This class war was started when Ronald Reagan determined that it would be beneficial to provide tax cuts for the wealthiest Americans. That was intended to encourage the growth of the economy, and it did - for the wealthiest Americans. Basically it redistributed income to the upper class by lessening their tax liability. This was coupled with the lowering of the tax rates on capital gains, the province of the wealthy, and then the richest Americans became unbelievably richer. Concurrently, their share of responsibility of the tax burden decreased dramatically.
Most Americans saw nothing wrong with that change; it seemed fair, from a simplistic point of view, that everyone should pay the same rate. However, everyone does not benefit equally from our capitalistic system. And it is very easy to see that paying 10% tax on one-hundred thousand dollars does not have the same impact as paying 10% tax on twenty thousand dollars when that is all the money that one earns in a year. With ninety thousand dollars left over, it is easy to live well. With eighteen thousand dollars left to live on, the loss of two thousand dollars has a far greater impact. That’s why the graduated income tax was developed. During a less greedier era, after the awakening of conscience caused by World War II and the Great Depression, both Congress and the American public took it upon themselves to distribute the burden of rebuilding the country and paying off the debt of the war to those who could most afford it. Prior to that the greed of the twenties and thirties was very much like the greed of the eighties, nineties and today. For some reason Americans admired the wealthy and worshipped attentively at their alter. They still do, and they will continue until their plight becomes unbearable. None-the-less, for those who do care, the following information is intended to clarify what has happened. And, no I’m not a socialist or a Marxist, I believe in responsible capitalism. I just think that being fair to the people upon whose backs the rich have prospered is the least the wealthy can do. After all, for a capitalistic system to work unemployment must be keep high enough to keep wages low enough and jobs scarce enough so that the profit margins are high and the wealthy can become wealthier.
Let’s take a quick look at the graduated tax prior to World War II. I’ve picked 1929, a disastrous year.
Family Income Distribution in 1929
2.3% had an income of over $10,000
8% had income over $5,000
71% had incomes of less than $2,500
60% had incomes of less than $2,000
42+% had incomes of less than $1,500
21% had incomes of less than $1,000
Average net farm income
1929=$962
1932=$288
Income Tax Tables for 1929 Married Filing Jointly
Marginal Tax Brackets
Tax Rate Over But Not Over
1.50% $0 $4,000
3% $4,000 $8,000
5% $8,000 $10,000
6% $10,000 $14,000
7% $14,000 $16,000
8% $16,000 $18,000
9% $18,000 $20,000
10% $20,000 $22,000
11% $22,000 $24,000
12% $24,000 $28,000
13% $28,000 $32,000
14% $32,000 $36,000
15% $36,000 $40,000
16% $40,000 $44,000
17% $44,000 $48,000
18% $48,000 $52,000
19% $52,000 $56,000
20% $56,000 $60,000
21% $60,000 $64,000
22% $64,000 $70,000
23% $70,000 $80,000
24% $80,000 $100,000
25% $100,000 -
Note that 71% of the population paid merely 1.5% tax. The vast majority of income tax was paid by the wealthy. That means that prior to World War II those people who benefited most from the system provided the most support.
Now let’s take a look at income and the tax tables shortly after WWII, 1950.
20% had income of over $5,284
40% had income of over $3,801
60% had incomes of less than $3,801
40% had incomes of less than $2,856
20% had incomes of less than $1,661
INCOME TAX TABLE 1950 Married Filing Separately
Marginal Tax Brackets
Tax Rate Over But Not Over
20% $0 $2,000
22% $2,000 $4,000
26% $4,000 $6,000
30% $6,000 $8,000
34% $8,000 $10,000
38% $10,000 $12,000
43% $12,000 $14,000
47% $14,000 $16,000
50% $16,000 $18,000
53% $18,000 $20,000
56% $20,000 $22,000
59% $22,000 $26,000
62% $26,000 $32,000
65% $32,000 $38,000
69% $38,000 $44,000
72% $44,000 $50,000
75% $50,000 $60,000
78% $60,000 $70,000
81% $70,000 $80,000
84% $80,000 $90,000
87% $90,000 $100,000
89% $100,000 $150,000
90% $150,000 $200,000
91% $200,000 -
60% of the population paid 20% tax. In order to pay off the national debt After World War II the tax burden was redistributed. However, the differential among the income quintiles was not nearly as great before the war and as it has been since 1980. In addition, those richest Americans paid a much higher income tax rate on high income. During 1950 through 1970 the attitude was still that those people who benefited most from the system should provide the most support for that system; although, as time went on the deductions for the wealthy cut their exposure.
However, beginning with the increased deductions of the 1970s and especially since the 1980s the attitude has become, "Let the middle class take over the burden of the tax needs so that the upper class can garner massive financial gains." That’s when middle class income gains shrank to a "trickle" while the upper class experienced a flood of income. For some reason our government thought that wealthy Americans and corporations needed incentives to make more money. (However, does giving them the money serve as an incentive or is it a disincentive?)
By 1988 the "graduated" income tax had become the following:
1988 Income Tax Table Married Filing Jointly
Marginal Tax Brackets
Tax Rate Over But Not Over
15% $0 $29,750
28% $29,750 $71,900
31% $71,900 $149,250
28% $149,250 -
According to the Federal Reserve Board the distribution of wealth in 2004 was the following:
1% of the population owns 34.3% of the wealth
The next 4% of the population owns 24.6% of the wealth
The next 5% of the population owns 12.3% of the wealth
The next 10% of the population owns 13.4% of the wealth
The next 20% of the population owns 11.3% of the wealth
The next 20% of the population owns 3.8% of the wealth
The bottom 40% of the population owns .2% of the wealth
When just the top 10% of the wealthiest population are combined, they own 71.2% of the nation’s wealth.
"So what!" you may say. They earned it. Actually, no, it was redistributed to them through the Federal income tax changes.
Just between 1983 and 2004 the net worth dramatically shifted as follows:
The top 1% net worth went from $8,315,000 to $14,786,000 - a 77.8% change.
The next 4% net worth went from $1,375,000 to $2,645,000 - a 92.3% change.
The bottom 40% net worth went from $54,000 to $22,000 - a minus -58.7% change.
From 1983 to 2004 the income change was nearly as drastic
The top 1% income went from $689,000 to $1,169,000 - a 67.6% change.
The next 4% income went from $180,000 to $258,000 - a 43.1% change.
The bottom 40% income went from $16,800 to $17,500 - a 4.3% change. It didn’t keep up with inflation; in fact, it lost heavily since inflation averages around 4% a year.
Those are the real economic results of the legacy of Ronald Reagan, the Georges’, the Republican controlled Congress, and those Democrats who allowed Ronald Reagan and the Georges to start this snowball down the hill.
Unfortunately for future generations, to provide the huge amounts of tax money needed to give to the richest Americans, to finance the military industrial complex, to support special interest groups and corporations, and to keep the middle class from recognizing what was happening, the United States needed to borrow a lot of money. Below is the giant slalom on which our Presidents have taken us. Note how much fasten the Republicans were down the slope. The Democrats are just no competition for these speedy Republicans. Clearly George W. Bush is the winner. Of course we are the losers and our grand children will be the grand losers.
President Debt during tenure Avg debt per year
Carter $309,786,000,000 $77,446,500,000
Reagan $1,828,701,960,187 $228,587,745,023
Bush 1 $1,554,057,922,952 $388,514,480,738
Clinton $1,395,974,529,061 $174,496,816,133
Bush 2 $4,141,176,587,800 $517,647,073,475
It’s amazing how much these Republican "small governments" cost. I thought that the purpose of small government was to decrease the cost. They’ve been able to shrink the services that the government provides while simultaneously increasing the cost. If the Republicans have their way they’ll "small government" us out of existence.
Without a doubt the upper class won, but one of their fears of winning is that the defeated will eventually notice that the cost of defeat was far greater than they first imagined. When that happens, things can get nasty especially when the economy takes a dive as it has now.
For those of you who are more adamant about the failure of our government to truly look after and protect the vast majority of Americans, you need to take a critical look at our government. From the tragedy of a costly war to the financial fiasco of the subprime mortgage (a hedge fund scam for the wealthy that smacks of the eighties junk bond scam, you’ve got to love deregulation and a completely free market), to the Patriot Act and warrant-less wiretapping that decimated our liberties, they have let us down. They have failed in their sworn task to protect the American public - not just the wealthy 10% but all of us.
As additional information the following are excerpts from the Hightower Lowdown.
Edited by Jim Hightower and Phillip Frazer
"The best year for the bottom 90 percenters was 1973, when the average taxpayer reported $33,000 in income (in today's dollar value). By 2005, that average had fallen by about $4,000. In other words, after three decades of explosive growth in GDP, America is prosperous, but Americans are not! That un-American imbalance is the most important fundamental of our economy.
Washington's "stimulus" package is a political fig leaf to cover our leaders' bankruptcy of ideas, gumption, courage, and...well, leadership. OK, $168 billion is a big leaf, but throwing these government checks around (including some $50 billion that Bush insisted on doling out to corporations) will not create middle-class jobs, stimulate new American production, or address the fundamental imbalance in our economy.
Even as Congress was passing its feel-good stimulator last month, the Labor Department announced that the U.S. lost another 279,000 manufacturing jobs in 2007, reducing that key middle-class job sector to less than 10% of America's workforce for the first time since such records have been kept. Around the same time, Wall Street banks announced plans to eliminate some 40,000 middle-class jobs, and Detroit automakers said they would cut tens of thousands of workers this year, replacing them with new hires paid only about $14 an hour--half of the previous wage.
Pundits and politicos are now decrying the reckless, unregulated financial scheming that fueled the collapse of the subprime-mortgage industry. These schemes cost 1.6 million people their homes last year, and more will lose homes this year. Politicians have proposed various band-aid bailouts, but our leaders don't want us to ask the most elementary question: Why is there such a huge demand in this wealthy country for these rigged loans? The key factor is the loss of family-wage jobs.
What America needs is not a stimulus for the false economy of stock-price enrichment for the top 10% and frantic, debt-fueled consumerism for everyone else. This is the time to make a sharp break from the "tinkle-down" economic policies of the past 30 years, turning instead to "percolate up" economics focused intently on rebuilding America's middle class and restoring America's unifying ethic of the common good.
INFRASTRUCTURE. As we've often reported in the Lowdown, one of the most damning failures of our political leadership at all levels has been its craven willingness to let America's house crumble. From collapsing levees to exploding underground pipes, a dangerous deterioration has spread through water systems, roads, schools, airports, the electric grid, ports, public transit, and other basics, reaching into practically every community.
THE GREEN ECONOMY. Here's our future--if we're smart enough to grab it. Rather than wait on the energy fairy to end America's oil addiction, let's do it ourselves.
One group in the lead is Apollo Alliance, an exciting coalition of enviros, labor organizers, entrepreneurs, community leaders, and others pushing aggressively for policies that link energy independence with new jobs. ....... Making every home and building in America energy efficient and developing clean, high-speed rail networks between population centers would employ millions of people at every skill level.
Yes, this would take an up-front investment, but the payoff is staggering. Take just one Apollo idea: a plan to create a Clean Energy Corps. One of the corps' functions would be simply to weather-strip the homes of low-to-moderate-income folks. There's already a federal program to do this, but it's so underfunded, understaffed, and inactive that it has reached only a tiny fraction of the 30 million eligible homes.
To retrofit them all over a decade would cost about $45 billion, but look at what we'd get for that sum. Some 225,000 people from the communities where the work is done would be earning and spending paychecks there, thus giving an added boost throughout the local economy."
What do you think? Are you ready for a class war that will take back the economy and focus it on the vast majority of Americans? Is it time to be less generous to the wealthiest Americans? Should we continue to fight wars to protect their oil profits or their right wing religious fanaticism or their anti-Muslim views? Should we continue to let them ignore the needed environmental changes so that their profits are secured? Should we continue to allow our government to continue serving that 10% of wealthiest Americans while letting the ninety percent of us to become less than an after thought?
Which of the candidates is really aware of the real economy and what do they plan on doing about it? Do any of them have the courage to wage a class war for us in Congress?
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