By Cutting Taxes on the Rich, We've Incentivized Greed--How Do We Return to Fairness?
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For instance, the non-partisan Congressional Budget Office – in an analysis of data from 1979 to 2005 – found that the inflation-adjusted income of middle-class Americans rose about 21 percent (only about one-fifth the increase enjoyed by the middle class during the post-World War II era).
Meanwhile, the income for the ultra-rich (the top 100 th of one percent) jumped 480 percent from 1979 to 2005, rising from an average of $4.2 million to $24.3 million. And CBO’s analysis ends in 2005, thus missing the decimation of the middle class from the Wall Street bust of 2008.
The other bitter irony about all this is that despite the oil shocks and other problems of the 1970s, the United States was actually poised to reap huge benefits from the government’s investments in the 1950s and 1960s.
Eisenhower had used tax revenues to build the Interstate Highway system and other modern transportation infrastructure. Kennedy had pushed the Space Program which led to microprocessors and other crucial technological breakthroughs. Government funding also was behind major advances in medicine and in the creation of the Internet.
There were benefits emerging, too, from global markets based on an international system promoted and defended by the United States.
The wealth created by these various developments should reasonably have been shared by the American people, with some of the money reinvested to keep the United States at the cutting edge of transportation, science and technology.
Though higher productivity and global trade would mean the inevitable loss of many factory jobs, the higher profits – if recycled through the government to benefit the average American citizen – could have meant new employment opportunities in areas such as construction, teaching, research, health care and the arts.
Instead, because Ronald Reagan became president in 1981 and won over much of the U.S. population to his message that “government is the problem,” the new orthodoxy called for tax cuts to benefit the rich and the rollback of government enterprises.
The Right’s larger strategy was to starve the government of resources and to make sure that the benefits from the era’s economic gains went disproportionately to the investor class. Prosperity was supposed to come from “trickle-down” or “supply-side” economics.
To ensure the political success of this project, the Right’s wealthy benefactors poured billions of dollars into building right-wing media and other propaganda outlets. Inundated with anti-government agit-prop, many middle-class Americans, especially white males, got confused about where their interests lay.
These Americans were sold on the notion that the federal government represented “tyranny” and that “freedom” required letting corporations and the rich control almost everything.
Even as the results of this orthodoxy became apparent in recent years, the Right’s well-funded political/media apparatus continued to dominate the national debate. Though polls showed sizeable portions of the American public favoring higher taxes on the rich, the political momentum still rested with the Tea Party and its billionaire patrons.
The Republicans in Congress have made clear they will reject any increased tax revenues at all (although some favor shifting more of the burden away from the rich and onto the poor). President Barack Obama’s modest proposal for a “Buffett rule” to make sure that the rich at least pay as high a tax rate as their workers is denounced as “class warfare.”
The Right also benefits politically from the fact that many key Democrats (and many top news media personalities) have benefited from the lower tax rates on the rich. The likes of Rahm Emanuel and Larry Summers – key members of Obama’s original White House team – raked in millions of dollars from Wall Street work while out of government.