Tuesday, July 5, 2011

A Rebuttal to the "Don't Tax the Hard Working Rich" Argument

First off, I hope that everyone had a wonderful Independence Day yesterday. And again I would like to offer my gratitude to the men and women of the Armed Forces of the United States, who fought to make this a free nation, and who continue to defend our liberties each day.

Now I know, in our society, there are just things you should not discuss at work: religion, sex, and politics are chief among them. And I try to write my thoughts here to get my feelings/frustrations out, but there are times when something is said, or I read a Tweet out loud, and being the opinionated person I am, I just can't keep my mouth shut anymore. The problem is, I'm a better writer than impromptu speaker (which is why I don't think I'll actually ever be a politician) and do not always think of the right things to say immediately.

So a couple of times last week, I heard a couple of coworkers repeat the old Republican talking point that the "wealthy should not be taxed at a higher level because they have worked so much harder to make all that money, so why should they be punished by the government coming in and taking their money away in the form of raising their taxes?" Of course that was coupled with the classic "but you can't raise taxes on the rich and the large corporations, they're the ones that create jobs!" If I haven't blogged about that second argument, I will very soon. But for now, my focus is on the first. While I did stand up to these talking points, I could have made a better argument.

So first off, a little history. From 1940 - 1963 the highest top tax rate ranged from 81% - 94%. For the rest of the 1960s and 1970s the top tax rate ranged from 70% - 77%. Now, during all these years, even being taxed at such a high rate, those living at the top were living incredibly well. At the same time, unions were strong, the middle class was booming, and families could afford to buy homes, cars, this new thing called "television", and they lived quite comfortably. For the most part, only Dad worked and families only went into debt for the mortgage. Now, I do not mean to oversimplify life as it was before I was born, but in general, the economy was growing, the middle class could buy the things they were producing, and prosperity could be had by the very wealthy and the middle class, all of whom were "hard workers".

Then Ronald Reagan came to Washington and nothing has been quite the same since. The top tax rate was abruptly cut to 50% and by the end of his second term it was all the way down to 28%. There was an increase of influence from Wall Street and other major corporations on Capitol Hill, hell bent on keeping those tax rates low. Since then companies and governments have been working to delegitimize, harass, and ultimately destroy the unions. Workers have less power to negotiate for better wages and benefits. The same wealthy who used to build up their companies and invest in their employees now close factories in America, ship the jobs overseas where labor is cheaper, and give themselves a big fat pay raise. Don't believe it? From 1990 - 2005 the average production workers' pay increased a paltry 4.3% (definitely not keeping up with inflation), while a CEO in America saw earnings grow 298.2%. I recently read (although for the life of me cannot remember the source) that before Reagan, the average CEO earned 30 times the average employee. Right now, the average CEO earns a staggering 400 - 2000 times what an employee earns.

If our economy is to get out of this rut, policies will have to be enacted to strengthen the middle class once more and the purchasing power they once held. Supply-side economics does not work. The last 30 years have proven that. This is a consumer economy, and if the consumers are unable to purchase the goods, the economy will remain stagnant for some time to come.

So what it all boils down to is this: the wealth gap between the rich and poor in this country has been growing almost exponentially for three decades thanks to corporate and Wall Street influence in Washington and our elected "leaders" writing and signing legislation that primarily benefits the wealthy at the expense of the middle class. I am all for hard work and industry, and I do believe a man should be able to earn a decent living. The top 1 or 2% in this country have been living lavishly thanks to their buddies, the Republicans, for the last 30 years, while the rest of this country is struggling to find a job, pay the bills, or just make ends meet from week to week, and that's with both parents in the work force. I argue that the poor and middle class work just as hard as the richest CEO, although they cannot make near the amount of money, for they do not have representatives in Washington writing tax codes and other legislation on their behalf.

So, yes, the wealthiest citizens in this country could afford to pay a little more in taxes. They are obviously not spending it in the way a middle class family would (which would stimulate the economy), and for the love of all that is good, they are NOT creating jobs. I'm not saying the top tax bracket should pay a 90% or even 50% tax rate, but if we take it from the current 35% to 39.6% as it was during the Clinton administration, which, as I recall were very prosperous years, that would be a big help to increase revenue to the government to help pay for all those nice things we enjoy in this country: roads, national security, national parks, clean air and water, and safe food to eat, to name a few.
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