Today is the 10th anniversary of the Bush tax cuts passed in 2001. In observance of this day, we should raise taxes on millionaires and billionaires.
A decade of these cuts cost our nation more than $2.5 trillion in lost revenue. Almost 40 percent of the benefits, or about $1 trillion, went to households with incomes above $380,000.
One of us is a member of Congress and lead sponsor of legislation to institute new tax brackets for income of $1 million a year and above. The other is an affluent taxpayer who has advocated for increased millionaire tax rates and believes those who have gained the most from our nation’s economic system should contribute more to make the system stronger. Both of us think raising taxes on millionaires is the patriotic and prudent thing to do for America.
A decade ago, federal budget forecasters projected a 10-year surplus of $5.6 trillion over the ensuing decade. That surplus evaporated thanks to massive tax cuts in 2001 and 2003, plus two wars paid for by borrowed money, and a major recession caused by the recklessness of some big Wall Street banks.
At the same time, extreme inequalities of income and wealth are at their greatest level since the Great Depression. The wealthiest 1 percent of households own more than 35.6 percent of all private wealth, more than the bottom 90 percent of the U.S. population combined. And at the very top, wealth is even more concentrated. In 2007, the combined net worth of the Forbes 400 wealthiest Americans was almost as much as the combined net worth of 150 million Americans — 50 percent of Americans.
Unfortunately, after a generation of tax cuts for high-income earners, millionaires are paying the lowest effective tax rates since before the 1920s.
Republican leaders and many governors around the country are saying “we’re broke” and advocating a new austerity of budget cuts. But their proposed cuts hit at the vitality of our communities, targeting college loans, food safety, children’s health care and converting Medicare into a voucher program.
“Our country is not really broke,” said Cynthia Carranza, who directs a food pantry in Niles. Carranza has watched the increase in hungry people at her food pantry door even as government support for her program is slashed. “We’re an incredibly rich and prosperous nation. But our wealth is skewed to a very few fortunate at the top. We’re not broken, just twisted.”
Middle-class and low-income families didn’t create these budget deficits or reap economic rewards over the last generation. So our nation’s plan to get our fiscal house in order should not sacrifice the vitality of our middle class and our commitments to address poverty.
Spending cuts should include reductions in our bloated Pentagon budget. We could save more than $1 trillion over the next decade by eliminating obsolete weapons systems and closing a third of U.S. military bases around the world that contribute little to our real security. We can eliminate corporate subsidies to agribusiness and oil companies, saving tens of billions over the next decade.
We should let the Bush tax cuts for high-income households expire at the end of 2012, as they are scheduled to do.
The Fairness in Taxation Act, introduced by Rep. Schakowsky, would generate more than $74 billion in 2011 by adding tax brackets starting at $1 million in income and rising to $1 billion in income. This policy would not only help close the budget gap but would also reduce the extreme inequalities that have led to the erosion of the middle class.
The road forward requires spending cuts and fair tax increases. Let’s start the next 10 years off on stronger fiscal footing.
Rep. Jan Schakowsky, D-Ill., represents the 9th Congressional District and served on the National Commission on Fiscal Responsibility and Reform. Mary Liebman founded Rich American Patriots United for a Tax Increase.