Mike Thompson Watch


Mike Thompson Continues Class War Tax Cuts

(January 15, 2011)

While Mike Thompson's campaign contributors, like Granite Construction, relax in the warmed, perfumed bath of the federal economic stimulus package, the rest of this northern California district continues to suffer from high unemployment, unfair taxation, and general oppression that characterize America in decline.

Money drains from the United States into Afghanistan, where it props up a corrupt, unpopular regime. Mike Thompson has criticized the war in Afghanistan, when standing in front of liberal anti-war voters. But when it comes to voting for sinking Americans' money into the opium poppy quagmire, the corporate security state establishment can always count on Congressman Thompson's vote.

In one of the nastiest pieces of public business since the Dred Scott Decision, the honorable Mr. Thompson worked with Democrats and Republicans alike to keep the tax burden firmly on the backs of the middle class. The so-called Bush Tax Cuts were extended (they should be called Ruling Class Tax Cuts). Most notably, there will be no estate tax (inheritance or death tax) on most fortunes. Nor will fortunes be taxed as they accumulated. Because the Rich are not like you and me. Their wealth grows mainly through something called Capital Gains.

In terms of stocks (ownership shares in corporations), capital gains are the difference between the value of the stock when you acquired it and its current value. So if Steve Jobs was given Apple stock at $10 per share (for being its CEO), and it is now at $300 per share, his capital gains would be $290 per share.

What is the tax rate on capital gains? Under the Ruling Class Tax program promoted by Thompson and his comrades, the theoretical rate is 15%. Note that is already unfairly low. Ordinary workers pay over 15% just for Social Security tax, and then another 10% in income tax if they make little more than minimum wage (a common scenario in the district), up to 35% on amounts over about $100,000 per year.

But the real rate on capital gains is 0%. Because you don't report your capital gains every year like you do wages. You only report capital gains when you sell the capital asset. So as long as Steve Jobs does not sell his Apple stock, he owes nothing. A janitor working at Apple for minimum wage pays more federal tax than Steve Jobs pays on his hundreds of millions of dollars in annual capital gains (he has enough money outside of Apple stock now to not have to sell any. You can see this if you look at his SEC filings).

Democrat Party politicians mainly lined up behind the latest Rich get Richer plan with two pieces of political cover. One is the extension of unemployment benefits to the long-term unemployed. The Republican Party threatened to kill this, but it was just a political charade. If the Democrats had hung firm on letting the tax cuts expire, they could have gotten a much better deal from the Republicans. The other political cover is the Recession. It is claimed letting the tax cuts expire would have hurt the Recovery. Yet they did not prevent the Great Recession. They came before the Great Recession, remember? So in a sense they caused the Great Recession. Cause, then effect.

The American economy is in a short-term upcycle, but the long term trend is that only the richest Americans benefit much from upcycles. The rest of us, even people in the upper end of the middle class, are increasingly being treated as second-class citizens. We are becoming mere servants of not just the American Rich, but of the global rich.

The number 1 servant of the rich in this district? Mike Thompson.

Mike Thompson is the current elected member of the United States House of Representatives for California's 1st Congressional District.