Can you imagine what would happen to the economy if top wage earners were taxed at 70 to 90 percent? Former Clinton Labor Secretary Robert Reich can, and he thinks it’s a great idea. To be sure, many Americans were concerned that giving Democrats control of the executive and legislative branches of our government during an economic crisis could usher back in socialist tendencies first seen in this nation during the Depression. Fears of such a leftward shift sparked a new powerful movement called the Tea Party. With this in mind, Reich’s op-ed “How to End the Great Recession” published in Friday’s New York Times validates these concerns: The rich spend a much smaller proportion of their incomes than the rest of us. So when they get a disproportionate share of total income, the economy is robbed of the demand it needs to keep growing and creating jobs. What’s more, the rich don’t necessarily invest their earnings and savings in the American economy; they send them anywhere around the globe where they’ll summon the highest returns – sometimes that’s here, but often it’s the Cayman Islands, China or elsewhere. The rich also put their money into assets most likely to attract other big investors (commodities, stocks, dot-coms or real estate), which can become wildly inflated as a result. Meanwhile, as the economy grows, the vast majority in the middle naturally want to live better. Their consequent spending fuels continued growth and creates enough jobs for almost everyone, at least for a time. But because this situation can’t be sustained, at some point – 1929 and 2008 offer ready examples – the bill comes due. And how does Reich see “us” paying that bill? If you said “higher and higher taxes,” give yourself a cigar: THE Great Depression and its aftermath demonstrate that there is only one way back to full recovery: through more widely shared prosperity. In the 1930s, the American economy was completely restructured. New Deal measures – Social Security, a 40-hour work week with time-and-a-half overtime, unemployment insurance, the right to form unions and bargain collectively, the minimum wage – leveled the playing field. In the decades after World War II, legislation like the G.I. Bill, a vast expansion of public higher education and civil rights and voting rights laws further reduced economic inequality. Much of this was paid for with a 70 percent to 90 percent marginal income tax on the highest incomes. And as America’s middle class shared more of the economy’s gains, it was able to buy more of the goods and services the economy could provide. The result: rapid growth and more jobs. 70 to 90 percent! He said it, didn’t he? 70 to 90 percent! But there’s more: What else could be done to raise wages and thereby spur the economy? We might consider, for example, extending the earned income tax credit all the way up through the middle class, and paying for it with a tax on carbon. Or exempting the first $20,000 of income from payroll taxes and paying for it with a payroll tax on incomes over $250,000. Yep. Let’s tax carbon and give the proceeds to lower and middle-income wage earners. There it is, folks. If you doubted the whole global warming scam was specifically designed to redistribute wealth, one of the left’s most-respected economic strategists just admitted it! But there’s still more: In the longer term, Americans must be better prepared to succeed in the global, high-tech economy. Early childhood education should be more widely available, paid for by a small 0.5 percent fee on all financial transactions. Public universities should be free; in return, graduates would then be required to pay back 10 percent of their first 10 years of full-time income. A 0.5 percent fee on all financial transactions! Does that mean if one buy’s stock or a house, the government gets a half of a percent? And another half when you sell? Does that include mutual funds, treasury bills, and money market accounts? And certificates of deposit? See where this could lead? Now just imagine if these socialists also get their way and a new valued added tax is implemented? At that point, any time you want to actually use your money, the government gets a slice kind of like a mafia kingpin or a union leader. And this is supposed to help the economy? But there’s still more: Another step: workers who lose their jobs and have to settle for positions that pay less could qualify for “earnings insurance” that would pay half the salary difference for two years; such a program would probably prove less expensive than extended unemployment benefits. Earnings insurance! Earnings insurance! As I hinted at the onset, this op-ed by Reich is a picture of the future if the Party in power and their media minions get their way. Be afraid, America! Be very afraid!
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Robert Reich: Stimulate Economy With 90% Tax On Top Earners
