Joseph Stiglitz, facing camera, at a meeting in mid-2009.
Joseph Stiglitz, “one of the few members of the economics profession committed to scientific empiricism, not ideology or servitude to the rich,” as one reader put it, writes that the habit of tax avoidance typical of Mitt Romney’s class makes it difficult to publicly fund things like education, technology and infrastructure, upon which modern economies depend to flourish.
While refusing to release key tax returns from the last 10 years, the GOP presidential candidate insists that he has paid an income tax rate of “at least 13 percent.” That’s not his fair share, Stiglitz writes, as the top marginal rate for American earners is 35 percent and working-class Americans often pay more in terms of the amount that is left to them after taxes. Such a concentration of wealth generates and perpetuates inequality of political power, which is used to preserve tax policies that favor the very rich at the expense of the rest of us.
[Mitt Romney] evidently does not recognise that a system that taxes speculation at a lower rate than hard work distorts the economy. Indeed, much of the money that accrues to those at the top is what economists call rents, which arise not from increasing the size of the economic pie, but from grabbing a larger slice of the existing pie.
Those at the top include a disproportionate number of monopolists who increase their income by restricting production and engaging in anti-competitive practices; CEOs who exploit deficiencies in corporate-governance laws to grab a larger share of corporate revenues for themselves (leaving less for workers); and bankers who have engaged in predatory lending and abusive credit-card practices (often targeting poor and middle-class households). It is perhaps no accident that rent-seeking and inequality have increased as top tax rates have fallen, regulations have been eviscerated, and enforcement of existing rules has been weakened: the opportunity and returns from rent-seeking have increased.