XIV. Agricultural/Food Policy

“Concentration” is the word that best describes the agricultural/food sector of the U.S. economy. The largest nine percent of farms produce 60 percent of output. The top ten percent of farm operations typically take in 75 percent of crop subsidies. There are 300,000 large commercial farms. Most of these subsidized crops are fed to livestock, manufactured into oils, refined grains, processed food ingredients or ethanol.

A relative handful of agribusinesses and food manufacturers have a stranglehold on every link of the food chain. These few giant businesses can control how food is produced, the price at which it is sold and the prices that farmers receive. The percentage of the market controlled by the top four firms are as follows: pork packers – 66 percent; poultry processors – 58 percent; beef packers – 83 percent; fluid milk processors – 46 percent; and grocery retailers – 48 percent.

The top four supermarket chains control nearly half of the national market, but on the local level, the control may be as high as 70 percent.

Even in regard to seed, most of the soybeans and the corn cultivated in the United States is grown from seeds containing genetically engineered traits covered by Monsanto patents.

When farmers have tried to respond to price pressures generated by the control exercised by so few giant firms by shifting to more intensive, larger operations, they drive down the price of their product through over-supply.

In regard to chickens, pigs and cows, in particular, the concentration of so many animals creates huge volumes of animal waste. According to the Pew Commission on Industrial Farm Animal Production, giant confined livestock and poultry operations produce half a billion tons of manure each year, more than three times as much as that produced by the entire U.S. population.

Recently, I attended a New Mexico Sierra Club event at which a representative of Food and Water Watch spoke as part of a 23-state tour to promote a fair farm bill. The new farm bill seeks to level the playing field by breaking up the agribusiness monopolies; creating agricultural reserves to ensure food security, rebuilding local infrastructure; and promoting environmental stewardship.

Since local markets tends to be more dominated by supermarket chains than is found in the national average, the Food and Water Watch representative called for the creation of local bodies that could negotiate with local food outlets to carry more of the locally grown produce. Farmers, he pointed out, also need help in getting their produce to market.

First Lady Michelle Obama has commendably taken on the cause of reducing the nation’s rapidly growing obesity problem. Writing in the November 19, 2011 Albuquerque Journal, Esther J. Cepeda says that one-third of all children and adolescents up to age 19 are overweight or obese: a rate that has more than tripled in the past 30 years, according to the Centers for Disease Control and Prevention.

An expert panel was led to suggest that kids who haven’t hit puberty need cholesterol screenings — and diabetes screenings, too, for good measure.

Congress isn’t helping on the obesity front by caving in to heavy lobbying pressure to, as Cepeda puts it: “maintain a school lunch program status quo where high-salt foods rule, where the thin layer of tomato sauce in a  slice of pizza counts as a vegetable, and deep-fried potatoes are passed off as a healthful option instead of the once-in-a-while treat they should be.”

Two other scary future prospects to note: 1) the International Diabetes Foundation predicts that one in ten adults in the United States could have diabetes by 2030; and 2) obesity could carry an annual cost of $350 billion by 2018.

A food desert is a major problem in providing for equitable food distribution. The USDA defines a food desert as a low-income census tract in which more than 500 people or 33 percent of the population live at least a mile from a supermarket that does at least $2 million in annual sales. In rural areas, anyone living 10 miles from such a store is in a food desert.

Michele Obama believes that a more equitable distribution of supermarkets, especially in urban areas, would help the diets of those not now getting a good diet. Her contention is disputed by Barry Popkin, lead author of a study published in the Archives of Internal Medicine. The study found that there is no evidence that building supermarkets will change peoples’ diets.

What Should Obama Do or Have Done?

The Food and Water Watch representative at the Sierre Club event in New Mexico said that the Obama administration had been working very closely with them on their fair farm bill but, more recently. has pulled back from that involvement. Thus, one thing the jObama administration can do is throw its full weight into getting the fair farm bill enacted into law.

President Obama has a bully pulpit but he has not used it to build public awareness of  how detrimental to the nation is the concentration of control by a few very large firms of the agricultural/food sector.  This sector may be another policy area in which the Obama administration mantra might not be “Yes we can!” but “Yes we can maintain the status quo.”

A final note is that no matter how commendable is Michele Obama’s crusade to reduce the nation’s obesity problem, there is only so much that first ladies can do. It is time to bring obesity reduction into the legislative arena and the capitulation of Congress to the agricultural/food lobbyists must be countered with the establishment of a more nutritious and healthy school lunch program.

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XIII. President Obama’s Assault on Church-State Separation

Barack Obama made a speech on July 1, 2008 at a campaign rally in Zanesville, Ohio, in which he said that faith-based recipients of government aid can’t proselytize the people they help and they can’t discriminate against them, or against the people they hire, on the basis of their religion.

The importance that President Obama assigned to George W. Bush’s faith-based policy was that he created his own faith-based office within about two weeks of taking office. On February 5, 2009, Obama announced the creation of the White House Office of Faith-Based and Neighborhood Initiatives. In that announcement, Obama asserted that the expression of faith is a force stronger than government, even though in that same announcement he expressed his strong support of separation of church and state. A faith-based office would seem, on the surface, to weaken that separation.

Besides creating the faith-based office, Obama created an advisory council of 25 members, who would serve one-year terms.

President Obama’s Faith-Based and Neighborhood Initiatives office has come under fire for proselytizing,  not taking action to prevent discriminatory hiring and, in general, creating an exact replica of Bush’s faith-based office. Obama has been accused of proselytizing himself by using the office to push a climate change agenda. The charge would represent a departure for Obama, since environmentalists have accused him fro not doing anywhere enough on climate change.

The second attack on Obama came after he observed at the National Prayer Breakfast in February 2010 that his administration had “turned the faith-based initiative around.” His statement triggered forceful criticism. Sarah Posner, of Citizens Against Religious Discrimination (CARD), wrote, as follows, in Religion Dispatches:

– “Obama had made three pledges: to end the exemption allowing         federal grantees to discriminate in hiring based on religion; to require houses of worship receiving federal funds to form separate non-profits so that federal funds would not be directed to sectarian organizations; and to put in place oversight and monitoring of proselytizing by federal grantees.

– “As president, Obama decided instead to address instances of employment discrimination on a ‘case-by-case basis’ and to only recommend but not require separate non-profits. The administration has not unveiled any plans to beef up oversight of proselytizing by grantees.”

The Rev. Barry W. Lynn, executive director of Americans United for Separation of Church and State, said that “in all significant ways, the Obama faith-based initiative right now is the same as the Bush faith-based initiative.”

President Obama also drew fire from Joe Solmonese, president of the Human Rights Campaign, who accused him of allowing discrimination against lesbian, gay, bisexual and transsexual Americans.

President Obama’s position is that anti-discrimination rules apply only to the narrow program the government is funding and not to the other missions being carried jout by a grantee. The Obama administration has not unveiled any plans to beef up oversight of proselytizing by grantees.

Among the things Americans United and CARD are calling for:

– Revoke a June 2007 legal memo issued by the Justice Department’s Office of Legal Counsel that asserts that a 1993 religious freedom law gives religious groups the right to take tax funds and still discriminate on religious grounds in hiring. This interpretation, the joint letter asserts, is “erroneous and threatens core civil rights and religious freedom protections.”

– Issue policies making it clear that social-services providers must give proper notice to beneficiaries of their religious liberty rights and access to alternative secular providers.

– Require that houses of worship and other religious institutions that infuse religion into every program create separate corporations for the purpose of providing government-funded social services.

The position of the faith-based groups is that the Civil Rights Act of 1964 allows them to restrict hiring to those who share their faith.

What Should Obama Do or Have Done?

Although the recommended changes called for by Americans United and CARD would remove a legal basis for discrimination and would create separation between a religious institution’s own mission programs and government-funded social programs, these kinds of changes would be difficult to monitor. The faith-based office also adds another layer of government and adds another expense item in the budget.  Monitoring compliance would be another administrative headache.

The best course of action is to eliminate the faith-based office, as that is the decision most in concurrence with separation of church and state.

President Obama’s Slippery Slope on Taxes

Supporters of President Barack Obama often depict him as playing chess while his Republican opponents are playing checkers. Much the same is being said of Obama and the Democrats on the deficit-reduction supercommittee for allowing the supercommittee to fail in its mission. The argument is that the Republicans are now in a bind because they will need to try to pass a separate bill in order to permanently extend the Bush tax cuts. But it would seem that President Obama is in substantially the same position as he was in December 2010 when he agreed to extend all the Bush tax cuts for two years.

In December 2010, Obama wanted to extend unemployment benefits and cut the FICA tax by two percent for employees for one year. He now wants to extend unemployment benefits, cut the FICA tax by 3.1 percent for both employees and employers, and maybe get the parts of the jobs bill enacted that have failed before.

After Obama agreed to extending the Bush tax cuts, he vowed that he would fight against renewing them once again for the wealthy. His present position is that he wants the cuts preserved only for individuals earning less than $200,000 annually and households earning less than $250,000 annually; however, it is very unlikely that Republican lawmakers will agree to extending only part of the Bush tax cuts.

President Obama’s position is complicated by his present argument that in not agreeing to lower the FICA tax rate, opponents of the reduction are actually increasing taxes for those subject to the FICA tax. If Obama can’t get the partial extension of the Bush tax cuts, he may again be forced to agree to extension of all of them so as not to raise them on lower- and moderate-income taxpayers.

 

Today I read an interesting analysis of the Obama performance on taxes, done by economists at the American Center for Progress. The Center’s economists calculated that under Obama, taxes have been cut by $850 billion, or 1.5 percent of gross domestic product. If Congress passes the next set of Obama’s proposed tax cuts, the total will be $1.1 trillion, or nearly two percent of gross domestic product — close to double the size of the Bush tax cuts in his first term.

In his 12-year plan, Obama proposed total tax increases of $1 trillion, meaning that he has already cut or proposed to cut more in taxes than he is proposing to raise over the next 12 years. His proposed future spending cuts would thus not be accompanied by any increase in taxation revenue.

The economists of the Center for American Progress also charted the relationship of the top marginal tax rate to real annual growth from 1950 through 2010. They found that in the 1950s, with a top marginal tax rate of over 90 percent, real annual growth averaged four percent; however, when the top rate was 35 percent, real annual growth was under two percent. The highest annual growth occurred when the top rate was from 70 to 85 percent and the second highest rate was when the top rate was 90 percent plus. The lowest growth was when the top rate was 35 percent.

 

 

XII. President Obama’s Timidity on Organized Labor (continued)

Measured against these descriptions of actions President Obama has taken in support of organized labor — with his support of collective bargaining rights for public employees being minimal in nature — Obama has been largely hostile to organized labor. It has already been mentioned that Obama abandoned the Employee Free Choice Act. He supported and got legislation passed establishing Free Trade agreements with Colombia, Panama and South Korea. Labor unionists are particularly incensed with the Columbia agreement because ever since we started funneling billions of dollars to Columbia to fight drug cartels, many union leaders and activists have been killed without any effective counter-actions by the government of Columbia. The South Korean agreement is opposed because it will likely cost jobs among unionized auto workers in the United States.

Barack Obama campaigned on raising the minimum wage from $7.25 to $9.50 an hour — a measure strongly supported by labor unions because it will establish a higher wage floor — but he has not touched the issue since.

In regard to unionized teachers, President Obama has seemingly gone out of his way to alienate them. He continues to support high stakes testing, even though that deforms the educational environment by elevating the teaching of a subset of skills over the broader educational development of the child; also, high stakes testing provides an incentive for teachers to “teach to the test.” He is a strong proponent of closely tying teacher evaluation to student performances on tests. Obama is also a great friend of charter schools, even though 95 percent of them do not have unionized teachers.

On a more symbolic level, President Obama had a very public meeting with former Florida governor Jeb Bush. Bush is a strong foe of unionized teachers and a leader in the movement to expand online education, which diminishes the role of teachers.

Larry Hanley, president of the Amalgamated Transit Union, has rendered what might be the consummate organized labor verdict on Obama: “Obama campaigned big, but he’s governing small.” An Associated Press article of September 5, 2011, describes labor unions shifting money out of Democratic congressional campaigns and into states to counter Republican anti-union measures.

Although the following section is not limited to unionized workers, its overall premise is that the absence of unions is mainly responsible for the small worker share of monetary gains.

One of the most illuminating pictures of how little of the economic pie gets cut for the benefit of the workers in a company or corporation is drawn in an article entitled “Where’s the economic recovery?” by Harold Meyerson, appearing in the March 9, 2011 Washington Post. Meyerson uses as a prime reference, Mark Whitehouse of the Wall Street Journal, who looked at how businesses were dividing up the economic pie, 18 months into every previous recovery from a recession since 1947. Whitehouse found that 58 percent of the increases in productivity trickled down to workers in increased wages. In the latest recession, in contrast, wages rose by a minuscule 0.3 percent. Productivity increased 5.2 percent during the last recession but just six percent of the productivity gains have gone to the newly productive workers.

Where is the other 94 percent going? It is going to funds on the corporate balance sheets; to shareholders and to companies’ stock buybacks. In the first three quarters of 2010, according to Standard and Poors, companies’ purchase of their own shares came to $212 billion.

According to research from the National Employment Law Project, as of January, 2011, 40 percent of the jobs lost in the latest recession came from higher-wage industries, but just 14 percent of the jobs created during the recovery were in those industries. The top three growth occupations were retail sales clerks, cashiers and food preparers; each has a median hourly wage of less than $10.

Harold Meyerson attributes much of the imbalance in monetary gains during the recovery to the absence of unions: the Bureau of Labor Statistics puts at 93.1 percent the nonunion share of the entire private sector work force. Meyerson concludes: “Absent unions, workers are dependent entirely on management’s willingness to share their increased revenue with their employees. And absent unions, no such willingness exists.”

What Should Obama Do or Have Done?

The major thing that President Obama should do is to begin making the case why the almost total demise of labor unions has been a major cause of the severe economic doldrums we now are in. In that context, he should make the case for the passage of the Employee Free Choice Act and also urge raising the minimum wage. He also needs to show some real fire and fervor in raising public opposition to the assault on collective bargaining rights of state and local public employee unions.

As developed in the blog on education, charter schools have many flaws and Obama puts far too much stock in them. Charter schools are nominally public but have less accountability and more student selectivity than do fully-defined public schools.

President Obama should also stop championing high stakes testing and moderate his linking of teacher evaluations to student test scores.

XII. President Obama’s Timidity on Supporting Organized Labor

Organized labor has brought about many of the societal beneficial changes in the work life of the United States: the eight-hour work day, the 40-hour work week, health and retirement benefits and the prohibitions on child labor. Organized labor has played a major role in the development of the middle class. Yet organized labor has fallen on perilous days, beginning with the regime of Ronald Reagan, who dismantled the air controllers union, Patco. The Bureau of Labor Statistics puts at 93.1 percent the nonunion share of the entire U.S. work force. At its height, organized labor comprised about 25 percent of the nation’s work force.

It isn’t the case that nonunion workers don’t want to belong to a union: polls show that 40 million unorganized workers wish they had a union in their workplace but fewer than 100,000 employees are able to form new unions each year through the current National Labor Relations Board election procedures. The deck is stacked against unions through the proliferation of right-to-work states and employers’ anti-union campaigns rife with illegal coercion.

In 2009, for example, according to Gordon Lafer, writing in the October 10, 2010 Nation magazine, more than 14,000 union supporters were illegally fired, suspended or otherwise financially punished in the past year. Under rules now in effect, pro-union employees are not provided with a list of eligible voters until seven days after an election has been scheduled.

The Employee Free Choice Act is the vehicle labor unions have chosen to unstack the deck against them. The proposed legislation removes current obstacles to employees who want collective bargaining and guarantees that workers who can choose collective bargaining are able to achieve a contract.

More specifically, the Employee Free Choice Act allows employees to form unions by signing cards authorizing union representation. The Act would also increase penalties on employers found to have willfully violated employees’ rights.

The Obama administration abandoned the Employee Free Choice Act in the face of intense opposition by big business. Nothing unites corporate lobbyists more than their animosity to labor unions.

President Obama has not been entirely hostile to organized labor. He has achieved some smaller victories for organized labor — “governing small.” as one labor leader put it — such as granting the nation’s airport screeners  limited bargaining rights. His appointments to the National Labor Relations Board and other agencies have made it easier to organize workers in the airlines, railroad and health care industries.

President Obama has come out against the Wisconsin legislative stripping of collective bargaining rights from all public employees, except firefighters and police unions. Also, he belatedly endorsed a vote against a ballot proposition — Initiative Two — which would have supported the draconian legislation against public employee unions pushed through the Ohio legislature by Governor John Kasich. His actions in regard to both Wisconsin and Ohio were marked by timidity.

During the presidential campaign, Barack Obama said that if organized labor’s very existence was threatened, he would put on a pair of comfortable shoes and walk a picket line. Yet, in the Wisconsin case, the sum total of his actions were to make one speech opposing the action of the legislators and governor, and exhorting the governors at the National Governors Association meeting to support collective bargaining rights. A woman in Wisconsin, noting Obama’s campaign promise, offered to buy him a pair of comfortable shoes in which to march. Obama ignored repeated appeals to visit Wisconsin during the effort to recall GOP senators who supported the decimation of bargaining rights.

The Ohio case is an interesting study in how President Obama tries to avoid taking definitive positions on controversial issues. When Bill Press, talk show personality and Democratic Party activist, learned from an Ohio congresswoman that, to her knowledge, Obama had not taken a position on the ballot initiative on collective bargaining rights, Press decided to ask Obama spokesperson, Jay Carney, if Obama had taken a position on the vote to take place in five days; also, he asked Carney if Obama had any plans to travel to Ohio before the election. Carney replied that he knew of no travel plans but that Press could infer from Obama’s Wisconsin position what his position on the Ohio vote would be.

Subsequently, Press received an email from an Obama deputy spokesperson, saying that Obama would probably favor a “no” vote. Press was urged by Senator Sherrod Brown’s office to get a more definitive statement, which Press subsequently did. Press’s radio announcement of Obama’s position was the only one I have been able to find.

The next blog will focus on some of President Obama’s anti-union positions and actions, particularly in regard to teachers’ unions. Also presented will be a description of what Obama should do or should have done to foster the trade union movement.

 

 

Supercommitte Democrats’ Betrayal and Some Suggestions for the 99 Percenters (continued)

The 99 percenters can also become a counter-force to a building consensus that corporate taxes have made U.S.-based corporations noncompetitive in the world economy. Even former president Bill Clinton has proposed reducing corporate taxes from 35 percent to 28 percent.

Corporations paid about 30 percent of total U.S. taxes in the 1950s and their share is now down to under seven percent. The corporate share of taxes paid to state governments is now only 50 to 60 percent of what it was at its height. According to a 2007 study by the Bush Treasury Department, between 2000 and 2005 U.S. corporations paid only 13.4 percent of their profits in corporate income taxes, well below the Organization of Economic Corporation and Development (OECD) average of 16.1 percent

The Congressional Budget Office has concluded that two-thirds of U.S.-based corporations pay no federal income tax. A study of the top 100 corporations in the Fortune 500 found that 25 paid their CEOs more than they paid in income taxes. A 2008 study by the Government Accountability Office showed that 83 of the 100 largest companies operate subsidies in nations that are considered to be tax havens.

A look at just two very large corporations reveals the egregious nature of our corporate tax structure. General Electric earned $14.2 billion in profits in 2010, paid no corporate income tax and actually accumulated $3.2 billion in tax credits. Prudential Financial lowered its tax bill by establishing 36 subsidiaries in tax-haven countries. It paid its CEO $16.2 million last year and received a $722 million refund on its federal corporate income taxes.

Thus, the 99 percenters can advocate a corporate tax structure going back to the provisions found in the tax codes of the 1950s, when corporations were contributing a much larger share of the tax burden and the economy was booming.

A final suggestion I would make is that the 99 percenters should work to help revive organized labor. Labor unions once constituted 25 percent of the labor force and now they are down to about seven percent. The fruits of economic activity are going increasingly to ownership, management and shareholders. The consequence of the public antagonism toward organized labor, set in motion by the very destructive presidency of Ronald Reagan, has come home to roost, as workers don’t have the financial resources to contribute to demand, the main driver of business growth. It is not taxes nor government regulations that are holding up business growth: it is lack of demand.

The Washington Post reported that half of all U.S. workers earned less than $26,364 in 2019 — the lowest median wage since 1999, adjusted for inflation.

In the final analysis, it was the growth of organized labor that was a major factor in building the middle class in the United States.

Free trade agreements have facilitated production of products by very low-paid workers, thereby contributing to the outsourcing of U.S. jobs — 2.4 million overseas jobs created by U.S. firms since 2000, while they slashed 2.9 million jobs in the United States. Thus, 99 percenters should oppose any more free trade agreements and lobby to use exit provisions to get out of those we have previously signed.

Footnote: It is not a good idea to lean too heavily on tax polling of a very fickle U.S. general public. A Washington Post-ABC poll taken in the last few months showed that 75 percent supported tax hikes on millionaires and another poll found that more than two-thirds favored tax hikes on households earning $250,000 or over. However, a Washington Post-ABC poll in 2010 found 54 percent supporting extending all the Bush tax cuts.

Surpercommittee Democrats’ Betrayal and Some Suggestions for the 99 Percenters

In the lead article in the November 21, 2011 issue of The New Yorker, Adam Gopnik wrote: “When there’s  a permanent confiscatory class of eagles, the turkeys can’t find a spot on the national seal.” This sentence spoke to me in what I recently learned about what Democrats, acting like turkeys, were willing to give up to the Republicans, playing the role of confiscatory eagles on the congressional supercommittee on deficit reduction.

Senator John Kerry said the Democrats laid their “sacred cows” of Social Security, Medicare and Medicaid on the table and were willing to make benefit cuts in them, including accepting means testing. Kerry acknowledged that the supercommittee Democrats are likely to take heat from the Democratic base for negotiating away benefits on their core issues, after the Democratic leadership had said that such cuts were not acceptable.

In the budget deal, the initial floor on tax increases was $1 trillion. Kerry said that the Democrats started lowering the acceptable tax increase amounts: starting with $1.2 trillion, going down to $1 trillion, then down to about $650 billion, and finally, offering to accept Senator Pat Toomey’s proposal of $300 billion in tax increases over ten years — it actually was $290 billion, with $40 billion of that to come from annual adjustments in tax rates based on inflation. Kerry said that Toomey reneged on his deal because the Democrats would not agree to a permanent extension of the Bush tax cuts.

The Toomey plan would limit the deductions for mortgage interest, charitable deductions, and state  and local taxes. Employer-provided health benefits might be taxed for the first time. The top rate would drop to 28 percent and the bottom rate would drop to eight percent.

The plan would permanently extend the Bush tax cuts but drop the top rate by 20 percent. A total of $750 billion would be cut from Medicare and Social Security.

The Center for Budget and Policy Priorities found that taxpayers earning more than $200,000 a year would receive tax cuts under the Toomey plan, far more generous than they would get if Congress merely renewed the Bush tax cuts once again.

Now it is proper to roundly condemn the Republicans for heir iron intransigence against supporting any tax increases, even on the wealthiest persons in society. The Democrats who were willing to give away so much on the spending side and accept so little on the taxation side should be roundly condemned also.

The Bush tax cuts were not on the table, as they were expected to expire before the spending and taxation strictures under the budget deal became effective on January 1, 2013. Thus, the Bush tax cuts should not have even come into the conversation. Even with a tax increase of $1 trillion, spending cuts on the table exceeded tax hikes by a ratio of six-to-one. Accepting a $290 billion taxation increase would have changed the ration to over 20-to-one. What the Democrats should have been arguing for was to reduce the ratio between spending cuts and tax increases, not increase it.

 

Switching to my unrequested advice to the 99 percenters, it seems to have been a wise decision for them to not have begun with a series of demands. Instead, making the case of how wealth and power is concentrated at the very wealthiest tip of society struck a chord in the nation.However, there is now coming a time when the 99 percenters must begin articulating a more specific case on the inequality and formulating ways to make the United States a more equal society. I would quibble about the choice of the name “99 percenters.” The top one percent own about a third of the nation’s wealth; the top five percent own a little over 60 percent; and the top 20 percent own over 80 percent. Thus, the 99 percenters could have called themselves the “95 percenters” or the “80 percenters” and still have captured the fact of concentrated wealth.

Besides these percentage indicators of wealth inequality, the Institute of Policy Studies has brought forth the statistic that the top one percent own half of the nation’s stocks, bonds and mutual funds, while the bottom 50 percent own five percent. A lesson that is buried in this financial imbalance is that the 99 percenters should be advocating taxing capital gains at the same rate as ordinary income — the evidence is murky, at best, that capital gains income is a  major job creator.

In terms of national personal debt, the top one percent have five percent of the debt and the bottom 90 percent have 73 percent. The political policy implication of this factual situation is that legislative efforts to require bankruptcy judges to provide relief for underwater homeowners should be supported.

We have been hearing a lot lately about the wealthy paying “a little bit more” or an undefined “fair share” in federal income taxes. Unfortunately, a consensus is building that the top marginal tax rate should be no more than 39 percent, although the United States was economically very prosperous in the 35 years after World War II, when the top marginal tax rate was never under 70.45 percent.

It has now become generally accepted among taxation experts that, on  average, those in the 35 percent taxation bracket actually pay about 18 percent of their income in federal income tax. In studying taxation rates, I recently learned that those in the 91 percent bracket in 1961 actually paid 42 percent in federal income tax. I was struck by this correlation between the top rate and the percentage of income tax paid. Because of exemptions, deductions and the fact that in a progressive income tax system, in which the tax rate increases with an increase in income, those in the top bracket actually pay about half of their income in taxes to the national government. Thus, a top rate of 60 to 70 percent would roughly correlate with the richest Americans’ share of the national wealth. The 99 percenters should be pushing for a top marginal tax rate of at least 60 percent.

The contention that the wealthy are not paying their fair share of income taxes is usually met with a counter-argument that the wealthy pay most of the federal income tax. The response to this counter-argument is that the wealthy are paying taxes at a rate that is much lower than their ownership percentage of the total national wealth.

The next blog will examine the argument that corporations are being taxed so heavily as to not be competitive in the world.