No Money Left? You’re Looking in the Wrong Places.

A protester in Madison has the answer to the state's budget shortfall. Photo: Peter Patau.

The U.S. government budget deficit is now $1.5 trillion, and political leaders in most states are wringing their hands and crying in unison: “There’s just no money.”

Led by Republicans, the only solution, they say, is to cut, cut, cut. And while they push draconian cuts in education, health care, pensions, public workers, Social Security, and Medicare, they also attack the one social group that’s had the clout to achieve and protect these gains—the unions.

Workers’ pensions are not the cause of the economic crisis hitting Wisconsin and other states. That crisis, of course, stems from the crash in the economy that started with a massive Wall Street scam. Financial firms packaged toxic mortgages and sold them to pension funds and other investors as good investments. Their fraud dragged everyone down.

Wall Street has recovered. The New York State comptroller reports its profits are up by 720 percent since 2007. How can there not be enough money for needed social services?

Actually, there’s tons of money. Billions of dollars. The problem is that it’s not available to meet everyone’s needs because the giant corporations and the rich have taken it.

Corporations paid 33 percent of all taxes collected by the federal government in 1953, according to the Senate Joint Committee on Taxation. Today, corporations pay less than 10 percent of all taxes to the federal government. It’s even a lower percentage to state governments.

There is no way the rest of us can make up the difference. The only solution is to get the money where there’s a lot of it: by raising taxes on corporations and the very rich. These millionaires and billionaires live better than kings because they’ve hogged so much wealth from our nation and others.

In 2007, the 400 wealthiest people in the U.S. owned $1.5 trillion. The top one percent own more wealth than the bottom 90 percent of us, according to the Working Group on Extreme Inequality. A tax on them and on the 7.8 million people who are millionaires could stop the financial hemorrhaging.

They Used to Pay

At one time, corporations and the rich paid a good chunk of their fair share. For most of the time from World War II till 1960, the individual tax rate for wealthy Americans was 91 percent, under both Franklin Roosevelt, a Democrat, and Dwight Eisenhower, a Republican. Today, a millionaire pays 32.4 percent, but for many it is actually much lower due to the proliferation of tax loopholes.

In the 1950s, corporations paid a basic tax rate of 53 percent, and our economy was booming. No longer. Corporations in 2011 are taxed at 35 percent, based on “taxable” income.



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But many pay much less because of a welter of corporate deductions, exemptions, and even tax refunds. Research from a New York University economist shows the effective tax rate for the pharmaceutical industry is just 5.6 percent. For the biotech industry, it’s even less—just 4.5 percent.

Even with these great savings, U.S. corporations scream that their tax rates are too high for them to compete in the global economy. Their tax rate was lower than that of 24 other countries in the world in 2008, according to Citizens for Tax Justice.

Successful Campaign

Corporate America has been hugely successful in its half-century campaign to slash corporate and individual taxes on the rich. That’s a major cause of our problems today. Some of the most right-wing companies and their owners, like the billionaire Koch brothers of Koch Industries (who fund the Tea Party movement), want to eliminate both corporate and individual income taxes altogether. Apparently, they could care less whether teaching, firefighting, street cleaning and other essential services survive.

Koch Industries, with sales of more than $100 billion in 2008, is privately owned and its tax information hasn’t emerged. But Koch Industries has set up a number of legal entities within the company that are exempt from paying taxes.

Other giant corporations have used these tricks and others to get their taxes to zero. Some even receive refunds from the IRS, including Exxon Mobil. It paid no taxes to the IRS in 2009 and got a $156 million refund. Exxon Mobil CEO Rex Tillerson took home more than $27 million that year. He makes in a week what would take an average Exxon Mobil worker a lifetime.

Executives in turn make big financial contributions to candidates of both parties, especially to Republicans. It’s little wonder they reward their corporate sponsors by attacking unions, public workers’ pensions, Social Security, and Medicare—and too many Democrats, including Obama, so far, have been more concerned about pleasing Wall Street than fighting for workers. It was good to see the Wisconsin senate Democrats leaving the state to avoid voting on the governor’s anti-labor, anti-people bill.

Charles and David Koch, the Tea Party’s wallet, are worth $21.5 billion each, according to Forbes magazine. Their goal, as stated by their right-wing, anti-labor think tank, the Cato Institute, is to eliminate all unions from the U.S. completely. If they are successful, that would be the end of the major defender of all the social programs. The war on Wisconsin public workers and their unions is the latest escalation in the Koch brothers’ campaign.

Cutting workers’ pensions and destroying their unions won’t balance any budget. But raising the tax rate on the ultra-rich, and on big corporations and banks, will.

Paul Krehbiel, former managing editor of the Furniture Workers Press, national newspaper of the United Furniture Workers, AFL-CIO, was recently chief negotiator for more than 5,000 Los Angeles County registered nurses, members of SEIU.


fistnbone (not verified) | 02/28/11

First, as a percentage of income, the wealthy have seen their tax liability decline over the last century. Equally, the wealthy are, by definition, far less impacted by inflation in the cost of living. This is best evidenced by the failure of worker wages to increase with productivity contrasted with wealth inequality in this county.

Second, to say that the decline in REVENUE due to drops in housing prices, decreased consumer spending, massive job loss, and investment has not been the cause of most budget shortfalls is like saying that people are having trouble paying their mortgages... but it's not because they lost their job. Income, or revenue, is part of the equation. Specifically, revenue has decreased far more than any increase in expenses for most cities, counties, and state governments. And yes, this is the result of inflated housing prices, poor consumer choices, and most importantly, a massive financial system that rewarded behaviors that put us in the position of having to bail out companies that were "too big to fail" (which is wholly debatable).

As for the attacks on the article's author, unionized workers and their competitiveness... sour grapes and name calling. First, I have no desire nor intention to work for what my counterpart in the India will work for. I am educated. I work hard, pay my taxes and union dues, and am citizen in good standing in my community. And, I have no illusions about the fact that my prosperity is built on the backs of union members and concerned citizens struggled that I could even have as much as I do... which is not even remotely in exorbitant range that critics of public employees like to paint.

Public employee unions are singled out simply as a way to divide working people against each other while dismantling the last actor of any significance putting up any resistance to the damaging behavior of the class of people who possess the lion's share of the capital (and therefore, the power).

Ken Meyer | 03/02/11


Question: are you claiming that, as a percentage of income, the tax liability of the wealthy is LESS than it was a century ago? (i.e. - "decline over the last century"). They had a heavy tax burden in 1911, did they? I ask because, from what I've read, the income tax rate (which, granted, is not the be-all and end-all of "tax liability"...but surely it's the closest measure out there) varied from "1% on income exceeding $3,000 to 7% on incomes exceeding $500,000." in 1913 (this is a Wikipedia reference, and perhaps it's wrong. I'm willing to be shown if it is)

As for your comment of....

"this is best evidenced by the failure of worker wages to increase with productivity contrasted with wealth inequality in this county."

...I wonder, are the increases in productivity the result of the average workers efforts; i.e. - productivity gains due to his personal increased labor efficiency alone - or are they, perhaps, the result of automation, system enhancements, etc. which were the product of other individuals who thus had the right to retain the benefits of that increased productivity. I ask because, frankly, I haven't seen so-called "workers. themselves - at least the blue collar variety - work any harder or efficiently over the last half century or so. Guess the question is one of "what productivity increases are due to 'the worker'?" And are "workers" demanding compensation based on the productivity gains of OTHERS. That is, are they - or at least a significant segment of them trying to claim a "free lunch"?

Lastly, as to your comment of...

"....I have no desire nor intention to work for what my counterpart in the India will work for."

....I understand where you're coming from. But I wonder if you understand that, if that "counterpart in India" is willing to do the work more efficiently and cost-effectively than you, and you refuse to compete, then that should be YOUR problem...and NOT anyone else's. That worker in India has just as much right to work as HE sees fit as you. In other words, if you want to starve yourself to death rather than compete, then that's your right. Just understand that others - who ARE willing to compete - aren't in any way, shape, or form obligated to make-up for your refusal to carry your own weight.

Ken Meyer | 02/25/11

I wonder if Paul Krehbiel would be willing to have HIS income taxed at 91%? Seems like he's real ready to impose taxes at that rate on OTHER people, while making statements like....

"Workers’ pensions are not the cause of the economic crisis hitting Wisconsin and other states. That crisis, of course, stems from the crash in the economy that started with a massive Wall Street scam. "

...which makes one wonder if he's willing to put HIS wallet were HIS mouth is. Personally, I doubt it.

In truth, as a past and/or present union representative, I suspect that Mr. Krehbiel knows full well who's the cause of "the crisis"...and it isn't "Wall Street", or "the rich", or any of the other typical union bug-a-boos. Rather, it was the unions themselves, who resisted becoming competitive, and year after year made "gimme, gimme" demands, to the point that those who had jobs to offer simply had to take them to other places where what they had to offer was respected. Or does he think the unionized auto industry collapsed on its own? Or the unionized steel industry? Or the unionized trucking industry? Note that their NON-union counterparts prospered...while "union company" after "union company" has sunk into bankruptcy.

Sorry, Mr. Krehbiel, but this country no longer has 7 League economic boots like it did in the post WWII period. We simply can't run rough-shod over the rest of the world. Today, there are countries who, no longer in ruins, have work forces - even UNION work forces - which realize that competition is the name of the game. And their labor is NOT whining like spoiled children limited to screaming "gimme, gimme" all the time. Rather, they're willing to EARN their living, and NOT depend on those who WORK more effectively than they to provide it for them.

Anyway, why don't you author another article when those YOU "represent" are willing to be taxed at a "91% rate on THEIR income...because taxing the most productive elements of the country - the elements that have JOBS to offer! - at that rate, while allowing the least-productive elements off with being taxed next to nothing is NOT going to bring this country back to its feet.

No money left? Nope...there's "money left". But there's simply no sense SQUANDERING it the way the author of this article seems to propose.

paulkrehbiel | 02/28/11

I can't understand how Mr. Meyer missed the entire point of my article. I repeatedly said that we should raise taxes on the RICH -- I repeatedly used the words "millionaires" and "billionaires." I never said raise taxes on everyone. If this idea were proposed, I would strongly oppose it. In fact, I would support reducing taxes on people earning the average yearly income and all those below that.

Mr. Meyer also blamed unions for our current economic crisis. What did unions have to do with the major banks and other financial institutions gambling on boosting their profits which created our Great Recession? He then asked if I thought the unionized auto industry and others collapsed on their own. No, they didn't collapse on their own. It was the corporate owners that shut down operations in the US, not unionized or non-union workers. Many of these giant corporations then opened new operations in foreign countries to take advantage of lower wages and penetrate new markets. The reason was to MAXIMISE PROFITS. Most of these giant corporations and their top executives are doing extraordinarily well today. The unions had nothing to do with any of this, and many unions worked to keep these plants open and American workers employed here.

We are experiencing the greatest transfer of wealth from working people to millionaires and billionaires in the history of our country. Why would Mr. Meyer want to encourage this process?

A big part of the solution to the problems facing workers here and abroad is to raise the wages of ALL workers to a similarily high standard, and fully fund all social services so ALL workers can live comfortably. Mr. Meyer's ideas only serve the corporate drive to pit workers against each other to see who can work for less in a race to the bottom. The result is millions more workers suffering needlessly, starving, and going to an early and miserable death, while the billionaires laugh all the way to the bank.

Ken Meyer | 03/01/11

Mr. Kehbiel;

Just why do you think "corporate owners...shut down operations in the U.S."? Because their union employees were the best and most cost-effective labor option? REALLY?!?! Or could it have been - just possibly, mind you - because their union employees were NOT willing to make themselves competitive on the world stage? In short, I can't help but "understand" that your claim of "the corporate owners" are responsible is just a bit too IRRESPONSIBLE for my taste; if the unions had made sure that the labor they had to offer was COMPETITIVE, then the employers wouldn't have moved the jobs they had to offer elsewhere...period. Not all that complicated, really.

And why, Mr. Kehbiel, don't you address the point that it was primarily the UNION organized industries that were hit the hardest? Care to look at the trucking industry, for example? How many of the large UNION trucking companies of a couple of decades ago are still in business? What happened to the three-quarters of a million or so Teamsters who used to have jobs under the NMFA? Yet is the industry today smaller that it was a few decades ago?'s grown exponentially. It's just that the "union-organized" firms couldn't compete....and today they represent but a small fraction of the work force, because the union put the companies they "worked" for OUT OF BUSINESS! And gosh knows the example of the UAW-organized "domestics" in the auto industry vs. the NON-organized "transplants" is far from an illusion. Perhaps you can bury your head in the sand if you wish..but the reality is, unions destroy - and have destroyed - job opportunities. In light of the overwhelming evidence, denial of that fact is just downright silly.

Beyond that, just how do you propose to...

"to raise the wages of ALL workers to a similarily high standard, and fully fund all social services so ALL workers can live comfortably"?

Are *YOU*,*YOURSELF* prepared to pay for those raises? Or are you just planning to soak the rich; i.e. pawning what YOU want off on "the other guy"? And do you think "the rich" are going to simply stand still as you go out of your way to abuse them? Do you think that you can FORCE them to provide what amounts to a dole? Think there won't be a capital flight of massive proportions? That the way things are working - even with the massive natural oil resources available in-country, in Venezuela now, for example? Think that capital flight isn't something that the unions of this country have caused, to a large extent, ALREADY?!?

The single comment of yours that most stuck in my craw, however, was your....

"I can't understand how Mr. Meyer missed the entire point of my article. I repeatedly said that we should raise taxes on the RICH -- I repeatedly used the words "millionaires" and "billionaires." if "millionaires" and "billionaires" somehow aren't people too. Or that because you're willing to inflict discriminatory pain solely on a class you don't happen to belong somehow makes it RIGHT? Or that they (the "billionaires" and "millionaires"), by virtue of their industriousness, owe the likes of you MORE than what they've already been providing? Face it, Mr. Kehbiel; you NEED them, if only for the jobs they provide. Do they need you? Per your comments about job flight overseas, if would appear not. Indeed, it seems to me that if you choose to tax them unfairly, then they'll simply just take their jobs to where they ARE appreciated. Think not? Then just WHY have jobs been migrating overseas?

We're looking at a "great transfer of wealth" primarily because workers - primarily union workers - have fallen for the snake oil charlatans such as yourself have been selling them. They think that, somehow, there's a "free lunch", and that they don't have to EARN their keep. They assume that, because corporations are chartered in Delaware or where ever, they're somehow OBLIGATED to keep on providing them with jobs. And they consider "their" jobs as some sort of property right, OWED to them, rather than something to be cherished and nurtured by any reasonable means available. But rather than giving them such a nourishing, at the direction of individuals such as yourself, they've spent decades now figuratively biting the hand that feeds them...and then they wonder why that hand has now drawn away from them. Real mystery, that!

Lastly, I don't see a large transfer of wealth from WORKING men and women; rather, I see a group individuals who THINK of themselves as "workers", but who, from an employers point of view, have been found lacking as an effective labor force. So the employers found a MORE EFFECTIVE work force...a work force they're making money off of, and a work force that is happy to receive the wages that are paid them. Now, no doubt the ones who essentially "pissed away" their jobs are hurting financially...but perhaps that's something they should have thought of BEFORE they decided to make themselves economic deadwood.

In the end, if so-called "workers" don't want to "pit themselves against each other", or whatever, in trying to make themselves a COMPETITIVE labor alternative, then of course that's their option. But they then shouldn't bemoan a fate they brought on themselves by their own presumption.

However, Mr. Kehbiel, perhaps, you can prove me wrong. Perhaps YOU can corral all those who provide employment and convince and/or force them to squander their hard-earned money on those who are LESS competitive, LESS cost-efficient, and LESS amiable to laboring effectively. Or perhaps, as I mentioned earlier, you can PAY THE SCALE DIFFERENTIAL YOU PROPOSE YOURSELF. Personally, I don't think you're capable of doing either. I think you're simply railing at the fact that demands of "gimme, gimme" aren't working out like you think they ought to.

Mores the pity. Makes one wonder just how many of this country's jobs sophisticates such as yourself are willing to throw away before they realize that employers are a class to be SEDUCED; instead of being chastised...and that those who treat current and potential employers as whipping boys are the true economic pariahs of this nation; parasites who, in the long run, bring society nothing except financial misery.

Now let's see if you "can't understand the point of" MY article...because I QUITE understood the "point" of yours. And, frankly, I "understood" it to be complete hogwash.

Joe Hill (not verified) | 03/07/11

Yes, I completely agree Ken. "Workers of the World Seduce!" even seems to roll off the tongue quite nicely ;) Perhaps when we finally kick these unions completely to the curb we can collectively roll catnip cigars instead of collectively bargain. That'll have those fat cats drooling.