Enjoyed reading about this...it's sensible, not sure it will fly though. Too often the wealthier the wallet, the tighter the fist.

The richest 25% of Americans pay 86% of the country's taxes. The poorer half of the population pays 3% of the nation's taxes. I think that people should have to pay for services -- it makes them much more critical.

The problem is not the rich not paying their fair share. The problem is the huge disparity of incomes. What policy needs to concentrate is making work pay for the average worker.

@Malusinka

The poorest 50% pay much more than just 3% of the nation's taxes. But you are right that the problem is the huge disparity in incomes - over the last 30 years the gains from worker producitivity have not gone to workers - those gains have gone to the top 10%-20% of society (elite and managerial class).

Part of the reason is the effects of globalization, but it is also the cumulative effect of a series of systematic policies which have weakened worker bargaining power. Read The Peasants are at the Gate: Let Them Eat Cake? referenced in the article.

Because of these policies that have funneled the gains of productivity to the top of the income ladder, the median worker has seen virtually no increase in real wages since 1970. Living standards have really only improved because (a) contributions of spouses as they entered labor force) and (b) 30 years of decreasing interest have given the illusion of debt fueled wealth.

@Malusinka

The poorest 50% pay much more than just 3% of the nation's taxes. But you are right that the problem is the huge disparity in incomes - over the last 30 years the gains from worker producitivity have not gone to workers - those gains have gone to the top 10%-20% of society (elite and managerial class).

Part of the reason is the effects of globalization, but it is also the cumulative effect of a series of systematic policies which have weakened worker bargaining power. Read The Peasants are at the Gate: Let Them Eat Cake? referenced in the article.

Because of these policies that have funneled the gains of productivity to the top of the income ladder, the median worker has seen virtually no increase in real wages since 1970. Living standards have really only improved because (a) contributions of spouses as they entered labor force) and (b) 30 years of decreasing interest have given the illusion of debt fueled wealth.

I think I have to read this more than once to fully understand. Seems like a traditional idea, austerity in difficult times. Also, there are trade issues which are causing major economic disparity here and abroad. I am not sure that millionaires paying higher taxes is the answer, maybe a temporary fix, but how does this work for long term, where is the real fix? R

If only. In the U.S. [as well as other countries] greed rules so powerfully. I am forever amazed at the people who support the rich and their rules, and continue to vote against their own best interest and that of their fellow citizens. Very informative.
R~

Hum... I talked about it last October:

This is what we call ‘Achtung’, Baby

No EP at the time though. ;-)

@SheilaTGTG55

the shift in income and wealth towards the elite is fact and is at its highest level since the guilded age of the 1920s. Proposing higher taxes on the wealthy is labelled class warfare, but class warfare has been engaged against the median household for 30 or more years now.

There is a great policy debate going on right now in the blogosphere about government spending restraint vs. expansion in the face of financial crisis. Paul Krugman and similar economists are trying to persuade policymakers that the neo-liberal traditional economic policies will not work in our present circumstances. These neo-liberal policies are behind the calls for government spending restraint, but they cannot work in our present circumstances - if every western country cuts spending at the same time it is not possible to grow out of the financial crisis.

and yet if debt and deficits are a concern, revenue must be raised somewhere. the balance sheet of the median "average joe' is stretched with high debt levels. reducing government spending targetted at these households or raising their taxes will lead to median household spending retrenchment and stagnant or declining GDP, and therefore further economic stagnation.

there is a start choice for the elite and managerial classes - stagnation and decline in economic activity that puts more stress on median households and which may lead to significant class friction down the line, or a renewed social compact that has the wealthiest step up and rescue the economic system.

the economic system is completely broken. the 2008 financial crisis was only the first leg of a multi-decade event. policy makers can take action to address the underlying cause (they are not doing so), or they can wait until the next leg of the crisis is upon us, likely when oil prices spike again (and they will do so).

the housing bubble was a symptom of the real crisis. the underlying cause was the end of the Cheap Oil Bubble. And that is something that has not been addressed, and nothing on the horizon will provide remedy - not ethanol (a fraud that gobbles up food supplies) or natural gas (production of which peaked in the US years ago despite the hype of shale, and of which global production is near peak).

I love this article... Thanks
Cabin Rentals

To me this seems to be as much about German culture as anything. I once remarked to a German exchange student about their pride in workmanship. His view was that Germans have NO pride of workmanship, but instead have an immense sense of responsibility. This sense in an auto worker means that you have promised to maintain high quality. If you are a millionaire you have a responsibility to the less fortunate.

Since most Americans don't feel this very strongly, and since the feeling seems to decrease with increasing wealth, it seems improbable that Warren Buffet, or any other wealthy American, would step up and ask for more taxes. I would like to be disillusioned.

Germans have been deeply scarred by having their economy collapse not once, but twice, in the past century. As individuals they are thrifty to a fault and are sceptical about debt. When I asked the owner of my (German) company what he thought about the FDP (the business friendly party) ideas to cut corporate taxes, he was horrified. He knows how much of an economic problem Germany is facing, and as a citizen, he much prefers a fiscally strong government to a tax cut that would benefit him personally. In fact, tax cuts here don't work to stimulate the economy, because people just save the extra money.

As Napoleon so rightly and brilliantly said, "Religion is the only thing keeping the poor from murdering the rich." Organized religion exists solely for the purpose of control of citizens, and has done a fabulous job, too!! It certainly doesn't create spiritual or moral people, that's for sure! In fact, it breeds Fascism in that too many adherents of a particular religion believe only theirs is the "true" religion and are ususally more than willing to kill and maim to prove it!!.....But what such silly people forget is that their example is the best advertisement for their religion, and if this is a "Christian" nation as some on the Right want to believe, then we're one sorry, sorry, pathetic failure of a Christian nation!

Anyway....just remember....there's far more us than there are of the rich.....and where can they go? Who would have thought that in the 21st century, for God's sake, that most of the world's wealth would be concentrated in the top 1-2% of the population?!! It's obscene!!!!!!

Well, I read your policy suggestion, which was to tax the wealthiest 20% more and possibly use that money to support the wealthy (2nd quintile, ie people earning up to twice the average income). Yes, that will go over well, tax the richest to help the rich.

You ignore the fact that the richest Americans have the most flexibility of how they invest and earn returns. Converting dividend income to capital gains, which aren't taxed, until they are realized is the easiest way to avoid income tax. It's not clear either from history or theory that drastic increases in tax rates will result in drastic increases in tax revenue.

Further, your solution for growing the economy is for gov't to invest in post-peak-oil energy ventures. Perhaps in partnership with business. Who invests in start-up ventures? Usually the rich, who lose their money if they get it wrong. When Gov'ts get it wrong, which they often do, politicians often intervene.

I live in a formerly communist country. I have no faith in the gov't's (any gov't's) ability to make the right investments.

I don't see how any of this changes the gap between rich and poor. In fact, the Gov't's recent policies to help the lower middle class on the ladder to financial success (through home ownership and the enforced savings of mortgages) is a significant cause of the crash.

@Malusinka

Thank you for your comment.

You are misreading some of what is advocated in the article. I do not advocate taxing the wealthy to help the less wealthy...that's a simplistic reading. The article argues that government spending cuts if done on a global level will lead to stagnant or declining GDP (and even more pressure on private debt payments....leading to bankruptices (and more stagnation). These cuts need to hence be avoided, but the only place where government can pick up extra revenue is from the wealthiest. So yes, tax increases on the wealthiest for the benefit of median and poor households.

The alternative is to cut social spending/entitlements on the vast majority, which I will argue will cause significant financial stress on bottom tier households and create a permanent underclass. We may choose this path, but my bet is that it will lead to significant political turmoil.

Re; the peak oil scenario: We are at peak now. There is zero probability that the private sector can alone make the investments and do the planning necessary for a crash pot-carbon transition. The government is the only entity than can step in and impose the kinds of changes necessary. You do not have to believe this or choose this path, but the alternative is a very high and clear likelood of further economic chaos in a few short years. I suspect we will do nothing until then - the political environment won't allow for it. So we will wait until crisis is upon us and then choose to do something. I have no idea what policy approach we will choose in the midst of crisis - they may be inclusive policies, or we may devolve into the politics of exclusion.

Economic growth is dead or will be during the next few years. I do not advocate that we can return to growth any time soon.

Your choice. In the meantime I am preparing on a personal level.

humanity will come to socialism eventually. but the challenge is to get there before the planet is rendered unlivable. if there were an 'environmental doom clock' it would read "kiss your collective greedy, stupid asses good-bye!"

And they're doing this because they're adults who want to remain rich, and realize that if Germany's economy falls, they won't be. American millionaires and billionaires? Selfish children who don't understand such things--or care.