U.S. Senate Majority Leader Sen. Harry Reid, left, speaks as Sen. Charles Schumer listens during a news conference Oct. 5 on Capitol Hill.Wall Street Journal
OCTOBER 5, 2011, 5:17 P.M. ET
By COREY BOLES
WASHINGTON—Senate Democrats proposed a 5% surtax on people earning more than $1 million a year to pay for the $447 billion cost of President Barack Obama's job-creation bill, in a move designed to shore up their party's support for the measure.
The proposal would replace the range of tax deductions for wealthy people, oil companies and other businesses that the president had proposed to end to offset the cost of the job-creation initiatives in his plan.
WSJ Deputy Managing Editor Alan Murray and Evan Newmark discuss the politics of the proposed 5% surtax on millionaires put forth by Senate democrats. Photo of Illinois Sen. Dick Durbin: AP/J. Scott Applewhite
Democratic leaders said they hoped to bring the revised plan to the Senate floor next week for debate. But assuming they keep all of their votes, they would need at least seven Republicans to vote in favor of any effort just to start debate on the legislation.
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It's also not clear that the changes would win over all the Democrats who have been opposed to the package. Sen. Joe Manchin (D., W.V.) has voiced objections to the spending portion of the bill, so changing how it is paid for would be unlikely to sway him. Sen. Ben Nelson (D., Neb.) has repeatedly said he would oppose any tax increases given the current economic malaise. Sen. Charles Schumer (D., N.Y.) said the surtax would impact any income earned by people above $1 million annually. It would also impact dividends and capital gains, he said. The New York Democrat initially said it would be in place for 10 years, but an aide to the lawmaker later said the measure would be implemented permanently. If agreed to, the surtax would take effect from Jan. 1, 2012, the aide said.
Senate Majority Leader Harry Reid (D., Nev.) said the measure would raise enough revenue to fully offset the budgetary impact of the president's jobs bill. That package includes a range of initiatives including tax breaks for individuals and businesses, a continuation of jobless benefits for the long-term unemployed, aid to states and local governments to rehire public-sector workers, and significant investments in transportation-infrastructure projects.
The lawmakers were silent on the issue of how the new tax would be balanced against existing Democratic policy of allowing the Bush-era tax cuts to expire Jan. 1, 2013, for individuals earning more than $200,000 a year and couples earning more than $250,000 a year.
It would appear that policy still exists, meaning under Democratic plans, people earning more than $200,000 a year would still see their base rates increase, while those earning more than $1 million would also be caught by the new measure.
Mr. Schumer did say that in many parts of the country, households earning around $250,000 a year would be considered middle class and not wealthy. He said it was "hard to ask more" of households in that income range.
"Many of them are not rich, and in large parts of the country, that kind of income does not get you a big home or lots of vacations or anything else that is associated with wealth in America," Mr. Schumer said.
He also said that a large number of small-business owners would be impacted if taxes were increased on people earning between $250,000 to $300,000.
—Janet Hook
contributed to this article.
But the Senate action doesn't go nearly far enough: Below is a proposal I wrote in 1998 to Tax the Super Rich
Tax the Super Rich
End Poverty, hunger and despair for millions of human beings in America and throughout the World: Tax the Super Rich and create an Economic Boom in the process.
The Super Rich are an abomination before God. They are an abomination to any decent society. They are a serious threat to the Nation's international trade relationships. And they are supreme evidence of a dysfunctional social system guaranteeing social destabilization caused by enormous disparities in the distribution of socially produced goods and services. The Super Rich get that way by unconscionable conduct. By using unfair economic advantages over less economically fortunate or less aggressive individuals, the Super Rich are those individuals and families who run monopoly empires, ruling like kings over mass distribution systems such as energy, computers, drugs, weapons, sports, entertainment, communications, any systems or products that have gigantic mass markets. Once an enterprise or an individual reaches the multi-million dollar bracket, further gains become almost automatic. Bank interest payments alone will continually add gigantic amounts of new wealth to these few individuals and families.
Our current legal and business system favors Big Money enterprise over smaller enterprises. Competition gets reduced and eliminated as corporate monopoly players team together to force out competition from smaller enterprises. It's time to put a stop to the social irresponsibility of letting the Super Rich system continue. Putting enormous fortunes into the hands of a privileged few who earn as much as the combined earnings of 90% of American citizens cannot be tolerated. Putting enormous fortunes in the hands of these few Super Rich while millions upon millions of people live in constant threat of starvation is barbaric behavior and totally unconscionable in any civilized society worthy of the name. We must end the Super Rich socially criminal behavior like we ended Al Capone's criminal career. We tax them out of existence. We regain our economic strength by having Congress legislate either an Act of Congress or an Amendment to the Constitution that simply states:
1) All U.S. citizen will be taxed at a rate of 100% for any income exceeding one million dollars per year, with no exceptions, no loopholes, no way for any individual to acquire over one million dollars per year.
2) No individual or corporation can hold assets exceeding one million dollars per year or transfer assets exceeding a million dollars per year into foreign bank accounts without the same tax law applying.
3) All taxed income over one million dollars per year is to distributed to Social Security programs, Medicare programs, educational grants, low interest home and business loans to low and moderate income families and individuals, and environmental protection projects.
4) A fund will be established for United Nations and various church and charitable organizations' for bringing food, clothing, shelter, and cooperative community self-sufficiency programs and advisers to the world's desperately poor.
Taking this action will only effect the illegitimate prosperity of a very few number of individuals while it will bring the middle-class back into its rightful prominence as the stable economic and social backbone of America. This action will also begin an Economic Boom era for America's economy as the Super Rich are forced to divest their holdings and companies. With divestment mandatory, re-investment will occur and hundreds, if not thousands of new businesses and jobs will be opened up. This action will rightfully gain America new productive members of society as well as opening up huge new markets both within the U.S. and throughout the world. This action will start a worldwide precedent for all nations laboring under the thumbs of about 250 Super Rich individuals who's combined yearly incomes could feed and house the majority of the world's people and allow them the opportunity to rise out of unnecessary poverty and hopelessness. And this action won't stop the benefits of entrepreneurism. There's still plenty of room left for enterprising individuals to prosper with every year with the opportunity to become multi-millionaires.
Society should rightfully honor those individuals who organize economic enterprises that service and enhance our lives. But the economic rewards of entrepreneurial creation must not become ends in themselves or society suffers. A taxation system like this will return us pride in being Good Americans--giving as we receive--just as this taxation system will brings us new days when to be a "millionaire" will really mean something special once again.
Below is reprinted an open letter to Bill Gates by Ralph Nader written in 1998.
With amazing restraint Nader says what Gates needs to hear. We must take legislative action to make sure Gates and the Super Rich get the message. Literally millions of lives are at stake. But recently this year, 2006, the surprise of surprises happens: Bill Gates gets the message! He and his wife form the Gates Foundation with a public goal of divesting the majority of the Gates wealth in support of humanitarian aid causes. Then, Warren Buffett, the second richest man in America, follows the Gates example and also agrees to divest most his wealth in support of the Gates Foundation good cause efforts. It's enough to make you think people really can change! Now what do I do with my harsh criticism of billionaires?
Nader Sends Public letter to Billionaire Bill Gates About Wealth Disparities
For Immediate Release
July 27, 1998
"Mr. William H. Gates
Chairman and Chief Executive Officer
Microsoft Corporation
1 Microsoft Way
Redmond, WA 98052
Dear Mr. Gates:
An astonishing calculation comes from Professor Edward Wolff of New York University and presents an important opportunity for you. Professor Wolff, a wealth economics specialist, estimated that your net wealth is greater than the combined net worth of the poorest 40 percent of Americans (106 million people). That includes their home equity, pensions, mutual funds and 401(k) plans, but excludes their personal cars.
When Professor Wolff made his analysis, your net worth was only $40 billion. Now, according to the latest Forbes listing of billionaires, your assets exceed $51 billion and that may be outdated, given the most recent surge in Microsoft stock. So it is fair to assume that the mostly secondhand cars of these 106 million Americans can now be included and then some.
All this wealth makes you the world's number one working rich person. Apart from the more than medieval size gap between your wealth and theirs, it is more than a little worrisome that tens of millions of Americans have so little net property worth, some after a lifetime of labor. As Jeff Gates, author of the new book - The Ownership Solution - says: "Capitalism is very good at creating capital but terrible at creating capitalists."
The United States now has the sharpest wealth disparity of any western nation. The wealth of the top one percent is greater than that of the bottom ninety percent of Americans. As author Gates observes: "The implications attending inaction are staggering fiscally, socially, politically and even environmentally." If you knew the range of Gates' experience in Washington and the business community, you would conclude that his normative conclusion was not "a random thought."
As might be expected, on a worldwide plane, wealth disparities are staggering. According to the United Nations Development Program, the assets of the world's 358 billionaires were greater than the combined incomes of countries with 45 percent of the world's people (about 3 billion human beings)!
All these chasms are widening against a background of modern and accelerating technology, declining trade barriers, mobility of capital, medical advances and presumably a greater awareness of what history's most tragic mistakes, avarice, monopolies and cruelties can produce.
As one illustration, last year, more people in the world died (nearly six million) from Tuberculosis and Malaria than in any previous year. The growth in gross global GNP and capability did not stop these diseases of poverty from their mass destruction. Concentration of power and wealth and the gross insensitivity of economic and political leadership had a good deal to do with these preventable casualties.
There is obviously a problem of distributive justice that has not been given the attention it deserves by the leaders of global capitalism. I saw a T-Shirt being distributed at a conference recently with the message: "A Rising Tide Lifts All Yachts." A telling phrase for our times.
Warren Buffett, possibly the world's number two working rich person with assets exceeding $33 billion, is your dear friend and fellow card player. Let me suggest that you team up with him to sponsor, plan and lead a conference of billionaires and multi- billionaires on the subject of National and Global Wealth Disparities and What to Do About It. The quantity, quality and distributional dimensions of economic output will drive participants to come to grips with the fundamental purposes of economic systems and their economic indicators.
With the dual sweep of the Gates-Buffett hands, the serious and consequential plight of humanity would become a matter of high alert for those business colleagues and acquaintances of yours who aspire to move from success to significance.
During our brief meeting earlier this year at the Time-Warner 75th anniversary dinner in New York, you replied that you were open to communication (by E- Mail, you smilingly suggested). I look forward to your response.
Sincerely,
Ralph Nader
P.O. Box 19312
Washington, D.C. 20036"
Bill Gates was listening, at least with one ear. He is giving away millions and says he will give all away except enough to support his family. We'll see, so far Gates donations are far less than the Christian tithe of 10% of income and may only mainly p.r. window dressing and tax avoidance tactics. And poor Nader, running for President on the Green Party ticket, forgot his ethical stance and became one of the pols ending up putting George Bush in office by taking just enough votes away from the Democratic contender to win.
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