Activists rally in Indiana. Photo SCOTT WEAVER / USW

Rebuilding middle class is all about priorities

Recently, I’ve heard thoughtful people question whether the term “middle class” has any real meaning. I think it does. But I also think it’s good to be challenged, and important to be clear about what we mean when we sound the alarm about the attack on the middle class.

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 our 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 for all – 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 should all be very 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 positive vision of a strong, expanding and inclusive middle class is under attack. It’s under attack in state capitols across the country, and it’s under attack in Washington, where Republicans in the House of Representatives have passed a budget proposal that amounts to an all-out, full-frontal 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 (to list just a few examples) with new tax breaks limited to the very rich.

We can counter these distorted priorities with a straightforward message about tax fairness. For decades, corporate America has been using a variety of loopholes to avoid paying taxes. The list of profitable corporations that have managed to whittle their U.S. tax bills down to little or nothing is long and shameful. But as bad as these corporate tax dodgers are, they’re 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 what we spend to educate our children? Why are cuts in the Head Start program even on the table?

In my mind, it’s immoral to treat income from buying and selling assets more favorably than income from working. And yet, that’s what our tax code does. The top rate on the wages and salaries 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 biweekly paycheck. According to the Internal Revenue Service, in 2007 the 400 richest U.S. taxpayers (average income: $345 million) received just 6.5 percent of their income from wages and salaries. They got more than 10 times that amount from capital gains, which are taxed at a maximum rate of just 15 percent – the same marginal rate paid by a working couple with an income of $50,000.

If the capital gains on just those 400 tax returns had been taxed at the 35 percent rate that applies to wage and salary income, it would have brought in $18 billion in revenue. That’s enough to provide $5,550 Pell grants to more than three million students who would otherwise be unable to afford a college education.

Rebuilding the middle class in this country is all about priorities. We need to educate, organize and mobilize to make sure our priorities are reflected in the current budget debate.