Sen. Sanders’ Bill to Tax Millionaires Has Surprising Precedent

One of the first things Ronald Reagan did upon becoming governor of California in 1967 was ram a $1 billion tax increase — about $5.5 billion today — through the state legislature. The additional revenue was needed to balance Reagan’s first state budget, which included a deficit as well as a huge increase in government spending.

At the time, Reagan’s tax increase was the largest ever levied by a state — and it hit Californians right in the middle class:

Reagan campaigned in 1966 on cutting government, but his first budget exceeded [his predecessor Democratic Gov.] Pat Brown’s by half a billion dollars. “Taxes should hurt,” Reagan said, and they certainly did – especially for the middle class. The billion dollar tax increase to pay for that big increase in government spending was sweeping: the sales tax jumped from three cents to five; bank, corporation and inheritance taxes went up half a percentage point to six percent; liquor taxes rose from $1.50 a gallon to $2; cigarette taxes leaped from three cents a pack to 10; and the maximum income tax rose from seven to 10 percent.

In 1968, Democrats were able to stop another Reagan tax increase — this one on food, utility bills and services like haircuts. In 1971, he raised taxes on banks and corporations.

Despite the current mythology about Reagan, he was even more tax happy as president, raising taxes at least seven times during his eight years in office, including the largest corporate tax hike then to date.

Today, of course, the mythological Reagan has become the patron saint of the GOP corporatists’ ideological aversion to taxes. Their anti-tax propaganda has been phenomenally successful, so much so that now, as the nation stumbles through its recovery from the worst recession in 80 years — a calamity caused by Republican malfeasance and ineptitude — raising taxes, even on the wealthiest Americans, has been taken off the table.

America is broke, Republicans say, and, since raising taxes is verboten, the only way to balance the budget and spur the economy is to cut spending, by which they mean defunding programs they don’t like — by which they mean government services that benefit the poor and the middle class.

But as Michael Moore correctly said this week in a speech to pro-middle class protesters in Madison, Wisc., they are lying. America is not broke. Not hardly.

Citing a 2009 article Forbes, the right-wing business magazine, Moore pointed to a huge structural disparity in the country’s finances.

As of 2009, the top 400 wealthiest families in the United States, Moore said, control $1.27 trillion ($3.175 billion per family). That same year, conversely, the least wealthy 60 percent of American families — 100 million of us — had a combined net wealth of just $1.22 trillion, or $12,200 per family. (Politifact checked and Moore was right about the 2009 numbers — they even looked at the 2010 figures and came up with roughly the same results.)

Despite the GOP’s skillful disinformation campaign on taxes, their pretexts fall apart under even casual analysis. The primary rationale — that the uber-wealthy create jobs — is disproved by recent history. It is an indisputable fact that during the first 10 years that the infamous Bush tax cuts for the super-rich were in place, the super-rich created next to no new jobs. By contrast, Pres. Clinton’s tax on the wealthy in the previous decade did nothing to impede the economic boom.

Middle class Americans — including many of the swing voters who just three months earlier elected tea party extremists into Congress and state houses across the country — appear to be waking up to the fact that with their draconian cuts, union busting and other tactics, Republicans have unleashed a full-scale war on the American middle class.

So far, only one member of Congress has had the courage to stand against the GOP’s fantastical anti-tax propaganda. Yesterday, Sen. Bernie Sanders, I-Vermont, proposed a tax on millionaires:

Sen. Bernie Sanders … on Thursday afternoon introduced a bill (PDF) that would establish a surtax on millionaires and strip tax deductions for oil companies — a proposal he claims would cut the deficit by about $50 billion.

The Emergency Deficit Reduction Act would accomplish this by raising taxes by 5.4 percent on annual income over $1 million.

If this proposal is allowed to advance, expect the right wing noise machine to go into overdrive. But Sanders has the people on his side. In the most recent Wall St. Journal/NBC Poll, a whopping 81 percent of voters — in other words, everyone but the 20 percent in the GOP base — chose raising taxes on the wealthy as the best way to cut the deficit.

Put another way, an overwhelming majority of Americans agree with both Sen. Sander’s proposal now and Ronald Reagan’s anti-deficit strategy back in the day that raising taxes, not cutting spending, is the best way to reduce the deficit.