Tax on Super-Rich Could Be Tougher
If Bill Clinton can reform our health care system, he would help millions of workers, including, incidentally, several thousand unhappy retirees of Primerica Corp., formerly American Can Co., whose medical benefits were slashed recently by the firm’s executives.
He could even give those retirees a tad of satisfaction if Congress approves his plan to raise taxes on the very wealthy, such as those Primerica executives.
A tax hike on the rich wouldn’t be connected to the bashing of the retirees, of course, but at least indirectly the executives who did it might keep a bit less of the money they expect from the damaging medical benefit cuts.
The trouble is Clinton’s proposal for raising taxes on the wealthy is far too modest to produce the revenue required for a comprehensive health care program, much less to meet other urgent needs of workers and their families whose real income has dropped.
And Clinton’s proposed tax hike on the wealthy wouldn’t give the Primerica retirees much satisfaction since the executives will barely feel it, any more than any other rich American will.
In brief, the Primerica retirees’ beef is that in 1991 it cost the company an estimated $8.7 million for medical benefits for 7,800 retirees who believed that they were covered for life.
Instead, their medical benefits were practically eliminated as Primerica became meaner as it tried to become leaner.
The executives’ action may save the company a few million, if it isn’t overthrown by a court challenge. But the unfairness of the move is dramatized by contrasting the projected savings to the company with the compensation given to a few executives there.
Just one, CEO Sanford I. Weill, took in about $10 million in stock options in 1991, plus another $2.2 million in salary and bonuses--more than enough to pay for the retirees’ medical benefits.
Whether or not the Primerica retirees ultimately win their court case, their predicament--like that of many others--should make it easier for Clinton to improve health care and change our current tax structure, which he charges “has made the rich richer and let the broad middle class take it on the chin.”
He needs a more ambitious plan than his present one, though. For starters, Clinton should first push taxes on the very wealthy at least back to the levels of the late 1970s.
After we see that the wealthy won’t suffer by paying the higher taxes they once did, Clinton could then press for a really progressive tax system that would bring a meaningful sense of fairness to it and significantly increase much-needed federal revenue.
Nobody expects him to adopt radical ideas like those of Sam Pizzigati, whose provocative new book “The Maximum Wage” ties maximum income to the minimum wage.
Pizzigati says no person’s total income should exceed 10 times the minimum wage, which is now $4.25 an hour. That would mean a maximum total income of $170,000 a year for a couple filing a joint return, which he argues wouldn’t be too shabby.
His unrealistic maximum wage idea isn’t going anywhere, since few people like any kind of tax hike, not even on the super-rich.
But his book contains fascinating bits of history about the many failed attempts to get the wealthy to pay their fair share of the cost of running the country.
He reminds us of such generally forgotten facts as President Franklin Roosevelt’s own 1942 proposal for a maximum limit on income.
More importantly, the book spells out how inequitable our tax structure is now and how much more the very wealthy can afford to pay.
(Pizzigati is publications’ director for the 2-million-member National Education Assn. that was an early and important backer of Clinton. But “The Maximum Wage” is Pizzigati’s own proposal, not NEA’s.)
So far, Clinton isn’t talking about enough of a change to make his call for tax fairness impress many workers. Primerica retirees won’t cheer much if he does manage to slightly curb what he calls “outrageous executive pay” by capping corporate tax deductions on CEO salaries at $1 million.
The CEOs could still get a salary of much more than $1 million a year by letting their companies pay taxes on anything more than $1 million, and they could still have those stock options and other goodies.
Clinton does suggest other things to get some tax equity. He wants a top tax rate of 36% instead of the current 31% on those earning more than $200,000 a year. And he wants a 10% surtax on millionaires.
But combine those increases with his other tax proposals to reduce some corporate and individual taxes, and the net gain would be $27 billion. That would barely dent the enormous $4-trillion national debt, much less get medical care to those who have no medical insurance or are underinsured or increase funding of such widely admired programs as Head Start.
Clinton should consider holding a “tax education” conference on national television like his recent, highly successful economic conference.
That way he might generate enough broad national support among people like those Primerica retirees and millions of others to at least help him get us back to the late 1970s, when the top rate was 50% on wages and 70% on other income.
The U.S. Treasury would have an estimated $160 billion more if we did only that. Far more revenue would be raised if we went back to 1950, when the effective tax rate went up to 87% on the top-bracket taxpayers.
The rich didn’t suffer then, nor did the country’s economy. If we do tax the super-rich like that again, we could help reduce, although certainly not close, the enormous and increasing gap between the very wealthy and both poor and middle-class Americans.
