Who is going to pay for it?

To increase fiscal revenue to finance the social programs guaranteed in an economic bill of rights, we will focus on progressive taxes that cut into the luxuries of the rich, which include:

• Taxes on labor income
• Taxes on capital gains
• Wealth tax
• Estate tax
• Corporate Tax
• Removing the cap on social security
• Wall Street Sales Tax

During the last depression, FDR increased taxes up to 75% for the highest incomes to pay for New Deal programs. This tax rate went up to 90% on the wealthiest during World War II. The chart below highlights a slow decline in tax rates, with a precipitous drop since Reagan came to power in 1980.

When we talk about raising top income rates, we have a historical precedent in the golden age of American capitalism when the economy was growing at its fastest rate. An increased rate to 70 percent for those earning more than $10 million/year would only affect 16,000 Americans, or .05% of the entire U.S. population of 320,000,000. This would generate over $70 billion per year, at least.

Despite the income tax rate becoming more regressive over the past half century, the wealthy often receive their largest income from capital gains, which is a rise in the value of a capital asset like stocks or real estate. According to a paper by Lily Batchelder and David Kamin, capital gains and dividends account for 70 percent of the income of the families that earn $53 million or more a year.

Yet income from capital gains and dividends is taxed at a lower rate than most labor taxes.

Senator Ron Wyden has proposed taxing capital gains as regular income every year. According to Vox, Wyden’s plan would focus on “wealthy Americans who report income above $1 million or assets above $10 million for three consecutive years, taxation would no longer be tied to when people sell their stocks, artwork, or houses. It would instead happen every year that the asset gains in value. If I hold stock worth $20 million one year and it increases in value to $23 million the next year, I would pay tax on that $3 million gain when I file taxes that year.”

In the paper above, Batchelder and Kamin estimated that a mark-to-market tax limited to the top 1 percent of earners could raise over $170 billion per year.

Receipt: $1,700 billion/decade

Wealth taxes are familiar with all homeowners who already pay it through property taxes on their home. What would happen if we extended this tax to the wealthiest in the land?

According to Elizabeth Warren’s campaign , a progressive 2% wealth tax on 75,000 households with a net worth of $50 million or more and a 6% tax on every dollar of net worth above $1 billion, would bring in over $375 billion per year.

Receipt $3,750 billion/decade

Now the wealthy will be reeling just mentioning the proposed taxes above. Yet if we increase the tax rate for the wealthiest on capital and labor, and we tax the currently possessed wealth, we are still faced with generational accumulation of assets thereby nourishing an aristocratic class, which can distort democracy.

According to an estimate from the Joint Committee on Taxation ( JCT), “only 1,800 estates are likely to owe any estate tax in 2018.”

The Institute on Taxation and Economic Policy ( ITEP) writes, “one robust approach to restoring the estate tax is the Responsible Estate Tax Act, proposed by Sen. Bernie Sanders (I-VT). His bill would reinstate the $3.5 million exemption and apply graduated tax rates depending on the size of the estate, ranging from 45 percent to 65 percent, and close loopholes in the tax.” The bill would raise an estimated $32 billion per year in revenue.

Receipt: $315 billion/decade

Beyond progressive taxes on wealthy families, we need to identify tax evasion by corporations. According to ITEP, 60 of America’s biggest corporations paid no federal income taxes on $79 billion in U.S. pretax income. Instead of paying $16.4 billion in taxes at the 21 percent statutory corporate tax rate, these companies enjoyed a net corporate tax rebate of $4.3 billion. These corporations include IBM, Amazon, Netflix, and General Motors. If these companies paid the statutory 21 percent federal tax rate, they would owe $16.4 billion in federal income taxes.

Just returning to the corporate tax rate before Trump took office would generate $135 billion per year. Of course the tax rate could be raised much higher as the chart shows above. And corporate taxes should encourage investment in the physical economy and provide deductions for investments in plants and equipment that create jobs while increasing the tax rate on corporations with runaway shops outsourcing U.S. jobs.

Receipt: $1,350 billion/decade

The current tax rate for social security and medicare is itemized as FICA or Federal Insurance Contributions Act in our paychecks. The employer and the employee both contribute 6.2% for a total of 12.4%. The current rate for Medicare is 1.45% for the employer and 1.45% for the employee, or 2.9% total. Any income above $128,400/year will pay 0% on social security and medicare.

According to the Committee for a Responsible Federal Budget ( CRFB), “Social Security will be insolvent in only 16 years. Social Security cannot guarantee full benefits for current retirees…That means the program will be insolvent when today’s 51-year-olds reach the retirement age and today’s youngest retirees turn 78. At that point, all beneficiaries will face a 20 percent across-the-board benefit cut.”

And according to the AARP, “Social Security Is the principal source of family income for nearly half of Older Americans. Twenty-four percent of those aged 65 and over live in families that depend on Social Security benefits for 90 percent or more of their income.

“In other words, it saves over 22 million people from poverty, including 15.33 million elderly Americans aged 65 and up, 5.63 million adults between the ages of 18 and 64, and 1.11 million children under the age of 18.”

It is important to remember that Social Security was created under FDR because old people were dying in poverty after a life of work. Any cut to social security will also mean cutting short the lifeline for millions of elderly Americans and their families. Cutting social security will cause mortality on the American population.

Simply removing the cap would eliminate the shortfall.

Receipt: Solvency of Social Security and Medicare

According to the Tax Wall Street Party website, “ Wall Street speculators pay no tax on their share of an estimated annual turnover of over $5 quadrillion (5,000 trillion dollars) in stocks, bonds and derivatives. A 1% tax on these sales, equally divided between the federal and state governments, would by most estimates bring hundreds of billions annually into public treasuries and largely solve budget deficits at all levels of government. The Wall Street Sales Tax also discourages the most dangerous forms of speculation, especially derivatives speculation, and helps to level the playing field between financial services — which are now in effect subsidized because they are not taxed — and the tangible, physical production of manufactured goods on which our economic survival depends…Household-level investment must be protected with a $1 million yearly exemption. The 1% Wall Street Sales Tax is…a sales tax directed at professional financial speculators.”

Even a small .01% tax, according to Public Citizen, would raise nearly $77.7 billion per year. Although this is far too low of a percentage for my taste, the receipt is below.

Receipt: $777 billion/decade (minimum)

Grand total of these progressive back-of-the-napkin tax calculations on the wealthiest:

• Taxes on labor incomes Receipt: $720 billion/decade
• Taxes on capital gains Receipt: $1,700 billion/decade
• Wealth tax Receipt: $3,750 billion/decade
• Estate tax Receipt: $315 billion/decade
• Corporate Tax Receipt: $1,350 billion/decade
• Social Security Receipt: Solvency
• Wall Street Sales Tax Receipt: $777 billion/decade

This annual increase of $860 billion/year of progressive tax revenue would ensure that we are moving closer to realizing the Economic Bill of Rights. Some of the taxes proposed above are actually conservative in their estimates like a .01% Wall Street Sales Tax or a corporate tax of only 20%.

Of course the IRS will need to be adequately funded to ensure compliance and crack down on tax evasion of the super rich and transnational banks and other corporations.

There are additional revenue considerations like the role tariffs should play in penalizing goods entering the U.S. that were created by slave labor without environmental standards, and how to steer the Federal Reserve to provide long term loans at low interest to rebuild the U.S. infrastructure and create tens of millions of jobs.

As we move into the most decisive year of modern America, I believe the best framing will help unify the classes and highlight the growing aristocratic upper class and corporate cartels using monopolistic tactics to suppress competition and democracy in the workplace and political arena.

We are in a fight for our lives between working class people and the oligarchy in determining who is going to pay for it.

Get active in 2020 while you still can.

Originally published at https://medium.com on January 15, 2020.