March 1, 2011

Balance the Budget by Taxing Billionaires? God Forbid!

By In Essays

[Image Credit: Farcaster]

Recently, I did the unthinkable! At a town hall meeting in Sacramento hosted by Senate President Pro Temp Darrell Steinberg, I proposed an easy way to balance the $26 billion California budget deficit without raising taxes on average citizens and without making any budget cuts.

The idea for my proposal came to me when I read in Forbes Magazine that California is home to 80 billionaires. California resident Larry Ellison, the CEO of Oracle, alone is worth $27 billion. And if you add up the collective net worth of the other 79 super rich Californians, it comes out to over $232 billion.

Thus, the proposal I made at the meeting was quite simple: Impose a 10% surtax on the 80 billionaires who live in California and the budget could be balanced without making any cuts (actually the total figure falls a few billion short, but I was rounding off to keep it simple). What could be easier and fairer? A billionaire or multibillionaire could easily give up 10% of his net worth without changing his lifestyle one iota.

When I made the proposal Steinberg rolled his eyes, and with few exceptions, everyone else in the room– most of whom were just average folks– looked at me as if I were crazy. You can’t do that! You can’t expect billionaires to pay extra taxes to help out in a financial crisis! Yet somehow it’s OK to increase tuition fees for college students or cut salaries for state workers, but ask billionaires to kick in a little extra for the good of the state-God forbid!

And that’s the real tragedy! Americans have become so brainwashed over the past 30 years by “free market think” they actually believe that taxing the wealthy is not only off limits, but un-American!

In Wisconsin, the loathsome Republican governor of the state, Scott Walker, would rather cut pensions and benefits of workers and destroy the rights of unions to collectively bargain than to even consider raising taxes on the rich. Ditto for John Boehner and the Republicans in Congress. No taxes on the rich! Period!!

Of course, if any of these anti-tax fanatics ever bothered to check the IRS tax tables, they would discover that the wealthiest members of our country, currently paying a 35% rate, are taxed at the lowest rates since the 1920s.

In fact, from the 1950s through the 1970s, the members of the highest income bracket were taxed at 70-91%. Seems incredible now, but those were the rates. So the idea that taxing the affluent at a higher rate is some kind of radical idea or socialist slight of hand is nonsense.

But back to my proposal at the meeting. When the shock and awe of what I said subsided, Steinberg mentioned that even if the Democrats were to propose such legislation, the Republicans would never go for it. Clever trick by the Democrats-always blame the Republicans for their own cowardice and lack of vision.

But what if Democrats stood up to the Republicans for once? What if Jerry Brown called a press conference and offered Californians a choice: Either I make draconian cuts in all your favorite programs, like education and health care, and lay off thousands of government workers, or I tax 80 of the richest people in the state an extra 10%. Which do you think they would choose?

And would the Republicans be able to justify cutting the budget to the bone when the other option exists? If they did, it would be political suicide. Once the momentum shifted, the Republicans would have to capitulate to save their own political skins.

Unfortunately, that’s the other tragedy. Democrats would never even consider asking the wealthiest members of the state, many of whom are their financial contributors, to help out during a fiscal crisis.

The same mentality exists at the national level. For example, why didn’t President Obama fight to let the tax cuts for the wealthy expire? Why didn’t he fight for the public option in his health care bill? And why hasn’t he pushed for indictments or tried to recover any of the money from the Wall Street banksters who blew up the housing market and walked off with hundreds of billions in taxpayer money? Is that the Republicans’ fault, too?

The bitter truth is, Obama and the Congressional Democrats are just as much in the pockets of the very rich as the Republicans, and they have perpetuated the propaganda of free market think over the last three decades with nearly the same verve and commitment.

During his campaign for governor, Jerry Brown said he was at a time in his life when he was ready to make the tough choices on the budget deficit. Well, he can start by telling billionaires they need to cough up some of the loot they’ve been stashing in the Cayman Islands or in Swiss bank accounts over the past several years. Otherwise, California may be the next state to experience “Egyptian-style” democracy.

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