Revive middle class by taxing rich

By Bob King

When I think of the middle class, what comes to mind isn't so much a particular income group, but a vision for our society and economy.

A middle-class society isn't polarized between a handful of the very rich and a mass of the desperately poor, and its politics aren't driven by fear and selfishness.

An economy that works for the middle class offers jobs for all who are able to work, with pay and benefits that support a decent standard of living now, a rising standard of living in the future and a secure retirement. An economy that works for the middle class takes care of those members of society who are unable to work. It provides quality public services — good schools for every child, access to parks and green spaces, clean air and water, affordable health care and arts and culture for all — and makes smart investments in the future.

That's our vision, and we are proud of what our union has done to turn that vision into a reality. The American middle class was built by workers' struggles. It was expanded and made more inclusive by the struggles of the civil rights movement. UAW members played an important role in both struggles.

Unfortunately, our vision of a strong, expanding and inclusive middle class is under attack. It's under attack in state capitols and in Washington, where the budget proposal passed by House Republicans is an assault on working families, the elderly and the poor. Unbelievably, their proposal couples devastating cuts in Medicare for future retirees, food assistance for the poor and Pell grants for low-income college students with new tax breaks for the very rich.

Those cuts are as unnecessary as they are wrong. The list of profitable corporations that have whittled their U.S. tax bills down to little or nothing is long and shameful, but these corporate tax dodgers are just the tip of the iceberg.

In the 1950s, on average, corporate income taxes amounted to nearly 5 percent of our Gross Domestic Product. Last year, they came to just 1.3 percent. In an economy our size, that's a difference of hundreds of billions of dollars. Why, then, are we attacking teachers' pensions and cutting education funding for our children? Why are cuts in Head Start even on the table?

And why does our tax code treat income from buying and selling assets more favorably than income from working? The top rate on the wages of the highest earners is currently 35 percent (down from 39.6 percent in the 1990s). But, if you're really, really rich, chances are you make far more from investments than from your paycheck. In 2007, the 400 richest taxpayers (average income: $345 million) received just 6.5 percent of their income from wages. The bulk came from capital gains, taxed at a maximum rate of just 15 percent.

If the capital gains on those 400 tax returns had been taxed at the 35 percent rate that applies to wage income, it would have brought in $18 billion in revenue. That's enough to provide Pell grants to more than 3 million students for college education. Rebuilding the middle class is all about priorities.

Bob King is president of the UAW. This opinion piece originally appeared in the May 5, 2011 edition of the Detroit News.