Until progressive taxation is restored, there will be no sustainable recovery. Why can't Democrats in Congress along with the Obama WH refute the changes to the tax law brought on by Reaganomics? This also applies to States, especially ones in severe distress like California.
The wealthy have been getting a free ride, not paying any more in taxes percentage wise than the middle class in most cases.
Here is today's tax schedule
Here's what a version of progressive taxation looks like.
Multiply all the amounts by 10, and this tax schedule [right from the IRS tables for 1963] falls in line with today's income levels.
Somewhere between these two extremes lies a path to restore a reasonable level of progressive taxation.
That table with the 24 levels?
That was Dwight Eisenhower's idea of fiscal conservatism. He was pressured to reduce those rates all eight years he was in office and refused to buckle.
Yes, there were loopholes and deductions then, just as there are today. However the core numbers do not lie: people paid taxes at a higher rate as their incomes went up, something this country abandoned in the 1980s with the adoption of Reaganomics. As late as 1980, the most wealthy Americans were paying 70% on income over the top bracket amount. By the time GHWB left office, the top tax bracket was 31%, and started at less than $100K/yr couples. The 28% top rate set a low not seen since the late 1920s.
I'm not calling for an immediate adoption of a 91% or even a 70% tax rate on incomes over $4M a year, or a 50% level of taxation of incomes on couples making over $320K, but we are light years away from recapturing some of the huge amounts of wealth transfer which has wrecked our economy.
What I estimate as trillions of dollars that should have been collected from Americans [and in other Western countries which followed Americas lead in the 1980s, adopting similar general tax reductions] were pumped into the hands of the already wealthy. With that money, a whole series of extremely powerful industries of lobbyists, media, and corporate entities were created which have taken the place of government.
This is the legacy of Reaganomics, in a nutshell, the trickle down VooDoo economics of David Stockman, Milton Freidman and the Chicago School. The massive deficits that were something that Dick Cheney said "didn't matter" until just recently of course now are damaging that a Democrat is in the WH.
The deficits have always mattered. How we got to this point is the fault of Ronald Reagan's administration, aided and abetted by GHWB, Bill Clinton and made even worse by GW Bush. Congress has been totally spineless and craven to the wealthy in permitting these tax cuts.
This wealth transfer which has wrecked both the US and world economies - it has driven the establishment of a whole sphere of luxury goods, luxury homes, and vacations and even complete locations for the ultra rich. It helped to create bubble after bubble of nonsense. Companies were bid up into the millions on the stock market in the 1990s that never produced a single thing; when this bubble burst, the money was thrown at more tangible things like housing as well as fraudulent instruments allowed by the repeal of Glass-Stegal.
It has created a media juggernaut in the centers of power which is almost impossible to break, as the giant Wurlitzer of Madison Avenue demands that Americans [and those who want to be like Americans] 'shop until they drop', and protects the interests of corporations and the wealthy over the rest of the people.
Expiration of the Bush tax cuts, the current plan of the Obama administration, is like putting a band-aid on amputation. A family making about $350/yr will have to pay roughly $900 more in taxes as the Bush cuts are repealed, and even this weak action is being decried by right wingers as 'socialism' and 'class warfare'.
There are few voices in Congress who dare speak up and tell this story - that in order to restore some sense of order, taxes MUST be raised and raised now on the wealthy.
Raising taxes on the rich: it's yet another 'third rail' of American discourse.
To see all the Federal data on tax tables, see this link.
[this not an endorsement of the policies on that website!]
http://www.taxfoundation.org/...