United for a Fair Economy has released a new report analyzing President Barack Obama’s tax proposals. In the report, the progressive organization argues that Obama’s tax proposals fall short of what is needed to implement a progressive tax structure and to reduce incentives for the kind of financial risk-taking that led to the current economic crisis.
The report compares Obama’s tax proposals–unveiled in his 2010 budget–with recommendedations from the Institute for Policy Studies (IPS). The report finds that the IPS proposals would generate significantly more revenue and curtail many of the practices that led to the financial crisis. Their proposals would increase the tax rates on the richest Americans to bring them closer to what the average taxpayer pays.
United for a Fair Economy argues that while the wealthiest taxpayers profited greatly over the past several years, their profits did not lead to greater stability and that the theory of “trickle down” economics failed:
Highly concentrated wealth did not lead to shared prosperity, higher incomes for most people, or a healthier economy. Instead it created a dangerous imbalance between investment capital and investment opportunities. An investor class had too many dollars for the legitimate investments available. Meanwhile, the consumer majority had too few dollars to buy the goods and services they required. The unbalanced distribution of our national income led to runaway debt for the majority and runaway financial speculation by the few.
As an alternative, the organization argues for a progressive tax system:
Progressive taxation – people paying taxes based on their ability to pay – is fundamental to a fair society and true democracy. Society needs some of everyone’s wealth to reproduce the infrastructure, services, public safety, education, and other public investments that support the economy and create prosperity. However, because the free market system within which we operate is both imperfect and produces harsh economic inequality, the market’s distribution of income cannot be the final word on economic justice. Progressive taxation changes the market’s distribution of income and therefore advances equality of opportunity.
The organization says that Obama’s tax proposals are moving in that direction, but they could be far better.
Obama’s tax proposals:
IPS tax proposals:
According to the analysis, the IPS proposals would help secure the economy and pay for public services, thereby adding much needed stability to the economy.