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Wednesday, July 6, 2011

Issue of the Week: Tax the Rich?

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It is amazing that lawmakers who advocate taxing the rich—and by rich, they are often talking about just the top 2% or 3% of the population—face such stiff resistance.

In our neighboring state of Minnesota, the government shut down when Republican lawmakers refused to increase taxes on the state's wealthiest individuals. Yet they had very little problem cutting all levels of public education and public health.

So, on a state level, how do 150,000 wealthy people win on tax issues over the other 5.5 million citizens? Public opinion polls, even those done by the conservative Wall Street Journal, show that huge majorities of Americans want to see the government tax the very rich.

One theory for why it is so difficult to pass this legislation is that it draws the ire of enough individuals who are earning $50,000 or $60,000 per year but think that someday they will become multimillionaires—even though study upon study has shown that the most common way to become a multimillionaire in America is by choosing your parents carefully and making sure they had millions of dollars when you were born.

Second, there is the argument that you don't want to tax the wealthy because they are the ones who create jobs. Yet every student of Macroeconomics 101 has studied the elements of the "Balanced Budget Multiplier" and knows that direct government spending does more to stimulate job creation than do tax cuts, especially tax cuts for the wealthy.

If we want to create jobs and boost the economy, then government should tax the wealthy and spend that money on infrastructure like high-speed rail or invest in education and hire teachers, for example. Yes, Fox News, government does create jobs—just ask all of those private companies that build highways and bridges or make the high-speed trains that are paid for with government contracts, or ask teachers, police, firefighters and trash collectors who it is that signs their checks.

Furthermore, there is no shortage of money in corporate America right now. They are sitting on tens of billions of dollars. The issue is that the private sector is not investing in America—and that is primarily due to lack of demand, and not taxes. If you tax the rich and pay the teachers and firefighters, that will stimulate demand and thereby create jobs. So the myth that taxing the rich will hurt the economy is just that: a myth. In fact, the exact opposite is true.

Is it simply that the wealthy have bullied and bribed the media and the higher education system? Is it that the media who champion the interests of the wealthy get the advertising dollars and economics professors who promote the totally discredited theories of supply-side economics get the research grant money and hefty speaker fees at conferences?

Perhaps that explains the amazing fact that, for example, Wisconsin's Fitzgerald brothers, who lead the state Assembly and state Senate and who represent some of Wisconsin's lower-income rural communities, can be the biggest champions of the rich and still get elected by voters who work hard and support a family on $25,000 or $30,000 a year.

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The Gathering of Southeast Wisconsin Volunteers

At a time when budget cuts are increasingly affecting our social safety net and a growing number of people are not sure where their next meal is coming from, the volunteers of the Gathering of Southeast Wisconsin continue to provide direct help to those who need it most. The Gathering, an interfaith nonprofit that began feeding the area's hungry and homeless in 1982, serves 10 meals weekly at three sites. The meals, prepared and served by hundreds of volunteers, feed about 100,000 individuals annually.

Additionally, the Gathering works with other nonprofit organizations to provide services including legal assistance, medical referrals and distribution of crucial supplies.

Readers who wish to volunteer their time and talents in coordinating, preparing or serving meals or to donate funds to purchase food are encouraged to call 414-272-4122 or visit www.thegatheringwis.org.