Serving Northern St. Louis County, Minnesota

Cutting taxes on the wealthy just makes them wealthier

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On Monday night I listened to the first of the presidential debates with some friends and I came well-prepared with crochet hook and yarn to keep my hands busy so I wouldn’t throw things at the TV. I don’t have TV reception at home nor had I sought out videos online, so my brain hasn’t been inundated with moving images of The Donald or any of the previous stream of Republican candidates who had somehow convinced themselves that they would be competent to fill the role of President of the United States. By the same token, I’d had very little conditioning to prepare me for two hours of exposure, so the impact was considerable. Taking in smaller, homeopathic doses over time might have been advised.

I was not surprised or reassured that my companions found his performance ludicrous, because I knew them all to be progressive, liberal-minded people, but I was somewhat relieved afterwards during the post-game replays and commentaries that even Republican strategists felt he blew it big time.

I haven’t been living in a cave, so I was familiar with his reported bizarre behavior, lambasting anything and everything with racist, sexist, misogynistic and otherwise offensive language and attitudes. As far as I’ve been able to determine, he feels no compunction to be rational, consistent, or truthful. So, again, no surprises; he’s been careening around the world for years with his well-nourished ego and exceedingly bad taste. The truly puzzling dynamic is how people can listen to him, observing the same behavior I see, hearing the same words, and still somehow actually envision him as president. With apparently a more powerful imagination than I have, they can picture someone who can’t sit still for even a few minutes on a nationally televised debate, sniffing every minute or two, nodding and shaking and grimacing, interrupting constantly...THIS person they want to carry the black box with codes to authorize nuclear attack? THIS is the man they want to represent our country with international leaders? The one who responded to media critics who said he had no plan for ISIS, “I’d just bomb the suckers.”

Okay, spewing sardonic comments about Donald Trump is no great accomplishment, he’s just too easy a target. But I have to ask: WHY, oh why, is this person still around, this easy target, who I can only hope is an embarrassment to most people in his party? Why is he purportedly doing so well in the polls? Why are people giving one iota of serious consideration to this man? And another question plaguing me: even if he exaggerates the extent of his wealth, couldn’t he afford a decent haircut?

The butterfly effect, technically known as disambiguation, states that small causes can have large effects; it was used initially with weather prediction but adopted as a metaphor inside and outside of science, such as the idea that a butterfly flapping its wings in Mexico could cause later cause a hurricane in China. Well, you know all that wind we’ve been having lately? LOTS of atypical heavy winds, right? Picture people all around the world just shaking their heads in disbelief, waves of black, brunette and blonde locks, curly and straight, setting those vibrations in motion, millions of people muttering, “What are they thinking?” “¿Lo que estan pensando?”, “Mitä he ajattelevat?”, “Kaj ti misliš?” And the winds they came. And the rain came down. Buckets of rain, buckets of tears.

Aside from my disorientation during this surreal political campaign, I’m quite clear about the one Big Lie that keeps getting revived, and that’s the one about taxes. Well, actually there are quite a few lies, but the Big One that’s wrapped around the others, burrito style, is that people at higher income levels are overtaxed, deserve to have tax cuts, and...wait for it...everyone else will benefit because those people will pump that money into the economy, bringing new life, new jobs and prosperity for all. Time and again, this trickle-down theory of economics has been proven ineffective, revealing that more money just makes wealthy people wealthier with lots more trust funds, real estate, and expensive shoes. Getting the money into the hands of the middle and lower income earners is what stimulates the economy because there are more of them and they actually need to spend the money, thereby putting it in circulation. But there was Trump, spouting the same old rhetoric on Monday night, bragging that it was just “smart” that he manages to pay zero federal income taxes, while at the same time complaining that the country’s roads and bridges are in disrepair.

Here are some clues within a brief history of personal income taxes in the United States revealing why our infrastructure is crumbling. Information is from taxfoundation.org, an independent tax policy research organization devoted to educating taxpayers, the media and policymakers. I compared tax rates at the highest and the lowest levels of earning throughout our history, using the figure of $200,000 as the constant upper level income for comparison. These are nominal statistics, not adjusted for inflation. Obviously, there are many factors affecting actual taxes paid, but this simple comparison paints a pretty clear picture, and if you’re not outraged after absorbing all this, perhaps you could email me and explain why you’re not.

In 1862, in order to support the Civil War effort, Congress established the office of Commissioner of Internal Revenue and the first income tax law with people paying 3-percent up to $10,000 and up to 10-percent above that. In 1895, income tax was declared unconstitutional until 1913 when the 16th Amendment to the Constitution made the income tax the permanent fixture we have come to know and love. Initial rates were one-percent at the lowest level, five-percent at $200,000 and you can see below how it went from there, paralleling our wars, depressions, recoveries and manipulations by tax policies which have been key factors in determining income distribution and accumulation of wealth.

1913: 1% - 5%

1917: 2%-41%

1918: 6%-72%

1923: 4%-58%

1924: 2%-46%

1929: 1.5%-25%

1935: 4%-58%

1941: 10%-71%

1944: 23%-94%

1952: 22%-92%

1964: 16%-76%

1965: 14%-70%

1978- 0%-69%

1980- 14%-68%

1982: 0%-50%

1987: 11%-38%

1991: 15%-31%

2003: 10%-33%

2008: 10%-28%

2015: 10%-28%

The lumber and railroad barons were able to amass fortunes at the turn of the 19th century, paying no taxes, and recent decades of ongoing tax benefits accruing to the wealthy has replicated the opportunity for them to build obscene fortunes while increasing the disparity between the upper and lower levels of income.

In the 1950s and early 1960s, the post-war government subsidized homeownership through FHA and VA, promoted the automobile industry and built the roads serving the newly-constructed suburbs, towns and cities. With the highest federal income tax rates in history, the economy, the middle class and the stock market were booming.

When the economy slowed down, President Kennedy supported lowering taxes combined with increasing the minimum wage, expanding unemployment benefits, spending more for highway construction, and increasing Social Security benefits to encourage early retirement. The Tax Reduction Act of 1964 lowered taxes across the board by 20 percent. Conservatives often point to that success as an argument to reduce taxes, but they neglect to note that the tax rates had started at over 90 percent.

Then the decimation began: the Reagan years brought the largest tax cut in U.S. history in 1981 followed by the Tax Reform Act of 1986 which slashed top tax rates. Several tax laws through the Clinton years brought some benefits to the middle class. Repeated tax cuts through both Bush administrations gave repeated benefits to upper incomes through decreased personal income, inheritance and capital gains rates.

As a result, the top one-percent of the population enjoyed 65-percent of the income growth between 2002 and 2007. Job growth between 2000 and 2007 was only one-third of the rate between 1989 and 2000, the weakest in any business cycle since the 1950s. Are you mad yet? Stay tuned...lots of upcoming opportunities to exercise your right to speak out, support your candidates and vote.

Comments

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Ben12

If you raise taxes on those who control prices (those who own companies and make executive level decisions), you don't end up with an increased tax base at the expense of their "wealth". You either end up with higher prices on the goods and services that they provide (inflation), or you provide those who make the decisions incentive to lower their costs. This comes at the expense of reduced labor costs either by automation, lay offs or relocation. In the case of increased pricing, this affects the lower income the most. In the case of jobs eliminated, this affects the entire economy and often reduces total tax revenue.

You can go on and on bitching about the wealthy but the simple fact is that the US has a serious problem with dependency on the entitlements and there is no amount of taxation that is going to fix that. You could theoretically confiscate every dollar made by every family earning over $200K (which is absurd) and you still wouldn't have enough to pay for what is being spent and what is being promised. So PLEASE quite tying to play this out as an "us against them" argument. The US has a huge spending problem and BOTH parties are equally guilty. The more money you give to the government, the more money there is for the politicians to direct to the industries who finance their campaigns. It has nothing to do with helping the little guy, it has nothing to do with helping hard working families, it has to do with getting elected and controlling the tax dollars. Both parties are doing it and articles like this are the reason they get away with it. As long as they can keep the population split against one another, they are free to continue with the corruption,

Thursday, September 29, 2016
jtormoen

Note to Betty Firth ... you tried. Thanks.

Thursday, September 29, 2016
Deplorable

I'm with Ben 12. Unearned entitlements have created a vile life of dependent poverty for millions. Both parties need to get back to serving the people, all of the people! I support eliminating all corporate and union PAC'S and their obscene control over our elected officials. Only individual donations with a $200 maximum would be great. Term limits (2) are also necessary. Regular folks cannot afford to run for office, and the lifetime politicians are useless bobbleheads. I'd also like to see a ban on television advertising for candidates. Debates only. Shortening the time allowed for campaigns to 30 days would also be a welcome relief.

Friday, November 4, 2016