Crashing the gate of the American Oligarchy requires change; much more ‘radical’ than anything articulated by the current Democratic establishment (1). It requires a change in thinking, strategy, and policy choices. (See bottom of diary for links to references)
In today's America, money is free speech. Money is the right to assemble, organize, and lobby. Money is political power. If you want to challenge the oligarchy and loosen its stranglehold on our government, you have to take away their money. It's been a (successful) Republican tactic for decades (2), so why not use it?
"It occurs to me that the best way you hurt rich people is by turning them into poor people." - Billy Ray Valentine
Step 1: Take your typical oligarchs:
Step 2: Apply concrete progressive polices:
Result: Redistribute of political influence.
So what kind of policies can achieve this? And as a progressive community, how can we work together to formulate and implement these policies?
To answer this, I'll lay the first plank, and illustrate how one simple policy change can weaken the oligarchy, promote the general welfare, and reinvigorate our enfeebled democracy. Then I invite other members of the community, especially our resident experts, to lay more planks.
My proposed plank consists of a policy change to Social Security; one that will ensure the Social Security program remains solvent indefinitely. This change will even allow us to lower the retirement age back to 65. How? Just start making the rich pay their share of Social Security taxes. Better yet, make them pay a fair share (more on what that means in a moment).
First a refresher on how Social Security is funded:
The Social Security Act, passed in 1935, created an insurance/pension program to provide income to those most likely to live in poverty: The elderly, the disabled, and widows (3).
The program is funded by the Old Age, Survivor and Disability Insurance (OASDI) tax applied to all regular income. The current tax rate for OASDI is 12.4 percent (4). Of that amount, you pay half (6.2 percent, which is deducted from your gross pay). Your employer matches that amount (another 6.2 percent).
Since its creation, there has always been a cap on how much income is subject to OASDI taxation (5). The cap currently stands at $118,500. Thus every dollar earned above this threshold is sheltered from taxation.
The income cap exacerbates existing income and wealth inequality. Let me demonstrate:
In 2012, there were 20,898,640 tax filers with an adjusted gross income (AGI) of $100,000 or more. The combined income for those filers came to $5,143,093,337,050 ($5.1 trillion and change). That's an average income of $246,097 per individual filer (6).
Remember, there is a cap on the amount of income subject to Social Security taxation ($110,100 in 2012). So of that $246,097, more than half (55 percent) was sheltered from taxation. But that's just the average.
Very wealthy individuals (the top 1 percent), with an average income of $1,029,487, paid Social Security tax on just 11 percent of income (7).
Oligarchs (the top .01 percent), with an average income of $19,880,685, paid Social Security tax on a mere 0.6 percent of income (8).
Most of you pay Social Security tax on 100 percent of your income.
Now let’s see how much revenue can be created if we remove the cap and require the wealthy to pay Social Security tax on all of their income, just like most of us do:
The average income for 20,898,640 individuals making more than $100,000 was $246,097 in 2012. Since the OASDI cap was $110,100, all of them dodged taxes on $135,997 of their income (on average). Thus, the total amount of income sheltered from OASDI tax comes to $2,842,152,344,080 ($2.84 trillion) (6,9).
If you apply a flat OASDI payroll tax of 12.4 percent to that total, you generate $352,426,890,666 ($352 billion and change).
To give you an idea of how that stacks up against current spending, in 2015 the U.S. spent $900.5 billion for Social Security and Disability insurance (10). So having the wealthy pay their share by applying a
flat tax of 12.4 percent on all income will add one third more revenue to the Social Security trust fund. That should solve any potential solvency problems.
But we're progressives, and we want to destroy an oligarchy that has usurped our democracy. As such, we must change our view on taxation. Taxes are a tool for redistributing wealth and funding government programs, yes. But they are also a tool for redistributing political power. To really take power away from the oligarchs, we need to hit them in the pocket book, by having them pay their fair share. In other words, OASDI should be converted from a flat tax into a tiered progressive tax, with higher rates on income beyond certain dollar thresholds. Every dollar taken from the oligarchy via taxation is one less dollar that can be used to corrupt our political system.
So now to the elephant in the room: Why hasn’t our party been pursuing this policy change or others like it? Why isn't it a plank in the party platform? To be fair, there is at least one Democrat who has worked to eliminate the cap, and that effort began long before entering the presidential race.
That's right. Bernie sponsored a law more than two years earlier that would have applied OASDI taxes to income over $250,000 (11).
Contrast that with Hillary's position on the cap:
During the last Democratic primary debate, (Nov. 15, 2011, Las Vegas), when asked by moderator Wolf Blitzer whether she would support lifting the income cap on Social Security taxation, she replied:
"I do not want to fix the problems of Social Security on the backs of middle-class families and seniors. If you lift the cap completely, that is a $1 trillion tax increase. I don't think we need to do that (12)."
My first thought when I read that was, "Wait, what? What's a democratic primary debate?!". My second thought was. "That's total bullshit." Because, first of all, taxes would only go up $352.4 billion. Second, most of us
already pay Social Security taxes on
all of our income. Removing the cap would only raise taxes on income above $118,500 (the cap in 2015).
In other words, taxes would only go up for the top 10 percent of income earners (13)."
Clearly, in this particular case, there is a stark difference in policy positions between the two candidates. But that isn’t the real problem. The problem is that our party, as a whole, does not advocate for this policy (or a multitude of others that could be used to combat economic and social inequality). It's nowhere to be found in the Democratic Party platform. It’s probably not in any state or local party platform either.
But guess what is in your party’s platform?
Buried among the pages of vapid platitudes are endorsements of the Trans-Pacific Trade agreement (welfare for the oligarchs), charter schools (to give poor students a “choice”, if they win a lottery), and an all-of-the-above energy policy (“a new era of cheap, abundant natural gas is helping to bring jobs and industry back to the United States.” … not to mention contaminated groundwater and man-made earthquakes) (1).
In short, our party platform is mostly empty rhetoric (some of it antithetical to what the majority of Democrats support) with next to no concrete policy proposals. Which is why I propose we, as a community, start working on a new Democratic Party platform.
This site attracts contributors with diverse backgrounds and expertise. We have people who are knowledgeable on health care, climate change, tax policy, economics, labor unions, criminal injustice, net neutrality, science, law, education, just to name a few. We have doctors, politicians, professors, researchers, lawyers, community organizers and government agency employees.
Imagine if we harness that immense collective knowledge to put together a new platform, one with real policy proposals. We collect proposals from members (especially out experts), recruit DKOS contributors to assemble the best suggestions in their field of expertise, then publish the results.
Let readers take what they like best and present it to their local and state Democratic parties. The best way to crash a gate is from the ground up, right? And it's something constructive we could work on. Instead of just grousing about the problems, why not present some concrete, well-argued solutions?
Have a policy proposal on how to deal with police brutality? student debt? campaign finance? etc.? Write a diary. Add a plank and tag it.
______
1) Democratic Party Platform
2) Union busting, tax cuts for the rich, Wall Street deregulation, predatory lending, "free" trade agreements, cuts to education and coincident rise in student debt, for-profit health care, unemployment benefit cuts, lotteries in place of income tax, etc. ad nauseum.
3) For a more detailed history of Social Security: Legislative History and Historical Background
4) Current Social Security tax rates.
5) OASDI contribution and benefit bases, 1937-2015
6) IRS Office of Statics of Income; Tax Stats - Individual Statistical Tables by Size of Adjusted Gross Income; Individual Income Tax Returns Filed and Sources of Income; All Returns: Selected Income and Tax Items: 2012. File. Link.
7) The World Top Incomes Database; Average income for the top 1 percent of income earners (Top 1% Average Income) in 2012: Link.
8) The World Top Incomes Database: Average income for the top 1 percent of income earners (Top 0.01% Average Income) in 2012: Link.
9) ($135,997 untaxed income per person) x (20,898,640 total filers making more than $100,000) = $2.842 trillion.
10) Office of Management and Budget: Historical Tables; Table 5.1—Budget Authority by Function and Subfunction: 1976–2020; File. Link.
11) You can read more about the law: Full textor Fact Sheet.
12) You can read the full transcript here. Then-Senator Obama also expressed a desire to raise the cap to preserve the integrity of the program.
13) The income threshold (P90 Income Threshold) for the top 10 percent of income earners was $118,140 in 2014.