking about, I'd do about what you're talking about -- enjoy myself, make extra sure my kid was set, but give a bunch away.  I'd support niche organizations dear to my heart.  And I'd travel around a lot more, especially Europe, but also South Asia.  I did some of that a decade or so back and it was great.  Have fun!

        "Happiness is the only good. The place to be happy is here. The time to be happy is now. The way to be happy is to make others so." - Robert Ingersoll

        by dackmont on Wed Nov 21, 2012 at 06:34:50 AM PST

        [ Parent ]

  •  Our task, I think, (2+ / 0-)
    Recommended by:
    maybeeso in michigan, RobElders

    is to educate the public on marginal tax rates. One could assume that everyone understands this very basic concept, but that does not appear to be the case.

    Sad but true.

  •  It's worth mentioning, (9+ / 0-)

    that Federal income tax is only a part of our total tax burden. Taxes paid at a local level tend to be even more regressive as are payroll taxes.

    "Remember, Republican economic policies quadrupled the debt before I took office and doubled it after I left. We simply can't afford to double-down on trickle-down." Bill Clinton

    by irate on Tue Nov 20, 2012 at 02:30:03 AM PST

  •  I'm shared out. (11+ / 0-)

    As someone who started out with nothing and have a most of it left I'm all shared out.  I'm retired on social security but still have to work 16 hours a week to stay afloat. (Literally, I live on a boat.)  If they haven't noticed and why would the rich.  Prices are going up and the wages are stagnant.  We get less than 2% more this year in social security and in my case all of it an more will be taken up in increased medical cost.  Due to the drought and increased fuel costs the the price of food alone is projected to increase 15% this year but food isn't included in the social security raise equation. (Thank you Mr. Reagan)  So I'm all shared out.  And hell today even Cat Food costs too much to be a viable alternative.  Time for the 3% to be heard from in the sharing department.  I'm shared out.  

    A bad idea isn't responsible for those who believe it. ---Stephen Cannell

    by YellerDog on Tue Nov 20, 2012 at 02:37:28 AM PST

    •  Food, Housing, and Fuel (4+ / 0-)
      Recommended by:
      skyounkin, ladybug53, NoMoreLies, kurt

      Marginalized in any inflationary measurements.  A decades long low interest money giveaway causing housing prices to double or more, and nary a note of any effect on inflationary measures which would have throttled it all back.

      Inter-generational theft and debt indentured servitude on a massive scale.  What could go wrong?

  •  The problem is that money, which is supposed (3+ / 0-)

    tosupposed to be used as a measure of materials and energy expended (like an inch measures distance) is instead being used as an instrument of social control, to make people's lives difficult so they'll work harder and produce a surplus for those who can't produce anything (because they are incompetent) to use up. Money is being used as an instrument of extortion, assisted by the law which has declared the notion that there is "no free lunch" to be a legal principle, in concert with the tradition that property rights trump human rights. That is, the law has been jiggered to make it illegal for a hungry man to steal food, while the distribution of all natural resources for the exclusive use by a few is entirely legal. Private property and disregard for human rights go hand in hand.
    Which is not to attack the principle of private property. If we keep in kind that ownership and use are distinct functions, then ther is nothing to prevent ownership being accompanied by an obligation to share. That is, individuals can own, but they cannot abuse and their ownership cannot (should not) deprive others of what they need.
    The real problem isn't acquisition or ownership. The real problem is exclusive use/abuse and hoarding. And that raises the question whether taxing what is in the process of being acquired will promote the release of what is being hoarded. I am doubtful that it will, but we can try. Since we are aiming to intercept money, a worthless entity whose negative effect is only felt when others are deprived, perhaps intercepting the acquisition will have the salutary effect of convincing the potential hoarders that hoarding the worthless is not worth the effort and they'll turn their obsessive behavior to something else.
    How do we persuade the money hoarders that their stash is worth less than Rumpelstiltskin's straw? That they are making other people miserable and undermining the economy for nothing?

    We organize governments to provide benefits and prevent abuse.

    by hannah on Tue Nov 20, 2012 at 04:42:51 AM PST

    •  hannah, I don't think human nature can be (7+ / 0-)

      overcome in the long run. Hoarding is in some people's nature and it must derive from myriad perceptions, real and imagined. It seems that some economists account for this in their formulations. One formulation I have seen repeatedly is that the currency needs to expand to meet the desire to save and the desire to import - two forms of "leakage" from the economy.

      The expansion of the currency means spending more than taxing. Deficit spending which, under our current stupid arrangements, means money is first created as it is spent, then it is recaptured and destroyed when it is converted to bonds that pay interest. Most people think it's just the opposite, that first the government sells the bond, then it takes that money to spend, because that's how it works in the private sector. But the government isn't the private sector, it's sort of the the economic mirror image, and it is the issuer rather than the user of the currency.

      The government needs to produce a lot more spending that is targeted to public purpose. I saw this list of proposals that looked like a good foundation to start a conversation. Don't remember the source, (might have been letsgetitdone or a link he pointed to) and I've probably reworded it somewhat.

      1) full payroll tax cuts for both employers and employees until full employment is reached
      2) revenue sharing payments to the States of $1,000 per person to save and restore State government employment to pre-crisis levels
      3) creating a Federal Job Guarantee program which would guarantee a job offer at a living wage with full fringe benefits to anyone seeking full time work;
      4) passing enhanced Medicare for All (as is John Conyers bill HR 676)
      5) public education reforms to create a world class educational system open to all, from preschool to graduate school
      6) passing a $3 Trillion infrastructure renewal program re-creating the energy and transportation foundations of the United States while rapidly eliminating dependence on fossil fuels and stopping the US contribution human-created climate change.

      Good thoughts all. But where's the political will?

  •  Getting the very rich to pay more is (3+ / 0-)

    an absolutely great idea, unfortunately it's hardly the panacea it's often or always painted to be at this site.


    And true:

    "Americans almost always do the right thing, after exhausting the alternatives."

  •  In all the talk about "shared sacrifice" (7+ / 0-)

    No one ever seems to mention that the 98% have already sacrificed.  What do they think all those years of foreclosed homes, lost pensions, and lost jobs are but the sacrifice and pain of the 98%?
    We've already contributed to the sacrifice pool, Thant you.  It's their turn now.  And we think that their sacrifice should be at LEAST as large as our own.
    Our sacrifice saved their rich butts.  It's time for them to PAY THEIR BILL!

    •  Shared pain? The people who are doing this need (2+ / 0-)
      Recommended by:
      ladybug53, cfm

      to keep in mind that it would take 10 or 100 times extra tax or cuts to impact the top 3% in the same way   Equal cuts and taxes raised for the upper 3% may cause real hardship for the people who weren't really making it before the cut while small raises for people making 10X to 1000X a much will cause real griping and whining.

      We should have top marginal rates at least as high as our historical average.

      We should also have a wave of infotraining that makes basic understanding of marginal tax rates almost instinctive

      Nothing in the world is more dangerous than a sincere ignorance and conscientious stupidity. Martin Luther King, Jr.

      by maybeeso in michigan on Tue Nov 20, 2012 at 09:06:21 AM PST

      [ Parent ]

  •  I am against (3+ / 0-)

    focusing tax increase on only the top 2-3 %.   All rates should go up for folks making more than $60-70,000 per year and there should be a progressive increase in brackets for those above $250,000.  Ending brackets at $385,000 is way too low.  Rates should steadily be increased up to $10M.  There have been too many policies (like voluntary military) the effects of which have been to exacerbate class divisions in  this country.   I would prefer to go back to Clinton tax rates across the board (maybe adjusted for inflation) than the President's proposal.

  •  RobElders, you forgot the additional 3.8% (0+ / 0-)

    from the ACA, starting Jan 1, 2013 there is a 3.8% tax on investment income.

    So even if today's tax rates continued into 2013 the top rate would be 38.8% - just 0.8% points short of tax rates during the Clinton years.    If the Bush/Obama tax cuts continued in full, the top rate goes to 43.4%.

    The most important way to protect the environment is not to have more than one child.

    by nextstep on Tue Nov 20, 2012 at 09:07:48 AM PST

    •  Different type of tax (0+ / 0-)

      I don't think the ACA tax that you reference (which applies to stock dividends, etc.) should be confused with the federal income tax on wages and salaries.  There are also payroll taxes (Social Security, Medicare, etc.) and state and local taxes (income, sales, property, etc.).  I didn't intend to address all of them.  I will note that the diary includes a chart that shows that capital gains taxes are also at historic lows.  I think the ACA "tax" is more analogous to an increase in the capital gains rate.  

  •  "Shared Pain" is 50/50 Horse and Rabbit Stew (2+ / 0-)
    Recommended by:
    Mr Robert, jm214

    One horse ... one rabbit ... see: 50/50

    What I'm expecting is "Ten parts spending cuts 1 part revenue enhancement"  ... and lets not expect any caps or carve outs for small saver/investors' "unearned income" ... or for mortgage interest on primary residences.

    In other words: this is going to hurt US a whole lot more than it hurts THEM -- but we'll be cheering while they'll be weeping fat round crocodile tears and promising a Gaultian counterrevolution.

    How it works:  President Obama will secure his legacy by getting a symbolic 2 or 3 percent tax rise on the "1%"  (which by his math is more like "the top 2%" ... and could reach as far as "the top 5%" -- and that accomplished let the Republicans have their way with Medicaid, banking reform,  infrastructure, education, and possibly Social Security.

    And oh yeah ... perhaps a concession abolishing the Postal Service to sweeten the deal.

  •  Nice tax rate graphic! Gotta link to it? (0+ / 0-)

    You can't see it very clearly as it's so small.

    Thanks ...

  •  All for 40% rate. When rates were >70% (2+ / 0-)
    Recommended by:
    Mr Robert, J Orygun

    the allowed deductions and loopholes made it so no one paid close to that rate.

    A historical chart with effective tax rates would be better. Clearly though, top effective tax rates were much higher than today in the 70%+ era ... and even in 70s.

    The low capital gains rate at 15% is what's giving high income earners such a huge break compared to the rest of us.

  •  taxable income beyond $250k (0+ / 0-)

    If you have $300k in salary, you probably won't be subject to the top rate at all.

    401k - 16k
    Mortgage interest 30k
    Charitable -5k
    Sale/Local tax - 4k

  •  I agree with what someone else said: (1+ / 0-)
    Recommended by:

    Go ahead and fall off the damn cliff and let all tax cuts expire, put the middle class cuts back in and watch to see what the Reps will do.  There is no way they could say no.

    This "Trickle Down" thing has turned out to be somebody pissing on my leg and tellin' me it's rainin'.

    by swtexas on Tue Nov 20, 2012 at 01:03:19 PM PST

  •  Shared pain? After they (the banksters) (2+ / 0-)
    Recommended by:
    chuckvw, silverlining4002

    crashed the economy and the repubsters caused 2 wars on credit and ALSO cut the tax rates? I think a little targeted pain is in order. I like the transaction tax on share orders. I think there ought to be a hair cutting amongst the mortgage fraudsters. (Like them eating at lest 20% of every loan they created in that last couple of years before the crash!) I think that the hedge fund folks should be getting a whopping BIG tax bill. And cayman and all the other little tax havens should be getting a drone visit.

    American Television is a vast sea of stupid. -xxdr zombiexx

    by glitterscale on Tue Nov 20, 2012 at 01:58:51 PM PST

  •  Thanks for an informative (0+ / 0-)

    and useful diary. I wasn't aware of the Visualizing Economics site but am sure I'll be spending quite a bit of time there now.

    Thanks again, I really appreciate your post.

    Don't ask me nothin' about nothin'. I just might tell ya the truth -- B. Dylan

    by ponderer on Tue Nov 20, 2012 at 05:01:58 PM PST

  •  Ask Rush... (0+ / 0-)

    Reporter: Rush, do you earn more than $250,000?

    Rush: Some days I do and some days I don't.

    "The language of the conqueror in the mouth of the conquered, is ever the speech of a slave." Tacitus

    by letsgetreal on Wed Nov 21, 2012 at 09:24:55 AM PST

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