Larry Beinhart’s Body Politic: December 2011

Tax the Rich

by Larry Beinhart and photographs by Dion Ogust, November 30, 2011

Low taxes on the super-rich, the top one tenth of the top one percent especially, are the cause of all our current economic woes.

When taxes on the rich are cut, as they were in the Bush administration, the same reckless sequence ensues—bubbles in the most nonproductive areas, financial instruments and real estate, with lots of get-rich-quick chicanery, a crash, bank failures, followed by a serious recession or depression.

When the Republicans forced Clinton to cut capital gains taxes, the dot-com boom turned into the dot-com bubble. When the crash came in 2001, Bush responded by cutting taxes. The result was called a “jobless recovery.” It was considered an inexplicable mystery. It was actually a new bubble in the fiscal sector while the rest of the economy was in a recession that has never gone away.

After the crash of 2008 we kept the Bush tax cuts and added more tax cuts. We now have a boom in the fiscal sector, the banks are rolling in money, and record corporate profits. Yet the recession in the real people’s economy remains.

Money will only be redirected into productive activity by taking it from the rich—who stick it in funds and speculate in derivatives and search for the new Bernie Madoff—and putting it to work by the government.
Income inequality distorts business, economics, politics, and society itself. Money buys influence and power.
What do people with money use that power for? To protect what they have and make even more. They buy theoreticians to justify their wealth. There are actual true believers in free market theology, people who equate Social Security and Medicare with Soviet and Fascist enslavement. But their success in leading the backward march in our political thought toward the 19th century is a steady record of such people finding wealthy individuals and corporations to fund and legitimize their nonsense.