Four False Beliefs

In order to begin to change the way our government and economy work, it is necessary to confront mistaken beliefs frontally.

A.Big Government is bad
The first question is – can we trust our government? The simple answer is – not as long as it is bought by powerful, self-serving interests. That aside, the beliefs that government taxes and programs are by definition bad and inherently limit our freedom are among these misleading ideas. Governmental programs allow us to create and maintain the infrastructure and necessary functions of the commonwealth – roads, bridges, schools, Social Security and Medicare, police and fire stations, court buildings, the buildings that house our government, dams and water distribution, national parks and protected lands, health and safety issues, consumer protection, environmental protection, … How many of these things do you want to do without? Without them we would all be much poorer and far less “free to”… and “free from”… than we are today. How did they manage to get us to believe this is all bad? We will explore this subject at length below.

B.Governmental Regulation is bad
This issue starts the same as the last: As long as the process is bought, we cannot trust or rely on governmental regulation. But that has not always been the case. The Sherman Antitrust Act of 1890has guarded us from the destructive monopolistic power of corporations from then until deregulation and lack of enforcement gutted it. Now our government bails out automotive manufacturers and financial institutions with our tax dollars because the are "too large to fail." Likewise, the communications industry -- phone, broadcast radio and TV, cable, satellite, and possibly the Internet if we aren't careful -- to be dominated by a mere handful of internantional cartels which determine the information we do and do not receive in ways that let the right wing call even moderate Democrats "socialists" and worse and to make up their own "facts" largely unchallenged. At the same time, the majority of the progressive base of the Democratic base is left without a meaningful voice.

It was not always so. From at least the mid1800s, our citizens have fought hard to eliminate 60-80 hour work week in unhealthy and dangerous sweatshops, child labor, slavery itself and slave wage levels where people could not live on their wages and became “debt bound” to their companies, and the collective bargaining necessary to begin to mitigate these extreme abuses. More recently consumer, environmental, toxic substances, and drug quality to name only a few have protected us all.

First brought about by the economic abuses of the “robber barons” leading up to the Great Depression, we began to create laws and programs to change this. One example is the Glass Steagall Act of 1933 which created bank regulations which prevented the dangerous types of high risk and manipulative financial speculation like derivatives. From then until 1999 when most of the regulations were repealed we were protected from these abuses. Even Allan Greenspan, former chairman of the Federal Reserve – a leading advocate for limiting government regulation and taxes – has admitted that deregulation and his implicit trust in the “free market” economy have been a substantial cause of our current world-wide economic crisis.

Did these reforms diminish the profit of the rich? Absolutely. It couldn’t be any other way – but it was a necessary and fair adjustment. How short is our memory? Is governmental regulation is intrinsically bad as claimed by the extreme right? Cumbersome, sometimes? Yes. Grant that we need to reform bad regulation, especially where corporate interests have turned reform into protection for their own interests.
But intrinsically bad? Absolutely not. Government is the only power we have to protect the public from selfish private interests and we need it.

C.Are taxes bad?
Many of us have often wondered why there is such a strong reaction against the idea of the strongly progressive income tax. The way it has worked historically and the way we are proposing it, tax increases wouldn’t touch anyone with a gross income below $200,000. Even then not nearly as much as those earning more than $1.5 million. These taxes would fund the needed programs that help the rest of us. Why do people with incomes within these lower levels and virtually no realistic possibility of ever rising into that upper level resist? Taxes are not bad unless you want our Constitutional and legal protections, the kinds of services only the government can provide and much more to disappear. How else can we pay for all these governmental services and programs except through taxes? And who should pay those taxes?

The conservative argument goes like this: “… the top 1 percent of tax returns paid more in federal individual income taxes than the bottom 95 percent of tax returns.” OK, this is a fact. Their argument continues that this is somehow wrong or unfair. Exactly why this is so is hard to fathom. Their total emphasis on how much they pay in taxes, not how much they have left after paying taxes. It’s a bunch. [The top 400 incomes in our country have a lower threshold of $87 million with current after tax incomes of more than $67 million. It’s entirely disproportionate. And it’s unfair to the rest of us.

The widely held notion that there aren’t enough super-rich to make much difference even if we raised their taxes is another non-fact. It is correct that there aren’t all that many people making more than $1.4 Million per year in “taxable income” putting them in the top 2%. It’s less than 3 million tax payers out of over 141 million total tax payers. That’s a very small number but they manage to control our country. What is not true is that they don’t make enough money to make a material difference in tax revenues. Fact: If we increased the tax rate on only the top 2% of income earners as we did in from 1940-60s, it would add up to as much as $2 Trillion(!) in federal revenues per year. That is more than enough to put our federal budget in the black without gutting badly needed programs. Despite what the rich want us to believe the strongly progressive income tax is indeed a viable alternative to cutting spending in order to balance our federal budget.

D.Do taxes stifle economic growth?
The ever-present mantra of the right is that high tax rates undermine economic growth and lead to national decline. This is an interesting belief, but the evidence proves it wrong. While our discussion relates only personal earned income, not capital gains, non-taxable benefits or Corporate Taxes,...nor does it consider that the top 5% of the world population own 90% of everything, the following observations are instructive.See: See http://en.wikipedia.org/wiki/Wealth_condensation .

“Conservatives tell us displaced factory workers that their jobs will come back if corporations get to keep more of their profits through lower taxes. That might be a compelling argument... if it weren’t completely false. They have had their way for more than 30 years during which domestic jobs have been massively exported and very few good jobs created. Most new jobs have been low paying part time jobs with few if any benefits. It hasn't worked. That's the fact of the matter. The problem is not that corporations are overtaxed. In fact, a whopping two-thirds of American corporations and foreign corporations doing business in the United States pay absolutely no federal income taxes—taking on $2.5 trillion in sales.

“Compared to our competitors’ corporate tax rates, the U.S. rate is low. According to the World Bank and PricewaterhouseCoopers, the United States’ total corporate tax burden ranks 76th of over 100 countries. When conservatives claim that the U.S. tax rate is high, they’re talking about the “statutory rate.” But corporations treat the statutory rate as just a guideline—they use offshore tax havens and accounting loopholes to pay much lower actual rates.” Source:

Whether we are talking about a the strongly progressive income tax on individuals or corporations, the idea is not at all new or radical. Progressive taxes are a fact of history going back to ancient Greece and Rome – hardly what we would call “communist” empires. Born in 1913 our own income tax was “progressive” from day one. It became strongly progressive only three years later with rates beginning at 2% on the lowest incomes and rising to 67%. The highest rates only fell below 50% for only six years from 1913 until 1982 and went as high as 94% in 1944. It did not stifle creativity, capital formation, or economic growth. That’s all a lie.
Progressive income tax is not some “communist scheme” as the right has always portrayed any attempt to limit their absolute right to unlimited profit and capital ownership.

It can hardly be argued that the “radical left” ruled the entire time that the tax rates remained much higher than today. During the term of conservative president and former Supreme Allied Commander General Dwight Eisenhower the rates rose again to over 90%. “Name calling” is a way people use to avoid the rational examination of the facts cannot support their position. It is a way of using “guilt by association” to create fear so that people will not question their views. It is a way of using belief to blind people and close off debate. We will not question things if we think the only alternative is frightening or evil.

Nor can it be reasonably argued that taxes stifled the economy during this time. Taxes helped pay for the recovery from the Great Depression, WW II, financing the Marshall Plan through which we helped rebuild the war-torn world, massive expenditure on our national infrastructure including the Interstate Highway System [costing inflation adjusted $425 Billion alone]. During the same time American business and industry thrived, employment was almost non-existent, income growing in terms of real value on the lower and middle income levels, mostly single income families were increasingly able to afford homes, cars, health care, college and a long and growing list of amenities. Government programs also aided in civil rights, health and safety, enviornmental and many other forms of regulation to stop the worst abused of business and industry. And we did it without burdening our governments with huge debt. This is the exact opposite of what the right wing has taught us to believe. We have to change this belief. The historical facts are on our side but will make little difference if we don’t change beliefs.

The right wing claims that taxes are bad are entirely spurious from beginning to end. They are beliefs unsupported by the facts of almost half a century of American history when tax rates remained above 70% and went as high as 94%. They are beliefs used to allow and justify the huge and increasing disparity in income and the capital ownership of almost everything. See the post regarding the growing income gap.] It is the philosophy of the robber barons of the 1800s again wanting unbridled sway over the government and the economy to the detriment of the rest of us. They try to convince us that they have a “right” to unlimited profit and rationalize it with what they present as "economic law." It’s not. There is no such right as the ability to amass and hold extreme wealth protected by our Constitution. That’s a lie. They claim that low tax rates on the highest incomes are good for the rest of us. That’s also a lie.

In a world where extreme poverty and starvation exist on a massive scale, where we are depleting and poisoning our environment, where we are told that we can’t afford universal health care, quality schools… the 400 incomes earning over $67 Million after taxes today is inexcusable and morally repugnant. The strongly progressive income tax is perhaps clearly one of the most important factors in limiting the stranglehold of the ultra-rich have on our government and economy and at the same time “finding” the revenue to fund important services and programs while balancing the budget. We can change this if we can only get over these false beliefs espoused by the radical right wing. They are the true radicals. The are the only real elite in our country. All that is great about the vision of our founding fathers is on our side. It’s time to change things. And to change things, we need to change beliefs.