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Working In These Times

Tuesday, Apr 17, 2012, 3:37 pm

Titanic Tax Shirking by Those in First Class

BY Leo Gerard, United Steelworkers President

This article was originally published at the USW blog.

President Obama’s 2011 income tax documents showed on Friday that he paid a significantly higher rate than the significantly richer Mitt Romney, highlighting the titanic level of tax shirking committed by far too many 1 percenters.

President Obama paid 20.5 percent on earnings of $789,674. The President’s total income is the amount Romney raked in every two weeks last year, for a total of $21 million. Romney, the likely GOP presidential nominee, has estimated he’ll pay a tax rate of only 15.4 percent. Romney is among the millionaires and billionaires – the 1 percenters – enjoying the lowest levels in 50 years. Some pay nothing!

That shirking of civic duty contrasts starkly with the values of some of the richest men in the world who went down with the Titanic 100 years ago Sunday – John Jacob Astor IV, Benjamin Guggenheim, Isidor Straus. Abiding by social conventions of the day requiring deference to people perceived to be weaker or more vulnerable, men from first class stepped back and allowed women and children to climb into lifeboats. Men from first class died in higher proportions than did women and children booked in steerage.

A century later, the wealthy have warped such social norms. Now survival of the fittest is the favored philosophy of far too many who book first class seats. They’re certain that their wealth makes them the fittest in what they see as a jungle of human life. They believe they bear no responsibility to those they view as lesser beings; in fact, they think they’re free to savage them.

This survival-of-the-richest behavioral code is barbaric. It’s a denigration of civil covenants. This democracy must reverse it. Revising the tax code would be a tiny, but broadly symbolic step toward asserting that this country is ruled by a majority that respects the basic tenets of civilization, one that reveres the ideal of equal opportunity, which means giving the less fortunate a hand up.

President Obama proposed two measures to move in that direction. One is to let the Bush tax cuts for the wealthy expire at year’s end. The other is the Paying a Fair Share Act, which would require everyone earning more than $2 million a year to pay an income tax rate of at least 30 percent.

Currently, under the Bush tax cuts, the maximum marginal rate has dropped to 35 percent. Few millionaires pay it, however. The 400 richest Americans – all making more than $110 million – paid at an average rate of only 18 percent in 2008. In 2009, 22,000 millionaires paid a rate of less than 15 percent. Nearly 1,500 of them paid nothing, no income taxes at all! In 2010 Romney, whose estimated worth is as much as $250 million, paid an even smaller rate – 13.9 percent – than the 15.4 percent he estimated he’ll pay for 2011.

The nation’s middle quintile, the Average Joe, whose household income was $51,914, paid 16 percent in 2010. A higher rate than Romney. A higher rate than 100 of the very richest Americans who paid rates less than 15 percent. And, of course, a significantly higher rate than the 1,500 millionaires who paid nothing

The income tax was supposed to be progressive. As people earned more, they paid incrementally larger percentages. The idea was not just that they could afford it but also that they should pay more because they consumed more of the country’s resources and services and benefitted more from the nation’s resources and services.

Over the years, however, lobbyists for those in first class convinced the politicians in Congress, 47 percent of whom are millionaires themselves, to cut the rates paid by the rich, to give them special deals and loopholes, and to tax the majority of their income – capital gains – at 15 percent instead of 35 percent. As a result, those who earn their money by sweat of the brow pay higher rates than those who get it from bets on Wall Street.

Romney doesn’t sweat it. Earlier this year when he released two year’s tax returns, he justified the low rates by saying:

“I pay all the taxes that are legally required and not a dollar more.”

What he didn’t mention is that he’s among the Republicans who intend to make matters even worse. He and U.S. Rep. Paul Ryan are promoting a budget that would preserve the Bush tax cuts for the rich, then top them off with more breaks for the 1 percent. This would require slashing and burning programs the middle class holds dear including Medicare and Medicaid.

Not all 1 percenters buy into survival-of-the-richest. A classic example is billionaire Warren Buffett who believes it’s wrong that he pays a lower tax rate than his secretary does. President Obama’s proposal to require millionaires to pay rates no lower than 30 percent is named for him – the Buffett Rule.

The 99 percent must insist Congress pass the Buffet Rule. They must render tax shirking by those in first class as unacceptable as driving with a pet dog strapped to the car roof or tossing a child out of a lifeboat. The survival-of-the-richest attitude is bad for the country and antithetical to democracy.

Full disclosure: The United Steelworkers is a sponsor of In These Times.

Leo Gerard is the president of the United Steelworkers International union, part of the AFL-CIO. Gerard, the second Canadian to lead the union, started working at Inco's nickel smelter in Sudbury, Ontario at age 18. For more information about Gerard, visit usw.org.

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