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The Road to Jobs and Economic Growth

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One of the great lies of our time is that raising taxes on the wealthy hurts job creation and undermines economic growth. There is absolutely no evidence anywhere in the world that this claim is true. In fact, all the evidence points to the exact opposite being true: When the wealthy are taxed fairly, jobs are created and economic growth is encouraged. Back in the 1950s and 1960s, for example, when the economy boomed and the middle-class expanded, the top bracket for high-income earners was 90 percent. Today, the top bracket is at 35 percent, but the top 1 percent are paying an effective tax rate of less than 30 percent.

In 1993, when President Clinton proposed raising taxes on the wealthiest Americans, he was roundly criticized by the corporate-controlled politicians on Capitol Hill and the Wall Street barons who always oppose higher taxes on the rich. They claimed the economy would suffer and jobs would be lost. Yet, when President Clinton won that tax increase, just the opposite happened. The nay-sayers were wrong. Job creation skyrocketed and we ushered in nearly a decade of strong economic growth.

A dozen years ago, however, that growth came to a halt with Pres. George W. Bush’s program of tax cuts for the rich and the deregulation of Wall Street. Instead, we were left with the lowest job creation of any Presidency in modern times. There is a reason for this result: When the wealthy get massive tax cuts, they don’t spend the money. Neither do corporations. In fact, corporations are now sitting on more than $1 trillion in cash.

On the other hand, when working families get a tax break, they spend it – creating more demand for products and giving corporations an incentive to produce more and hire more people. That is why President Obama makes such a strong case for keeping taxes low on the working middle class while allowing the Bush-era tax cuts for the wealthy to expire. Yet the same, age-old arguments are made by the wealthy to keep their taxes low.

They’ve even got a corporate CEO-funded front group, called Fix the Debt, arguing that we need to cut programs that help the poor, seniors and the sick in order to finance more tax cuts for the richest people in the country. That kind of thinking won’t put America back to work. And it won’t finance the important investments in infrastructure and education that we need to remain competitive in the future. All it will do is give the rich a tax break that they don’t need.

That is one reason why the 2012 election was the most important one of our lifetime. Big issues were debated, including whether we would return to Bush-era policies or enact the kind of Clinton-era tax policies supported by President Obama. The voters sent a clear signal that they supported President Obama’s plan to move the country forward by raising taxes on the wealthy and protecting vitally important programs that the poor and middle-class rely upon, such as Social Security, Medicare and Medicaid.

Some on Capitol Hill – such as Sen. Lindsay Graham of South Carolina – say they will only accept a revenue increase if the President will agree to major cuts in Social Security, Medicare or Medicaid. But Congress and President Obama have already cut more than $1.5 trillion in government spending. Now, the focus must be on revenue.

More than 40 members of the House have indicated their opposition to any cuts in Social Security, Medicare or Medicaid. Sens. Jay Rockefeller and Tom Harkin underscored the opposition to unnecessary cuts in a letter they circulated earlier this week. They urged President Obama to “reject changes to Medicare, Medicaid and Social Security that would cut benefits, shift costs to states, alter the structure of these critical programs, or force vulnerable populations to bear the burden of deficit reduction.”

The taxes on the richest people in America have been too low for too long. Our economic recovery is being damaged by this fundamentally flawed policy. Just this week, billionaire Warren Buffet made this clear in an op-ed published in The New York Times. In his column, Buffet called on Congress to immediately “enact a minimum tax on high incomes.”

Buffet also suggests a 30 percent rate for income between $1 million and $10 million, and a 35 percent on amounts above that. “A plain and simple rule like that will block the efforts of lobbyists, lawyers and contribution-hungry legislators to keep the ultra-rich paying rates well below those incurred by people with income just a tiny fraction of ours,” Buffet wrote.

We need to mobilize and demand that the Congress raise taxes on the wealthy and protect vital programs. It is the only way to avoid a fiscal disaster while encouraging job creation and greater economic growth.

Photo from Moyan_Brenn licensed under Creative Commons

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Lee Saunders

Lee Saunders

Lee Saunders is the President of the American Federation of State, County and Municipal Employees, AFL-CIO, which represents 1.6 million members. He was elected at the union’s 40th International Convention in June 2012.

Saunders was previously elected Secretary-Treasurer at the union’s 39th International Convention in July 2010.

Saunders grew up in a union household in Cleveland, Ohio. This inspired him to join the Ohio Civil Service Employees Association (OCSEA) when he began working for the Ohio Bureau of Employment Services in 1975. His father was a bus driver and a member of the Amalgamated Transit Union. His mother was a community organizer and, after raising two sons, returned to college and became a community college professor and a member of the American Association of University Professors.

Saunders began his career with AFSCME in 1978 as a labor economist. He has served in the capacities of Assistant Director of Research and Collective Bargaining Services, Director of Community Action and Deputy Director of Organizing and Field Services. Saunders also served as Executive Assistant to the President of AFSCME and was responsible for managing what is acknowledged to be one of the most effective political and legislative operations in the history of the American labor movement. AFSCME’s clout in fundraising and member mobilization, and its lobbying expertise are unmatched in the ranks of the AFL-CIO and beyond.

Building on ideas generated by local unions, Saunders has championed AFSCME’s Next Wave initiative to encourage and develop the next generation of union leadership. He has also developed and supported programs that foster diversity and promote increased member participation within the union.

He has served as administrator of a number of AFSCME councils and large local unions across the country. For nearly four years, he served as Administrator of AFSCME District Council 37, New York City’s largest public employee union, representing 125,000 members. In that capacity, he was successful in restoring the fiscal health, integrity and good name of the council and its 56 affiliated local unions.

Saunders serves as a Vice President of the AFL-CIO Executive Council, which guides the daily work of the labor federation. He is an at-large member of the Democratic National Committee, Treasurer of the Leadership Conference on Civil and Human Rights and a member of the Executive Committee of the Congressional Black Caucus Institute’s 21st Century Committee. He also serves on the Board of the National Action Network.

He received a Master of Arts degree from Ohio State University in 1974, a year after earning his Bachelor of Arts degree from Ohio University. In 2002, the College of New Rochelle awarded him an honorary doctorate degree in Humane Letters.

Saunders and his wife Lynne live in Washington, DC, and have two sons, Lee, Jr. and Ryan.

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