The Fairness in Taxation Act

Floor Speech

Ms. SCHAKOWSKY. Mr. Speaker, I rise today to address a grave threat to both our economy and our democracy, and that is the disappearing middle class.

Over the last 30 years, there has been a dramatic and deliberate transfer of wealth from the middle class to the very, very, very rich. Income inequality is now at the highest level since 1928. Wages have stagnated for middle and working class families despite enormous gains in productivity. Where has the money gone?

This chart shows the change in the average pre-tax household income from 1979 to 2005. The bottom 20 percent--that's that number way down in the corner--of households saw their incomes over those 30 years grow just $200. Over the same period, the top 0.1 percent saw income growth of nearly $6 million each year. The top 100th of 1 percent now makes an average of $27 million per household per year. The average income for the bottom 90 percent of Americans: $31,244.

Meanwhile, Republicans, who squandered a budget surplus, created a huge deficit with unpaid-for tax cuts that went mainly to the very rich, and whose policies allowed Wall Street recklessness to bring our economy to near collapse, are now demanding that the middle class foot the bill. Their solution to our fiscal mess is to gut vital programs like Social Security, Medicare, and Medicaid, and to make cuts in domestic spending that would cause an additional 700,000 middle class Americans to lose their jobs.

In the next chart, you can see some of the enormous cuts that they are proposing: $1.3 billion from community health centers, the only source of medical care for many families; $5.7 billion from Pell grants, reducing the size of the grant for 9.4 million students who want to go to college; and $1 billion in funding for high-speed rail, important infrastructure projects that will create good jobs--thousands and thousands of good jobs.

Once again, they are showing their utter disregard for the shrinking middle class and those who aspire to it by cutting important jobs programs and assistance programs for poor families.

Part two of the Republican program for addressing our economic problem, and every other problem, is to cut taxes even more for the rich. Enough is enough. It's time for millionaires and billionaires to pay their fair share. This isn't about punishment and it isn't about revenge. It is about fairness.

Currently, the top tax bracket starts at $375,000, failing to distinguish between the well-off and billionaires. I have introduced the Fairness in Taxation Act, which would create new tax brackets beginning at 45 percent for income over $1 million, rising to 49 percent for income of $1 billion a year or more; and, yes, there are people in our country who made $1 billion or more just last year. Historically, these rates are relatively modest. During most of the Reagan administration, the top tax rate was 50 percent; and in previous decades, the top tax rate was as high as 94 percent.

My bill would also address a fundamental inequality in our current law by taxing capital gains and dividends GPO's PDF at ordinary income rates in those brackets. Rich hedge fund managers should not be paying a lower tax rate than their secretaries because much of the income of the hedge fund manager is capital gains and dividends.

According to Citizens for Tax Justice, the Fairness in Taxation Act will raise more than $78.9 billion if enacted in 2011, allowing us to avoid the harsh cuts that will hurt the middle class. This is an idea that Americans support. In a recent poll, 81 percent of respondents supported placing a surtax on Federal income for those who make more than $1 million per year in order to reduce the deficit.

Passing the Fairness in Taxation Act will allow us to stop the war on the middle class, restore fiscal integrity and fairness, and fund initiatives that reflect our American values and goals.

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