R i g h t a r d i a: Rightardia Editorial on taxes: the Right is conning you

Thursday, July 16, 2009

Rightardia Editorial on taxes: the Right is conning you

The New York Post is suggesting the Democratic health care prescription will be a poison pill in New York.

A terrifying 57 percent tax looms for biz, top earners,” by Charles Hurt, et. al: “The top [income tax] rate in New York City … would be 58.68 percent, the Washington-based Tax Foundation said in a report yesterday.

During and immediately World War 2, the tax table for top earners was 90 per cent. The government financed the war and the handled the Great Depression with the income tax. Since then the top taxes have been chiseled away for the wealthiest Americans. In fact tax tables dropped for top income earners to about 33 per cent during the Bush administration.

But wait, there's more! Bush cut capital gains take to 15 per cent that was round 28 per cent when Clinton was president. Most billionaires and millionaires make their money with capital gains, not through their salary.

The rich were big beneficiaries of the deficit politics of the GOP during the Reagan and George W. Bush administrations. In fact, the Reagan tax cuts fractured the Middle Class. About one third became affluent and the other two-third either tred water or declined. Many of the problems we have today started with the tax table experiments of Reagan Republicans.

If we want a society that allows people to make unlimited incomes such as the big corporate CEOs who make 300 times the income of the average corporate worker, these same people should be prepared to pay some big taxes.

The GOP would like you to believe that most taxes in the US are progressive. A progressive tax with a rate that increases proportionately with taxable income. A Republican. Theodore Roosevelt, brought the progressive tax system to the US.

A flat tax is in fact the prefered GOP tax approach because such taxes are regressive. Most US taxes are regressive: sales tax, real estate tax, licenses, tariffs, Social Security and Medicare payroll taxes are all regressive. Two well known taxes that are progressive are Income Tax and the Estate Tax. of course, Bush suspended the Estate Tax while he was in office and cut the income tax rates for top American earners. It is clear that any tax in the US that is progressive is a right wing target. The tax cuts had a negative effect (see figure 1).

The US Congress is smart to raise taxes on the most affluent Americans to pay for health care. Affluent Americans were the biggest beneficiaries of GOP Supply Side economics. The wheel needs to turn and middle class needs to be built back up. Bridges, roads and levees need to be repaired. Obama needs to do exactly what FDR did by spreading the wealth around.

We know from the Bush years that supply side economics is a conservative pipe dream that doesn't create jobs or improve the economy. All 'tickle down did was created a large deficit and national debt and retard job creation (see figure 2).