Deficit, Schmeficit

By Madeleine Kando and Tom Kando

Wisconsin’s Governor Scott Walker and his Republican minions are now trying to take away most collective bargaining rights from public employees (shrewdly excluding police, firefighters and state troopers). Other Midwestern states are moving in the same direction. The purported objective is to help close the state’s $3.6 billion budget deficit. Most states have a budget deficit these days. Wisconsin’s is by no means the worst.

We propose a much better plan, one that would keep public workers from demonstrating and still satisfy the Republican governor and his supporters:

Wisconsin has about 30,000 households making over $1 million a year (It also has 100,000 millionaires, measured by NET WORTH). (Source: Wealth, Income and Power by Sociology Professor William Domhoff).

People who make over a million a year don't get taxed more than someone who makes $380,000. It's all the same to Uncle Sam, whether you earn $380,000 or $10 million, you get taxed at 35% max. Does that seem logical to you?

In addition, most states also levy income taxes. For example, Wisconsin’s rates range from under 5% to nearly 7.75% of income over approximately $300,000.

Why not tax those who make over a million dollars a year a few percent more? Note that we are talking about INCOME, not just being a mere “millionaire,” which many of us approach by just owning a relatively nice house and a few investments.

If 30,000 Wisconsinites would each pay 5% more on each million they make, this would yield $1.5 billion on just their first million! Add to this a 5% tax on the additional millions earned by the super-rich, and presto, your budget deficit is gone. End of story. All these people need to do is forego a few trips to the Bahamas.

You may say that we are mixing apples and oranges - state and federal taxes - and that we are proposing to raise federal taxes to remedy state deficits. But how revenue is increased is irrelevant. There are plenty of mechanisms for the different levels of government to share revenue with each other. The federal government already rebates billions to the states all the time.

We can hear you say: 'Oh, that reeks of socialism. That's not what America is about'. Really? Did you know that in Holland the highest tax rate is 52%? Compare that to the highest bracket of 35% in America, which only kicks in if you make more than $380 thousand! And of course, they also have additional levels of taxation over there, just as we do.

This brilliant plan would not only solve many states' budget deficits, but it would also make this country more equal. On this list of countries by income equality, you can see where America ranks on the 'Gini index'. The Gini index is a measure of income inequality. A country that scores 0.0 on the Gini scale has perfect equality in income distribution. A score of 100 indicates total inequality where only one person corners all the income.

The most equal countries on the list are Denmark and Japan. Holland ranks fairly high in terms of equality. America, as you can see, ranks about the same as some very underdeveloped countries in Africa, like Sierra Leone and Senegal. We are not suggesting bringing back proscriptions. This was the method used by Roman dictator Sulla and emperors such as Julius Caesar to solve their budget deficit. They declared a list of the richest citizens - many of them senators - to be criminals, chopped off their heads and appropriated ALL their assets. We don’t favor this method, even though our own average senator’s net worth is $14 million, and Congress’ total net worth is $2.5 billion. (Source:Your Senator Is (Probably) a Millionaire).

We suggest a more civilized form of redistribution (another taboo word in America, along with “socialism.”). Redistribution based on a more progressive and therefore more just tax system, one more similar to the one in Europe, Japan, Canada and the rest of the Western world.

What is so abominable about the current fiscal debate in this country is that there is a near consensus that the problem is just one thing, namely overspending at the public level. Anyone who dares to suggest that there are two sides to the issue - too much spending and insufficient revenue - gets tarred and feathered. So it’s open season on Unions, on teachers and on the entire public sector. No matter that spending by the states is already way, way down.

As a society, we are driving in the wrong lane, in the wrong direction. We are trying hard to emulate the enormous inequalities of banana republics. Not content to have a top tax rate of 35% for millionaires, the Republicans want to reduce the rate to 29%! The 2010 elections prove that the brainwashing of the public is now complete. leave comment here