Why taxing the rich isn’t enough
GARY LAPON'S article on the Buffett Rule does a fantastic job exposing the seemingly endless ways in which our tax system is designed to benefit the rich and exacerbate inequality ("The 'Buffett Rule' charade").
But it's worth stepping back from this picture a moment and recognizing that tax policy actually plays a miniscule role in generating the deadly economic inequality in our society.
The vast majority of the difference in wealth and power between the 1 percent and the 99 percent is produced the good old-fashioned way--through the capitalist economy itself.
This can be seen by looking at an analysis Howard Gleckman of the Urban Institute did of inequality during the Bush years. For the top 1 percent of households in this period, pre-tax income rose from $1.5 million in 2000 to $1.9 million in 2007, or about 27 percent. After-tax income for these same households rose from about $1 million to $1.3 million, an increase of about 30 percent.
When you consider that household incomes for the bottom 99 percent stayed basically flat for this period, you can see that tax policy only contributed about one-tenth of the total growth in inequality. The other nine-tenths of growth in inequality in this period came from the market.
In a situation where labor unions are weak and redistributive social programs are being gutted, the rich can wring more and more profits from workers while only giving the smallest increases in compensation (if any at all).
This is exactly what happened during the 2000s. Worker productivity rose by close to 20 percent, while real median wages rose by just 3 percent.
In this light, what is striking about the biannual slapfights between Republicans and Democrats over tax rates on the wealthy is how little would actually change even if the Democrats got everything they wanted.
Tax reform has become the only language liberal politicians know how to speak when it comes to addressing inequality, a fact that is no doubt related to its total ineffectiveness as a means by which to do so.
In reality, there is only one way that the obscene inequality of our society can be confronted: class struggle. Either through labor movements that challenge capitalist class power on the shop floor, or through winning redistributive social programs, struggle is the solution.
If the president were really serious about doing something about inequality, he wouldn't be telling stories about how much Warren Buffett's secretary pays in taxes--he'd be handing her a picket sign.
Paul Heideman, Newark, N.J.