While President Obama capitulates to right-wing Republicans by extending tax cuts for the wealthy, some Democrats in Congress are pushing what is not only good policy – but smarter politics. Bernie Sanders in the Senate and Jan Schakowsky in the House have sponsored legislation to raise taxes on millionaires – rather than restoring the Clinton tax brackets for those making over $250,000. One Capitol Hill newspaper noted this
deviates from where the White House currently stands, as it specifically targets the very rich. Moreover, it puts Republicans in a far more awkward position – as they are left defending tax cuts for millionaires. There is a huge difference between rich people making $250,000 a year and those making $2 million a year, and the high upper-income tax brackets we saw in the 1930’s and 1940’s were likewise similarly targeted. Even in anti-tax states like California, voters have approved tax increases for millionaires – which makes this legislation one of the most hopeful things to come out of Washington lately.
In December, Obama threw progressives under a bus – when he caved to the Senate GOP minority on Bush tax cuts
, while admitting at the same time that the American public did not want to see these tax cuts renewed. But even though Republicans are out of touch with the public will, he was going to do it anyway. It was truly the lowest point of his Administration.
Vermont Senator Bernie Sanders and Illinois Congresswoman Jan Schakowsky admit they wanted Bush tax cuts for those making over $250,000 to expire. But having lost that battle in December, they are proposing a “surcharge” for incomes of over one million dollars. Schakowsky’s bill creates a new tax bracket at 45% for those making $1 to $10 million a year, and 49% for those who make above $10 million. “I certainly don’t see it as a counter to the real and specific debate on the Bush tax cuts,” she said. “The fact is, Republicans don’t want to do anything to take away tax breaks from the richest Americans, and we want to stimulate that debate.”
Of course, it also inoculates Democrats from the predictable Republican attack – every time they support tax increases for the rich – that Democrats “think you are rich.” The average successful person can see that if they make less than $1 million per year, they are not going to be affected. At a time of record budget deficits, the Sanders proposal would raise $50 billion in revenue – and Schwakowsky’s measure would bring $75 billion.
Until 1963, the richest Americans paid over 90% of their income in taxes – and it wasn’t until Ronald Reagan that it dipped below 70% – which makes the Sanders-Schakowsky proposals very modest, historically speaking. But what’s interesting is if you look at who paid those high tax rates
, who constituted as “rich” was well above what $250,000 will get you today. Until 1965, the top tax bracket was for people who made over $400,000 – and during World War II, the 80% tax rates only affected those making over $5 million.
A “millionaire’s tax increase” is politically viable – because the public supports raising taxes, when they understand that they’re not the one who will pay them. That’s why, for example, a tax on oil company profits always polls very well. In 2004, California voters passed Proposition 63 by State Senator Darrell Steinberg – a 1% surcharge on incomes of over $1 million, which was specifically targeted at funding mental health services.
Sanders told The Hill
the Obama Administration had not expressed interest in his proposal, but he was “not surprised” about that. “We have not heard the President has indicated that he is interested in coming up with revenue,” he said, “just that he wants to negotiate with Republicans on spending cuts.” Ironically, Jan Schakowsky was an early Obama supporter in his U.S. Senate bid – back when he was a little-known state senator.
Not only would Obama be turning back on his old friends, but not supporting a modest tax increase on millionaires is suicidal politics.