What states can teach DC about fixing the revenue crisis

Part of the reason Republicans, and some Democrats, objected to raising our government's debt ceiling in the first place is their accusation that "government is broke.” Now that there are reports of what the next sequestration in 2014 will bring  — with painful cuts for military families, older Americans, children, and local economies—we can’t kick the revenue can down the road and bury it in politics. 

The fact is that we're not broke—we’ve been robbed.  There is plenty of money in the United States today, if we know where to look. 

American corporations continue to post record profits, even as real wages for workers stagnate. The recovery from the second biggest economic crash in U.S. history — caused by Wall Street recklessness — went to corporate profits while less than 1 percent of that growth went to wages. Big businesses are hoarding anywhere from $1.24 trillion to upwards of $2 trillion in unspent cash. However, corporate tax rates and revenue, both in absolute dollars and percentages, are at an all-time low. Some of the largest corporations in America, including General Electric, Boeing and Verizon, have paid no taxes whatsoever for the last four years. In fact, several received tax rebates directly out of the pockets of taxpayers.

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Meanwhile, the top 1 percent in the United States controls a disproportionate 43 percent of our nation's wealth. The gap between the very wealthy and the rest of America has only grown wider and faster in the last several years. And yet the very wealthy in our nation pay one of the lowest tax rates in a generation. The 400 richest people in America paid an average federal income tax of just 18.11 percent in 2008, a dramatic drop down from 26.38 percent when this data were first tracked in 1992. The current top marginal tax rate (before loopholes and deductions are factored in) is 39.6 percent. From the end of World War II until 1981, the top rate was 70 percent.

In cities and states across the country citizens are demanding a different direction and organizing to increase public revenues as a means of investing in our shared economic future. In Minnesota, voters were able to raise $1.1 billion in new revenues from the top 2 percent and an additional $411 million from closing corporate tax loopholes. And they won in part by pointing toward the vital need for investments in early education and state colleges. In Maine, citizens succeeded in an effort to raise the most revenue in over 20 years and did so under a Tea Party governor – generating $250 million through a roll back of high income tax breaks, sales tax, and closing corporate tax loopholes. Recently in Illinois, everyday taxpayers packed a hearing to support legislation that would require corporations in the state to disclose how much they are paying (or not paying) in taxes.

Too many in Washington today, on the right and the left, insist we no longer have the money for government programs to strengthen opportunities for the middle class and the poor. They cling to a rational of so-called austerity politics that has been widely disproven, both in theory and in practice. Research supposedly proving that high levels of public debt depress economic growth was roundly debunked by a grad student who discovered a simple math error at the root of a broadly cited but ultimately inaccurate study. And the implementation of strict austerity politics in the United Kingdom with the goal of rebounding that nation's economy has proven to be a universal flop.

Far right conservatives cannot continuously demand tax cuts for big business and the rich in good economic times or in bad. Economic policy is not a one-size-fits-all solution. As our economy slowly recovers, corporations are hoarding their profits and reserves instead of doing their part to increase hiring and wages and grow consumer demand. So it's our job to step in, to invest in infrastructure and social supports that help bridge the gap to a better economic future for all of us.

America is not broke; we've just stopped investing in the invaluable public programs that help all of us, like schools, public defenders, infrastructure, jobs, transit.  

With a temporary debt-ceiling deal in place, Members of Congress have another chance to get this right.  It starts with acknowledging that we have a revenue crisis and then being ready to ask those at the top – including corporations - to pay their fair share.  If Members of Congress continue to avoid asking those sitting on record profits in tough economic times to do pitch in, they just might end up at the bottom of the polls next November. 

Goehl is the executive director of National People’s Action, a network of metropolitan and statewide membership organizations dedicated to advancing economic and racial justice.