American Prospect runs special section on saving the middle class

 

 

 

 

 

Here’s an excerpt from one of the articles by my personal hero, Dean Baker:

The fact that progressives must look beyond the narrow range of tax and transfer policy does not mean that we should ignore tax policy, especially the upcoming battle over extending the Bush tax cuts to the wealthy beyond 2012. But we have to start being more creative in our approach.

For example, a financial speculation tax (FST) not only provides a great opportunity to raise a large amount of revenue (as much as $1.8 trillion over the next decade) through an overwhelmingly progressive tax; it also provides an opportunity to directly attack one of the main sources of growing inequality. Many of the most outlandish paychecks on Wall Street depend on the sort of quick-turnover trading that would become far less profitable with an FST. Implementing such a tax could have at least as much impact on the before-tax distribution of income as it does on the after-tax distribution.

Of course, getting an FST will not be simple. Opponents, including many top figures in the Democratic Party, will do everything in their power to prevent an FST from ever being taken seriously. But the battle for such a tax is well worth putting before the American public. On one side are the politicians who want to cut Social Security and Medicare to meet their deficit targets. On the other side are leaders who want to tax the Wall Street speculators who helped to crash the economy. There would be little doubt which side the public would favor if given a clear choice, even if the campaign contributions go heavily in the opposite direction.

The FST is unusual as a tax that will directly have positive distributional consequences. The larger agenda for restoring greater equality must include new approaches to monetary policy, trade policy, and patent policy as well as labor — management relations and corporate governance, but taxing Wall Street speculation in order to protect our most important social welfare programs would be a great place to start.

http://www.prospect.org/cs/articles?article=tax_tricks_time_to_go_on_offense