Between The Lines - Richard Wolff: GOP and Big Winners of Trickle-Down Policies Now Charge They are Victims of "Class Warfare" (Week Ending Oct. 7, 2011)

Award-winning Investigative Journalist Robert Parry (1949-2018)

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GOP and Big Winners of Trickle-Down Policies Now Charge They are Victims of "Class Warfare"

RealAudio MP3

Posted Sept. 28, 2011

Interview with Richard Wolff, professor of economics at New School University, conducted by Scott Harris

When President Obama outlined his plan on Sept. 19 to raise $1.5 trillion in new taxes primarily targeting the wealthy in order to reduce the nation’s deficit over the next decade, Republican politicians and conservative activists were quick to brand the president’s plan as “class warfare.” The White House proposal would add $800 billion in revenue by ending the Bush-era tax cuts on households with an annual income of more than $250,000, and gain an additional $700 billion by closing tax loopholes and deductions.

Responding to his conservative critics, Obama rejected the class warfare label and stated that after a decade of unchecked spending, every American has to pitch in and pay their fair share. Otherwise, the president maintained, the country will be forced to cut programs benefiting the middle-class and poor while protecting tax cuts for the wealthy. He also invoked the so-called “Buffett rule,” which was coined after the multibillionaire Warren Buffett complained that he shouldn’t pay a lower rate in taxes than his secretary.

Republicans have long advocated for their so-called, “Trickle Down” philosophy, which asserts that giving tax breaks to America’s wealthiest citizens creates jobs for the rest of the country – a claim widely challenged by many economists. Between The Lines’ Scott Harris spoke with Richard Wolff, professor of economics at the New School University’s graduate program in international affairs. He examines the dubious right-wing charge of class warfare in light of the major reductions in taxes on the wealthy and corporations resulting in growing income inequality in recent decades.

RICHARD D. WOLFF: If you go back to the 1940s and 50s, roughly half a century ago, you would notice very quickly that taxes on business and taxes on rich people were much, much higher than they are today. I can give you two quick examples. At the end of World War II, for every $1 that Washington got by taxing individuals in the United States, it got a $1.50 from business. In other words, the business community paid 50 percent more of Washington's revenue than the individuals in America did. Today, the same relationship is quite different. For every dollar that Washington gets from individuals, it gets 25 cents from business. And that means that over the last 50 years, the business community in America has been stunningly successful in shifting the burden of taxes off of itself, onto individuals.

At the same time, among individuals, it's even more dramatic. In the 1950s and '60s, the income tax rate on the richest Americans was 91 percent. For every dollar that a rich American earned in the '50s and '60s, over the cutoff point around $100,000, that rich person had to give 91 cents of that dollar to Washington and was only allowed to keep 9 cents for himself or herself. Even as late as the 1970s, the tax bracket, the tax rate on the richest Americans was 70 percent. For every dollar over $100,000 that a rich American earned, he or she had to give Washington 70 cents; they got to keep only 30.

Let me compare that to the way that it is now. In 2011, the richest Americans pay an income tax rate of 35 percent – that's right. For every dollar over roughly $100,000, a rich person today gives Washington only 35 cents and keeps the other 65 cents for himself or herself. Over the last 50 years, taxes have been shifted from business to individuals and from the richest individuals to the middle and the poor in the United States. So I would call that class war just like my conservative friends do. The only difference is I can show that it's been a massive war conducted over half a century and much larger in its impact on the mass of people than anything Obama has proposed in reverse. In fact, all Obama is proposing to do is to recover a very small portion of what the middle- and lower-income portions of American society have lost in this class war over the last 50 years.

BETWEEN THE LINES: Professor Wolff, another pet slogan that the right has repeatedly used to attack any kind of progressive taxation is the term "redistribution of wealth." They accused Obama of that during the 2008 campaign. The changes in tax rates over recent decades – how does that redistribute wealth in our country towards the wealthy and away from working families and the poor?

RICHARD D. WOLFF: What I find striking is the ability of the conservatives and the business community to talk about redistribution as if they are the victims rather than the perpetrators. It's stunning. Thirty years ago, the 1970s and '80s the United States was a less unequal economy than that of any other major industrial country. In other words, the gap between rich and poor in the United States, say in 1970, was less than the distance between rich and poor in places like England or France or Germany or Italy and so on. Today, that situation has been completely reversed. That is, the rich have become much, much richer and the mass of the Americans have become somewhat poorer. In other words, the United States now is the most unequal of the advanced industrial countries in the world.

And so the bottom line is, unless you want to think of it as purely coincidental, the last 30-40 years during which taxes on rich people and businesses have been reduced has also been the time when the distribution of wealth in the United States was shifted from middle and low income people to those in the top who have done the best over the last 30 or 40 years by a wide margin, not only because of the stock market boom and the stagnant wages in the United States, but also because of the change in the tax burden so that again, when Obama is charged with a very modest effort to go back a little on the redistribution that has happened, the right-wing screams "redistribution" as if they haven't been the beneficiaries of a much bigger and longer lasting redistribution for the last 30 years.

Richard Wolff's latest book is titled, “Capitalism Hits the Fan.” Find links to Wolff’s and other articles examining class warfare at www.rdwolff.com.