April, 2001
Fortney Pete Stark
Thirteenth District, California
Congress of the United States
House of Representatives
Washington, D.C. 20515
Dear Mr. Stark:
I do appreciate the time you take to read my letters.
Even though I have written you several times I have focused on only four items:
1) Social Security: even though I have paid into this system for 27 years I have nothing to show for it, but a promise from the government that at some age I will receive some benefit. I say some age and some benefit because the government can change the benefits and benefit age anytime they want to, they have already reduce my benefit at age 62 and increased my full retirement age while at the same time increasing my Social Security taxes. And I am still 22 years away from full retirement age which gives the government plenty of more time to increase my Social Security taxes more, increase my benefit age more, and reduce my benefits more.
2) ERISA laws and my company 403b plan: not only does the government demand that I save for retirement through them, but I am also required by my employer to invest my extra retirement money, that is, my 403b money through a mutual fund company, I cannot invest the money on my own and make my own choices. My employer states that is due to ERISA laws.
3) In regards to the Federal Reserve increasing interest rates when there was no inflation and the fact that the politicians were not even challenging the chairman on the matter at the time of the increases. If Greenspan had problems with asset inflation he should have gone where the problem was: institutional investors buying stocks that were extremely overvalued based on historical norms. I wrote you about this subject before it was obvious that we were in a global economic slowdown. Just a tid-bit of information for you, the total loss in market cap of all stocks in the 1987 crash was $500 billion, in the past year or so, Cisco has lost close to that in itself, it had a market cap close to $600 billion and now it's only around $100 billion (institutions mostly owned this stock, institutions who are supported by ERISA laws).
4) The financial news basically being a sounding board for CEOs, investment bankers, brokers, analysts, mutual fund managers, economists, and their companies while at the same time suggesting to Americans that they are there to "report the news and that's it." I believe the financial news should be made to openly disclose that they have vested interests in the markets and that what's in there best interests may not be what's best for viewers.
With the new administration now in Washington, a fifth item has surfaced: the tax cut and the rich. I have done some research on the Federal Budget and I have even written you trying to get information and asking you to check my figures. I believe that the tax cut and the rich is a much bigger problem than the Democratic Party realizes. To them it's just another issue.
I don't think it is just another issue, I think it shows how screwed up the Democratic Party really is. Rather they want to admit it or not, the Democratic Party lost a Presidential Election they should have never lost and they did not lose it because of a close race in Florida. The Democratic Party was making another bid for the White House during an unprecedented economic growth period and that alone should have secured the White House for them. But it didn't. Why not? Was Gore that bad? No. Was Bush that good? No.
The fact is before Bush was elected he campaigned openly about his tax cut and stated it was for all Americans including the rich. The fact that he wanted the tax cut for the rich as well, should have lost him the election: the vast majority of registered voters are not rich and do not want the rich paying less in taxes than they already are. But he won. I believe he won because the Republican Party was allowed by the Democratic Party to get away with a lie. Republicans over and over again stated that the rich pay most of the taxes. And they are still at it today. An ally of the rich, Bill O'Reilly stated yesterday, "The best example of propaganda finding its way into the national discourse right now is the tax cut debate. The left continues to hammer the theme that President Bush wants only to please the rich, to give the government's money to the wealthy, while poor Americans suffer terribly." He goes on, "The truth is the wealthy pay the overwhelming portion of federal income taxes." (Fox News, "The O'Reilly Factor," 4/5/01).
O'Reilly, loves facts and figures, do an independent audit of taxes paid by the rich with facts, figures, and charts and go on "The O'Reilly Factor." Put him in his place and then move on to the next one.
I have been intensely watching this debate and I still have not seen anyone state even an estimate on who are the rich and just how much do they pay. For example, the rich includes everyone making over $200,000 a year and they pay this amount that is this percentage of the $1.8 trillion the government took in, in 1999.
My question to you is exactly who are the rich in America? And how much do they pay in total Federal taxes? I believe the median income is around $50,000 so I would think a rich person would have to make at least three or four times the median income to be consider rich. Regardless of the income level, I am still interested in knowing, for your purposes anyway, who do you consider to be rich and exactly how much do they pay in total Federal taxes? Or has anybody really even calculated it?
Federal Budget revenue sources for 1999 were 48% income taxes, 34% Social Security taxes, 10% corporation income taxes, 4% excise taxes and 4% other that include estate taxes. Right off the top of my head, Gates has made about $60 billion in his life, but close to $40 billion is still in Microsoft stock and therefore is an unrealized gain, taxes paid 0, that leaves $20 billion, but of that he gave a lot away and he could write it off against his other income, taxes paid, I don't have a clue, but I know he didn't have to pay Social Security taxes on most of it because there is a cap on Social Security taxes. As far as Gates' portion of Corporation taxes paid, 0, and then excise taxes, and other taxes which include estate taxes, all I can say, not much based on his net worth of $60 billion and the fact he is still breathing.
One thing for sure, Gates has not paid that much in taxes relative to his net worth that he earned, so everyone says. The vast majority of the truly rich are in the same situation as Gates. I believe if most Americans knew this and understood it, they would be very disappointed in the American tax system and would overly not support the Bush tax cut plan. Unfortunately, the Democratic Party is not very good at stating their case or explaining what's really going on. Maybe it's because they too are controlled by the rich and don't really want to let the cat out of the bag (like with campaign financing).
I hope to see you on the "O'Reilly Factor" (please let me know if you are), but if you decide not to, I hope you at least write me back with an answer to the following question: who are the rich in America? And how much do they pay in total Federal taxes? For example, the rich are considered to be anybody who makes over X amount, and they pay X amount in federal taxes (I'm looking for total taxes paid, not just income taxes, taxes are costs no matter what the taxes are called). And if possible, can you, tell me how much do individuals who make over $250,000 pay in taxes, e.g., the group of individuals who make over $250,000 pay X in total federal taxes.
My personal belief is the vast majority of federal tax revenues which include Social Security taxes are paid by the upper-middle-class and the middle-class, not the rich. However, I would like some hard facts on the subject rather they support my belief or not.
Finally, I would like to talk about my earlier remarks about why I think the tax cut and the rich is not just another issue for the Democratic Party.
My family, both sides, have been Democrats forever. The Democratic Party supported the little guy and that's just what my family was and still is today. Unfortunately, in the Nineties, the Democratic Party has not been about the little guy in general, but only a certain little guy, that is, the little guy who's a certain race or sex (I'm not talking about what is in the hearts of Democratic Politicians, I'm talking about their actions and what comes out of their mouths). I believe this is the wrong approach since America is a very diverse country, if this was Japan, it would be another issue, but it's not, this is America. A diverse America, even more so now, as is clearly pointed out in the 2000 census report.
What should define the little guy is economic status, not race, or sex, or sexual orientation, but simply economics. By allowing the Republican Party the opportunity to pretend that they now are strong supporters of the little guy by stating that they are not just going to give money back to the rich, but they are going to give all Americans back money, the Democratic Party is going to lose even more support, slowly, but surely. If the Democrats would have shown America, in Ross Perot style, that the rich do not pay most of the taxes, in fact the rich utilize most of the tax loopholes, and that they, the Democratic Party supports all the little guys, I personally believe the Democratic Party would be much more supported by the middle-class including the middle-class in the Heart Land of America.
The Republican Party clearly represents the rich and big business, but do to a loss of focus on the Democratic side, the Republican Party is gaining strength, strength that it does not deserve. I realize there are many other factors going on, but I believe the tax cut and the rich is a major factor in divining the two major political party s in America, the tax cut and the rich is not just another issue. Time and the actions of the Democratic Party will tell.
Respectfully,
PS. I started watching the "O'Reilly Factor" because he didn't care about being politically correct, and I really enjoyed watching him when he challenged Greenspan even though it was too late by then, but later, he world make stupid remarks such as calling the slowdown a recession when it was impossible since it takes two quarters in a row of negative GDP growth and the forth quarter of 2000 was still 1% which would mean we really couldn't be in a recession until June 30th at the earliest, that would be the first day that someone could suggest we were in a recession and even then it could only be a suggestion because it would take several weeks before all the numbers would be in. He also said Greenspan should resign which made no sense, someone shouldn't resign for making a mistake even if it was a huge mistake. On top of that, the politicians would all have to resign because they let him hike rates without even challenging him. And now that O'Reilly constantly talks about the "poor" rich having to pay too much in taxes... I really wish someone would challenge him with facts, figures, and graphs. He, nor anybody else, should be able to mislead the American people.
ADDENDUM (September 7, 2001)
So far, I have not heard from Congressman Stark regrading the above questions?