What happens when we tax the rich?
After the Republican Great Depression, FDR put this nation back to work, in part by raising taxes on income above $3 to $4 million a year (in today’s dollars) to 91 percent, and corporate taxes to over 50% of profits. The revenue from those income taxes built dams, roads, bridges, sewers, water systems, schools, hospitals, train stations, railways, an interstate highway system, and airports. It educated a generation returning from World War II. It acted as a cap on the rare but occasional obsessively greedy person taking so much out of the economy that it impoverished the rest of us.
JFK pushed through that tax increase to take us back toward FDR/Truman/Eisenhower revenue levels, and we continued to build infrastructure in the US, and even put men on the moon. Health care and college were cheap and widely available. Working people could raise a family and have security in their old age. Every billion dollars invested in infrastructure in America created 47,000 good-paying jobs as Americans built America.
But the rich fought back, and won big-time in 1980 with Reagan.
Reagan promptly cut income taxes on the very rich from 70% down to 27%. Corporate tax rates were also
cut so severely that they went from representing over 33% of total federal tax receipts in 1951 to less than 9% in 1983
The result was devastating. Our government was suddenly so badly awash in red ink that Reagan doubled the tax paid only by people earning less than $40,000/year (FICA), and then began borrowing from the huge surplus this new tax was accumulating in the Social Security Trust Fund. Even with that, Reagan had to borrow more money in his 8 years than the sum total of all presidents from George Washington to
Jimmy Carter combined.
In addition to badly throwing the nation into debt, Reagan’s tax cut blew out the ceiling on the accumulation of wealth, leading to a new Gilded Age and the rise of a generation of super-wealthy that hadn’t been seen since the Robber Baron era of the 1890s or the Roaring 20s.
And, most tragically, Reagan’s tax cuts caused America to stop investing in infrastructure.
In the years since then, mind-boggling wealth has risen among fewer than 20,000 people in America (the top 0.01 percent of wage-earners), but their influence has been tremendous. They finance “conservative” think tanks (think Joseph Coors and the Heritage Foundation), change public opinion (Walton heirs funding a covert effort to change the “estate tax” to the “death tax”), lobby congress and the president (who calls the “haves and the have-more’s” his “base”), and work to strip down public institutions.
The middle class is being replaced by the working poor. American infrastructure built with tax revenues during the 1934-1981 is now crumbling and disintegrating. Hospitals and highways and power and water systems have been corporatized. People are dying.
And Bush, following closely in Reagan’s footsteps, is making things worse. As Senator
Bernie Sanders pointed out at recent hearings for the confirmation of Bush’s new nominee for the Office of Management and Budget:
Since Bush has been president:
- over 5 million people have slipped into poverty;
- nearly 7 million Americans have lost their health insurance;
- median household income has gone down by nearly $1,300;
- three million manufacturing jobs have been lost;
- three million American workers have lost their pensions;
- home foreclosures are now the highest on record;
- the personal savings rate is below zero - which hasn’t happened since the great depression;
- the real earnings of college graduates have gone down by about 5% in the last few years;
- entry level wages for male and female high school graduates have fallen by over 3%;
- wages and salaries are now at the lowest share of GDP since 1929.
The debate about whether or not to roll Bush’s tax cuts back to Clinton’s modest mid-30% rates is absurd. It’s time to roll back the horribly failed experiment of the
Reagan tax cuts. And use that money to pay down Reagan’s debt and rebuild this nation.
Our bridges are falling apart (among other things), and its Ronald Reagan's fault. A few hours before the bridge collapsed in Minnesota, a news release landed (among hundreds) in my email inbox. It was from the right-wing "Heartland Institute" and a Minnesota conservative group calling itself...
www.commondreams.org
