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Power & Democracy

Is Raising Taxes on the Wealthy Beneficial for Business? Yes. Power & Democracy. Matthew J. Spanovich November 29, 2011. Class Warfare

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Power & Democracy

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  1. Is Raising Taxes on the Wealthy Beneficial for Business? Yes Power & Democracy Matthew J. Spanovich November 29, 2011

  2. Class Warfare • Paul Ryan: “Don’t forget that most small businesses file taxes as individuals. So when you are raising top tax rates, you are raising taxes on these job creators.” (Harkinson) • Joint Committee on Taxation [JCT] • Fewer than 2% of the nation’s small businesses fall into either of the top two tax brackets, and of those who do, many of these filers are investors with no direct impact on the business. (Harkinson) • “less than 3 percent of all taxpayers with any positive business income at all—big or small—would be affected by the increase in rates” of a progressive tax. (Linden & Ettlinger) Refuting the Small Business Argument

  3. Not really “Small Business” • “These figures for net positive business income do not imply that all of the income is from entities that might be considered ‘small.’ For example, in 2005, 12,862 S Corporations and 6,658 partnerships had receipts of more than $50 million.” (Linden & Ettlinger) Refuting the Small Business Argument

  4. “Wealth confers power beyond its consumption value. This power is economic, social, and political.” (Avi-Yonah) • Social Effects • Ability to acquire goods and donate to charity creates reliance (Avi-Yonah) Reign in the Power of the Wealthy

  5. Political Effects • Financing personal campaigns i.e. Bloomberg & Schwarzenegger • Campaign contributions i.e. Solyndra & Perelman (Rolff) • Economic Effects • “The current tax system in the United States leaves these vast differences in wealth and power largely untouched” (Rolff) • Wealth tax fosters economic equity = democracy Reign in the Power of the Wealthy

  6. Robbing the United States Government • 2010: Taxes < 15% GDP, lowest ratio since 1950 • Government must receive revenue to pay for federal programs, welfare, and investing in the economy Re-invest the Wealth Tax Revenue

  7. Incentives for Wealthy have Failed • “Incentives did not work. Savings rates did not increase and benefits did not trickle down.” (Dugger) • Differences in Holdings and Investments • Middle Class: 68.6% of wealth is tied to mortgages • Rich: 45.1% investment real estate & unincorporated business (Rolff) • Wealth tax would encourage transfer of assets from low-yielding to high-yielding investments to offset the tax (Rolff) Re-invest the Wealth Tax Revenue

  8. “The vast inequality of wealth is socially destructive because it degrades relationships among people (cultural, social, and political) and eventually undermines the sense of community on which a democratic polity must rest.” • Avi-Yonah • I.e. Occupy Wall Street Promoting Democracy

  9. Extreme concentration of wealth in the hands of a few who are unaccountable to the majority • “Such private individuals exercise degrees of power and influence that run counter to the ability of the government of the people to govern the country.” (Avi-Yonah) Promoting Democracy

  10. Not proposing a return to 70-90% top marginal tax rate • Steps to Fix this Problem • 1) Let Bush Tax Cuts expire; do not allow Estate Tax to expire • 2) Reconfigure the Income Tax Brackets to relieve pressure on the Middle and Lower Classes • 3) Institute a graduated wealth tax based on total assets • 4) “direct regulation of political and economic activities via campaign finance reform and antitrust enforcement.” (Avi-Yonah) We Can Fix This

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