Looked at another way—in terms of tax justice, financial regulation, and income disparity—the economic right wing has dominated American politics for the past thirty-plus years. In the face of little popular resistance and with assistance from both major political parties, the richest Americans and the most powerful corporations have had a free hand to rewrite the tax code and the banking laws to enrich themselves, endanger the world economy, and deprive government of the revenues it would need to, as the Constitution puts it, 'promote the general welfare'.
As income inequality in the States approaches banana-republic levels, Americans are finally having a long-overdue national conversation about taxes, banking laws, and economic justice, but why were we not having this conversation all along? The singular focus on civil rights without a comparable commitment to tax justice may also be the greatest failure of the American left. While it is inarguably a great achievement that any child, regardless of color, can now swim in a public pool, that opportunity means little if tax revenues shrink to the point where cities can no longer afford to open the pools, let alone build new ones.
Let me say at the outset that nothing in this article should be construed to question the value or the necessity of the long, ongoing struggle for civil rights and civil liberties. The sacrifices, heroism, and eloquence of the struggle ennoble our history. Our successes on the road to the equal protection of the law are the nation's greatest historical achievements and the envy of the world. But those same victories might today be more widely enjoyed had we paid comparable attention to less obviously heroic matters, like the tax code and financial regulation.
Capitalism per se need not be at odds with civil rights. Indeed, many of the wealthy are socially progressive, as demonstrated by strong support on Wall Street for same-sex marriage in New York State, as reported multiple times by the New York Times. Lloyd Blankfein, CEO of Goldman Sachs, has even made a video supporting marriage equality. The selfish energies that capitalism unleashes in the pursuit and creation of wealth don't discriminate against individuals, but they do require proper government regulation lest they destroy us all.
The reason that twenty-first-century tax rates constitute a political failure is that for most of the twentieth century tax rates were not what they are now: the rich were taxed more, much more, and the United States managed, despite high taxes on the rich, to be a world economic power. Those tax rates changed because one side, the rich, wanted them lowered and the other side, the rest, did not put up a commensurate fight.
Tables comparing the year-by-year highest tax brackets, like this one from the National Taxpayers Union, have been making the rounds of the internet lately. Here are some highlights:
• From 1954 through 1963, income above $400,000 was taxed at 91%.Were Dwight Eisenhower and Richard Nixon communists for presiding over tax rates of 91% and 70% respectively? Hardly. The 1950s and 60s were decades of prosperity for American businesses and working people alike. Then Ronald Reagan was elected president in 1980, and the tax rates for the rich began their dramatic decline.
• From 1965 through 1978, income above $200,000 was taxed at rates that varied from 70 to 77%.
• From 1982 through 1986, the income bracket varied a bit from $106,000 to $171,580, but the top marginal rate plummeted to 50%.
• When Reagan left office in 1989, the highest marginal tax rate was only 28% and it applied to everyone who made more than about $30,000 a year. In essence, progressive taxation vanished.
• George H.W. Bush raised the top marginal rate to 31%.
• Bill Clinton raised it to 39.6% on incomes over $250,000.
• Finally, George W. Bush lowered it again to 35%, where it remains under President Barack Obama.
For more detailed data, see this spreadsheet supplied by the Tax Foundation.
Income taxes are only one piece of the puzzle. Taxes on capital gains and other so-called 'unearned income' like stocks and bonds have also plummeted to favor hording by the rich. The current capital gains tax rate is only 15%, i.e. lower than the historically low income tax. Comparable declines have occurred in estate tax rates and corporate tax rates. The only aspect of taxation that has risen in recent decades has been the number of tax breaks and loopholes for the rich, like those that now allow dividends and so-called carried interest to be taxed at the same rate as capital gains. (For some of these facts in chart form, see this report by the Center for American Progress.)
What happens when governments cannot collect enough revenue because they have lowered taxes too far? Services break down, public investment comes to a halt, and civil society declines. Here are a few examples of the consequences from around the country.
by Jeff Strabone, 3 Quarks Daily | Read more:
