Taxing the Rich: The Real Third Rail of American Politics


Social Security and Medicare have traditionally been untouchable by our leaders. That has changed. Deep cuts in both programs loom ahead as the Federal Budget process moves forward in Washington D.C.

The “third rail” in subway and elevated trains in our cities is electrified and fatal to the touch. A new third rail of American politics firmly in place for at least a decade now is simply taxing the rich.

What is taking place on the Federal level, especially in the states with Republican governors, and soon on the local level are all attempts to do the impossible: balance budgets entirely on the backs of the American middle class and damn the consequences for the poor.

Struggles For Justice fully supports provisions in Wisconsin’s budget repair bill to have public employees in the state pay 5.8% into their state pensions, and to increase their contributions to health insurance to at least 12.6%. With the loss of collective bargaining rights on health insurance will come even heftier co-pays and deductibles saving millions more dollars for the State of Wisconsin. We even support a suggestion made by a local Journal-Sentinel letter to the editor suggesting public employees be taxed one percent of their gross annual income to be given back to non-Union private sector employees. For an average Wisconsin teacher that works out to about $490.00 a year. For someone at the top of the pay scale with the most education and experience in the classroom that can be at least $700.00 in additional sacrifice for the greater public good.

Beyond all this, are changes in salary, seniority, tenure, and more coming for teachers and similar changes in working rules and conditions for other public servants. Those of us in public service are going to more than do our bit.

Lost in all this is that public servants already pay their full share of local, state, and federal taxes: the 175,000 public sector workers in Wisconsin are taxpayers.

The discretionary income already passed into law by the Wisconsin legislature lost to public employees is exactly $660 million. That is money that cannot be spent on main street in hundreds and hundreds of towns and cities across the state. Small business is going to take a major hit. This is a non-partisan fact of life in Wisconsin now and it is not up for a debate. It is reality. Perhaps this loss of economic discretionary spending will be a good thing. Perhaps not. But it will be there and now is there in law.

By contrast, corporations in the United States are sitting on over two trillion dollars in profits. The fourth quarter of the 2010, amidst what feels like a depression to most working people was the most profitable quarter on record for American business in the nation’s history. 2011 is starting out at nearly that. The number of millionaires and billionaires is increasingly almost exponentially. Money is flowing upward to the wealthiest persons and corporations. This may be seen as a good thing by most people but it is in fact what is happening. And it has consequences. One of them is that there is far less money available to support public infrastructure such as roads, bridges, mass transit, public education, and more.

No politician in either party is frankly saying that we simply ought to ask the people who have the greatest ability to pay more to well, pay more. This is the real third rail in American politics. You cannot speak of it: taxing the rich. But to solve our nation’s problems and to move ahead we must do that.

Even the most moderate tax increases on the wealthiest Americans and a modest increase in taxes of say one percent on the rest of us would produce tax revenue at all levels of government that would maintain the quality of life associated with the American dream. The tax increases could be non-partisan.

Why not sunset these taxes on the wealthiest Americans and corporations when state and federal tax revenues revive? Where is the outside the box kind of thinking on the part of our leaders? Or do they simply enjoy digging themselves into their traditional Republican or Democrat or Libertarian Tea Party boxes and just fighting it out with the middle class and the poor, and yes, small business on main street getting the forty whacks.

A decision last December NOT to return the richest Americans to simply what they paid during the prosperous Clinton years of the 1990’s boom, in effect adds to the Federal deficit by $700 billion dollars over ten years. This opportunity at cutting the deficit was lost for at least the next two years. In the meantime the deficit piles up and Americans in the middle and who are poor are asked to shoulder this load.

Taxing the Rich is the real Third Rail of American Politics. Our leaders must reach out and touch it and have the courage to say what we must do in addition to cuts in spending. Where will we find leaders with that kind of courage?

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