Send email to Caleb at:  Caleb@calebon.com

 

TIME TO GET SERIOUS ABOUT OUR GOVERNMENT BUDGET DEFICITS

Everyone seems to be talking about the budget deficit for both the Federal government and the state governments. The Republicans especially have been talking about the need for so-called "austerity measures" to cut spending in order to reduce the deficits.

They insist that the only way for the governments (both State and Federal) to deal with the budget crises is to cut spending including for basic governmental functions such as education, crime fighting, basic health care, mental health issues. Cuts they want to institute also include major projects for infrastructure like high speed rail projects that most industrialized societies already have in place.

Infrastructure projects like highways, bridges, high speed rail have multiple benefits for the country and local areas by providing jobs as well as projects that make the area and the country more efficient for business and personnel. Education goes towards investing in our most valuable asset: Our people. Other projects they want to cut include things like high speed internet which will make all American businesses and commerce run better and faster. Other countries like South Korea already have much faster internet than we have and they are working on even faster internet for all of their citizens.

In fact there is a much easier way for our country to get out of the current budget deficits AND create jobs for Americans and improve the standard of living for all Americans. Over the past 30 years the average income and wealth of the top 10% of Americans has increased many times over. During this same time period America's working families has remained flat while their "wealth" has disappeared.

It used to be that American families could survive quite nicely on a single income. Over the past thirty years, this ability has vanished. Now even multiple income families are struggling to simply pay for food and housing. And, for millions of middle-class Americans this has been a losing battle.

During the 1950's we had millions of American soldiers returning home after winning World War II. We were dealing with sending more troops fighting in the Korean War and figuring out how to grow an economy. The top tax rate on the highest income earners was more than 90%. This gave people with high incomes incentive to remain in American companies rather than taking money out of American companies to invest in foreign companies or taking huge profits and putting it in Swiss bank accounts.

The solution to our government budget deficits is simple. We need to make the tax burden on working Americans much more fair. We need to have income tax surcharges on multi-millionaires. I believe that we should add a surcharge income tax on ALL income in any taxable year just for that income greater than $2,000,000 in any taxable year. I am not talking about going back to the greater than 90% rates during the 1950's. But, we should make it so that the surcharge insures that all income should be surcharged for a total rate of 75%.

This income tax surcharge on multi-million dollar income should quickly and easily solve our budget crises in a way that is fair. After all, the people who are receiving multi-million dollar incomes per year are certainly receiving HUGE benefits of living in our country. They should pay a commensurate share of the burden of taxes for receiving those benefits.

This multi-million income tax surcharge should apply to ALL income. Right now there is a big difference in how income is taxed. Most working Americans have mostly "earned income" meaning the money they earn from working at a job and getting paid salary or hourly for their work. The maximum tax rate for "earned income" is 35% in a single year.

However, "unearned income" is money received for things like stock dividends. This is a great deal of income that multi-millionaires receive. This is not money that they have earned but simply a large amount that they receive for owning company stock. So, these people receive the money for not doing an ounce of work. Because of the Bush tax cuts, this "unearned income" is typically taxed at just FIFTEEN PERCENT (15%) a much LOWER rate than the money earned by middle class Americans.

Most Americans do not realize that the people with the top 10% of income own more than the entire bottom 50% of Americans. This income disparity for which the working people of this country bear a huge burden should not continue to exist. Working Americans are the ones who can least afford to be bearing this burden. Yet the Republicans' only solutions to America's problems is to call for more tax cuts for the wealthy thereby making the budget deficits even worse. At the same time they talk about reducing basic governmental services which are primarily used by the working people.

Paying taxes is a patriotic duty. America is the greatest nation on the planet. It is time for Americans to realize that one of the reasons that it is the greatest nation is because there are benefits to living here. One of the costs of living in the greatest nation is to pay a fair share of those costs associated with living in the greatest nation. It is time for the rich pay their fair share as they receive the huge benefits from living in our country.

Caleb Donner is a Southern California attorney who can be reached at caleb@calebon.com