Why We Need Occupy Wall Street

Today—the same day that New York’s Mayor Bloomberg had his cops clear Zuccotti Park—Richard Fisher, the president of the Federal Reserve Bank of Dallas, called for breaking up America’s biggest banks, calling them “too dangerous to permit.” Also today, Warren Buffett, in an interview posted on the Business Wire of Berkshire Hathaway, his company, continued his criticism of American plutocracy. “Through the tax code, there has been class warfare waged, and my class has won,” Buffett said. “It’s been a rout. You have seen a period where American workers generally have gone no place, and where the really super rich as a group increased their incomes five for one in this rarified atmosphere.”

All of which suggests that Occupy Wall Street has already been a stunning success in changing the nation’s public discourse. Not that Fisher and Buffett hadn’t criticized our economic policies well before OWS set up shop in Zuccotti Park, but they are now not just rich and powerful voices crying out in the wilderness. As the following post from Politico’s Ben Smith illustrates, OWS really has altered what the media talk about—the chart measures a Nexis search of print stories, Web stories, and broadcast transcripts that used the term “income inequality,” measured by week:

Politico

It runs from 91 instances in the week before the occupation started to almost 500 instances in the last week of October.

Not that the rising concern over inequality has permeated the Beltway. Democrats on the budget Super Committee, in an effort to meet the Republicans halfway (which is really three-quarters of the way, but that’s another story) have agreed not to raise taxes for the wealthiest Americans above their current 35 percent level. (Raising the capital gains tax, as best we know, never even came up.) Equally awful, Democrats on the supercom may settle for a deal that makes cuts now but defers tax increases to future actions of congressional committees. That’s some deal, guys. The Republicans sold you a bridge to nowhere, huh?

In other words, we need Occupy Wall Street to keep on keeping on and to inspire us to lean on our elected representatives to stop cosseting the rich and start rebuilding the nation.

Comments

Does the author believe that increasing marginal tax rates and rates on investment returns has no effect on employment and economic growth?

Excellent, succinct question.

If the Republicans go into 2012 relying on their old trope that increasing taxes on the wealthy is a job killer they will lose. 2012 will be decided by independent voters who long ago realized this to be self-serving hogwash.

I am a business owner in the top quintile of earners (though certainly not the top 1%). Higher marginal tax rates would encourage me to take less money out of my business for personal consumption leaving more to invest in expansion and new jobs. The rationale is that by expanding the business I create more value so that if and when I sell the business I recoup that investment at the much lower capital gains tax rates.

Mr. Obama has, until the coming election forced his hand, demonstrated a profound lack of interest in the economy beyond rubbing warm, scented oils into the tight shoulders of his friends on Wall Street. Now that he has taken notice, his impotence and fecklessness in improving conditions for the bottom four quintiles is astonishing.

2012 will almost certainly see a third party candidate in the race. The Democrats are welded to the parochial interests of a few core constituencies and the Republicans are welded to a few of theirs. Neither party is offering meaningful, sensible solutions to the problems facing the majority of Americans.

So higher marginal tax rates result in business expansion and more job creation. Got it.

You're not a business owner, and the tax situation that you insist would pertain (Higher marginal tax rates on income versus capital gains encouraging investment in the business rather than taking income) already exists. If it takes government tax policy to incentivize you to do the right thing with your business, then you're not a very good business person. Expanding a business is a decision based on whether there is a market and demand for the expansion, not if the tax situation favors it. The tax implications are a marginal component of the decision vastly overtaken by the ROI based on available market share. Spinning your fantasy to convince someone that independent business owners are going to vote Obama unless the Super-committee shoves higher marginal tax rates down the throats of everyone making over $200,000.00 a year is a pathetic attempt and bandwagon politics.
Let's face it, regardless of tax policy, whether it's higher or lower rates, more or less regressive, or a narrower or broader base, the Government has succeeded in spending more money than it has taken in consistently and continuously. The size of government continues to grow at a rate far outpacing the combination of population growth plus inflation, and in the end, it hasn't solved a single problem that it keeps insisting it must have more money for. It's time to STOP the growth of Government at a minimum, and pare it back where we can. It's become too much for the people to afford, especially in tight economic times. The idea that government money can "stimulate" the economy forgets that the Government has NO money and must take it OUT of the economy and skim their percentage before it gets put back in. So now we have 60 cents to stimulate with instead of the dollar that the private citizen had to spend.....less net economic activity. Wake up people. Class warfare will kill us all in the long run.....just study the French Revolution.........

Au contraire - I've started and owned two business, worked in my father's small business, and was a line officer (having nothing to do with mortgage finance) at three major international financial corporations. I have four degrees in economics and finance - two of them Masters. And the tax situation I insist would pertain does not pit income taxes against cap gains taxes - favorable economic results come from lowering both. As for your ROI, I'll counter with my WACOC - which is a key determinant of ROI. (Look it up in any business school text.) But as to class warfare, you're right on.

Deficits aren't the problem. Lack of spending is. Why do you business owners think spending LESS is going to make your businesses grow? I don't know of a single economist who thinks spending LESS gives you MORE.

OK. I will agree with you as soon as the Hollywood elite do. After all let’s be fair. As soon as Matt Daman, Shawn Penn and the rest of the elite, agree to limit their pay to 20 times what the camera man makes. Why are they making $20 million for a movie that they could not make with out the camera man? Why should they get their money up front and keep it, even if the movie loses money. They have to give up the residuals because the workers don't, i.e. camera, sound, make up etc. That's just not fair to the workers. Maybe if they agree to do that the ticket price will be $4.00 or $5.00 instead of $12 to $15 and the workers that work on the movies will be able to take their families to the movies they worked on, and maybe the popcorn would be $2.00 instead if $8.00. While we're at it, the authors and intellectuals elite need to limit their pay to 20 times what the printers in the publishing house makes. No more $10 million book advance for Obama and Clinton. It's not fair they make so much, when they couldn't get the book printed with out the workers. Maybe then the hard cover book cost $6.00 instead of $35.00 and the workers could afford it.
Ridiculous isn’t it! However, it does sound FAIR. Fair is in the eyes of the beholder, if your ox is being gored it’s not fair. So who is to determine what is fair? The Gov’t is the worst at determining what is fair. Money and politics always get in the way. The market always is the best solution. If people don’t like something they won’t buy it or support it or vote for it. We need to stop thinking BIG GOVERNMENT knows best. Why would we think that?

windriven,
There are conceptual reasons behind certain "preferences" in the tax code. Capital gains tax rates are lower than earned income rates because the former often takes place over many years. The gain calculated by the difference between the purchase and sales prices is exposed to inflation. The preference is intended to compensate for the effect of that inflation. Conservatives long ago offered up indexing gains for inflation but there were no takers.

Also higher marginal rates have little effect on how much money you "take out" of your business. As a "S" corp, your income is taxed, not what you "take out". Higher marginal income tax rates reduce ROI and therefore reduce investments by businesses, not the other way around. I own a business. Are you sure you do too?

Ooooh, a National Discussion on Income Inequality! Will this be like the National Discussion on Race, which included no frank discussion of race issues at all, or will it be like the National Discussion on Civility, which consisted entirely of name-calling and ratcheted-up incivility? I can't wait.

The trouble is that those who call for "discussions" rarely want true discussions. This article is a case in point. There are real issues with income inequality (and, more to the point, middle class stagnation and erosion) but they only marginally involve the tax code (pre-tax income inequality is greater than post-tax income inequality, despite what the author seems to want readers to believe). They involve complex systemic issues which are difficult to address (and which require real discussion). Many of these are issues which politicians don't want anyone to talk about, like excessive immigration's impact on labor rates.

I would like to see someone calling for a "national discussion" actually try to promote discussion for once, and not just devote his efforts to advancing a pre-existing partisan/ideological agenda.

Why is this a good question? You guys act as if there's no data on this question. There is. Under Clinton, capital gains taxes were about 29%. Under Bush, 15%

How'd that work out for the US? That 50% decrease in the tax provide jobs and make America stronger?

America is tracking the trend line to End Of Empire laid by
Rome-Spain-Holland-England
Over extension worldwide on Debt.
Small group own most of the wealth
 
10% own 70% net wealth  80% own 15%
10% own 70% financial wealth  80% own 7%
10% take 50% individual Income  50% take 13%
 
70/15  70/7  50/13  = 190/35

Simplistic-- clear picture—can you see it? Congress cannot! White House cannot!

Each of 10% own $7 of net wealth and each of 80% own $0.18
Each of 10% own $7 of financial wealth and each of 80% own $0.09
Each of 10% take $5 of individual income and each of 50% take $0.16
 
$7  to  18 cents ratio: 700:18
$7 to 7 cents 700:7
$5 to 16 cents 500:16

Is that not a picture of Third World Country?
Is that not a picture of England in End of Empire?
Is that not a picture of a Dictatorship
I cannot paint a clearer picture but sadly our president is too busy preaching to his choirs
The members of congress are too busy counting $$$$$$$$$$$$$ from Wall Street.
Ministers of America $$$$$$$$$ Got Your Tongues?
Where are our leaders? Counting $$$$$$$$$$$$$$$$$$$$$??????
If my numbers are wrong advise cswinney2@triad.rr.com I correct.

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