Taxing the Rich

Decades ago, right wingers began championing cuts in income taxes for the rich and – when that lowered government revenue – turned around and claimed that government could no longer “afford” to maintain vital public services like education and health care. Unfortunately, in an effort to curry favor with the wealthy and their corporations, many state and national officeholders began to adopt the right wing’s tax-cutting model. In New York State, the tax rate for top income earners was reduced from over 15 percent to less than half that amount. On the federal level, it plummeted from 91 percent (in the early 1960s) to 35 percent (today). As a result of such policies – and of rising expenditures on the military – there was a lot less government revenue left for public services, and they were slashed accordingly.

Of course, in these circumstances, there was plenty of money – in fact, more than ever before – in the pockets and vast bank accounts of the wealthy and their corporations. Furthermore, unlike most of the population, the wealthy generally didn’t regret the decline of public schools, public hospitals, public law enforcement or public parks. After all, they sent their children to expensive private schools and colleges, utilized private health care, resided in secure, wealthy neighborhoods and vacationed in exclusive hotels and resorts. Why worry about the adequacy of the government’s stamp program if the only time they experienced hunger was when the service was slow in their favorite French restaurant?

To help reverse the erosion of public services, unions and other social justice organizations have turned increasingly to a tax-the-rich approach. A good example of this occurred in Oregon on January 26 when voters passed two ballot measures that raised taxes on the wealthiest 3 percent of that state’s residents and on the most lucrative businesses in the state.

These ballot measures were developed in the context of a severe state budgetary crisis, which left Oregon on the verge of freezing salaries for public employees, making deep cuts in spending on education and ending forest protection rules. Taking the offensive, public employee unions, community groups and progressive businesses developed a grassroots campaign to pass the two ballot measures, which were designed to safeguard $1 billion in public services while not raising taxes on the vast majority of the population or, for that matter, on 93 percent of small business owners. They pointed out that the rich had grown much richer thanks to conservative policies and that the state’s minimum tax paid by most corporations stood at only $10 a year!

Not surprisingly, corporate leaders and their supporters fought back ferociously. A coalition of business organizations spent millions of dollars, donated by the banking industry and wealthy entrepreneurs such as Nike’s Phil Knight, to inundate the airwaves with ads proclaiming that a tax raise for the wealthiest individuals and businesses would destroy jobs and the state’s economy. Although polls found that the ballot measures were popular, it seemed quite possible that business groups and the wealthy would prevail. For years, the state’s voters had rejected propositions for tax increases, and they had not supported raising income taxes since the 1930s.

Nevertheless, in the end, Oregon’s voters backed both tax-the-rich ballot propositions by roughly 54 to 46 percent.

Doug Hall, the director of the Economic Analysis and Research Network at the Economic Policy Institute, declared: “The people had an opportunity to weigh the relative merits of draconian budget cuts versus strategic revenue increases, and they have decided to support the revenue increases. I think that sends a powerful message to the rest of the country.”

It certainly should. The passage of the Oregon ballot propositions is one more indication that – despite the televised ranting of right-wing demagogues – most people believe that the vast wealth in the hands of individuals and corporations should be drawn upon to promote the public welfare.