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    This diary is in response to Laura Clawson's review of  “The Betrayal of the American Dream” by Bartlett and Steele. I confess I have not read the book and am relying on her synopsis but I trust she has described  the book well and her judgment that the book does not provide solutions to the problem of wealth disparity is accurate.
    What struck me in the review and many of the comments is the non discussion of the elephant tap dancing across the room. The chart at the top of the review clearly shows that the divergence of income took off in the 1980's. Perhaps I am older than most of those here but I turned 30 in the 1980's and remember them. When Ronald Reagan took office the top marginal tax rate was 70% and capital gains and dividends were taxed at the same rate as earned income. Since then, the marginal rate has varied between 28% and 39.6% and capital gains are taxed at a far lower rate. Thus, we see the middle class struggling while the wealthy acquire more. This is not just post hoc reasoning. The Congressional Research Service report concludes that marginal tax rates have little to do with economic growth but do contribute to income inequality.
    Therefore, a return to the marginal tax rate of 70% and eliminating the difference between capital gains and earned income would lead to a more equitable distribution of wealth. There would be more incentive among business to invest in research and workers as the CEO's would be less inclined to siphon off profits in excess salaries. In addition, the financial speculations responsible for the current recession would be less likely simply because they would be less profitable. While I would also like to see a financial transaction tax and a restriction on commodity futures trading to those entities that either produce or consume the commodities in question, I believe that greed is the root cause of much of our current problems. We should then, at least make greed less profitable.
    The Occupy movement has been successful in highlighting the problem of income inequality but has been criticized for not advocating policy positions that can be enacted through legislation. I propose an increase in the marginal tax rate to 70% on incomes over $1,000,000 per year, with all income taxed equally. I have no illusion that such a change will be politically easy, witness the recent resistance to even a small increase in the marginal rate. I am certain, however, that such a change can only come about with massive grassroots support. It is necessary to begin a national conversation on the advantages of returning to tax policy that favors the middle class. After all, the marginal tax rate during the Eisenhower years was 91% and the American economy did very well in the 1950's and 1960's.

Originally posted to cigale on Mon Jan 07, 2013 at 10:27 AM PST.

Also republished by Income Inequality Kos.

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Comment Preferences

  •  Many Here Favor This General Approach (11+ / 0-)

    and plenty are old enough to remember those rates.

    One of the results of those rates is that extreme compensation is not sought and offered so often, which leaves more money in businesses for stable growth, paying suppliers and labor, etc. That's much of the way that both income and wealth disparities are reduced.

    I just looked up 1976 and the 70% rate kicked in at $100,000 in that time, which with inflation equals $405,000 today. So your proposal is a little easier on the rich than we were back then.

    You've got my vote.

    We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

    by Gooserock on Mon Jan 07, 2013 at 10:56:09 AM PST

  •  I am roughly your age. (10+ / 0-)

    Remember the Reagan years very well.

    Lower taxes were supposed to solve everything.

    Instead everyone around me started losing their jobs.

    Including all the folks hired to work with our children in the park across the street.

    The ice skating warming house shut down, the guy who took care of the house lost his job. The ice was still there but mostly too rough to skate on.

    Finally it became my turn to lose my job. For the Building Trades, it was the worst times since the Great Depression with 25% of our membership out of work for one whole season, at least, more for many.

    Homelessness skyrocketed, many were mentally ill. Thankfully, MN, at least continued to care for their mentally ill. But about this time, MN ended General Assistance for adults without children. To bad for you if your UE ran out.

    And working people have been losing ground ever since.

    So much for trickle down. Why that phrase didn't piss people off is beyond me.

    WE NEVER FORGET Our Labor Martyrs: a project to honor the men, women and children who lost their lives in Freedom's Cause. For Dec: Life so cheap; property so sacred.

    by JayRaye on Mon Jan 07, 2013 at 10:57:59 AM PST

    •  I think trickle down is short for pissed on.... (3+ / 0-)
      Recommended by:
      JayRaye, kharma, Kevskos

      It is a total failure and was invented after the fact to justify screwing anyone not rich already, methinks.

      Our money system is not what we have been led to believe. The creation of money has been "privatized," or taken over by private money lenders. Thomas Jefferson called them “bold and bankrupt adventurers just pretending to have money.” webofdebt

      by arealniceguy on Mon Jan 07, 2013 at 11:41:37 AM PST

      [ Parent ]

      •  yep, was gonna say people shoulda been (1+ / 0-)
        Recommended by:

        more pissed off about being pissed on by Reagan & Crew.
        I'm mean, seriously, they come right out and tells us what they plan to do to us, and the American people still vote for these jerks,


        And by people, I mean my former union, IUOE local 49 who supported the teabagger congressman in the last elections.

        Sometimes I despair, but we must keep up the good fight no matter what.

        WE NEVER FORGET Our Labor Martyrs: a project to honor the men, women and children who lost their lives in Freedom's Cause. For Dec: Life so cheap; property so sacred.

        by JayRaye on Mon Jan 07, 2013 at 11:48:29 AM PST

        [ Parent ]

  •  Your facts are off. (3+ / 0-)
    Recommended by:
    arealniceguy, Mr Robert, VClib

    Because of the Tax Reform Act of 1986, the top 1% paid MORE in individual federal income taxes under Clinton's top rate of 39.6% than they did in 1979, when the top marginal rate was 70%.  The Tax Policy Center has summarized the CBO data in the SECOND chart here.  

    Your mistake is in thinking that top marginal rates give you an indication of what the rich are paying in individual income taxes.  Top marginal rates alone do NOT tell you that.  You also have to figure in deductions, exemptions, the ability to shelter income,  all of which changed dramatically in 1986 so that a comparison of marginal rates before and after that date is pretty meaningless.  

    You also have to figure where that top marginal rate starts in today's income.  Those 90% rates only applied to a small percent of income, since you could deduct so much.  And, it started if that non-deductible income reached something like $2 million a year in today's income.  

    If you look at effective rates, we've already returned to an EFFECTIVE rate on the top 1% that is HIGHER than it was pre-Reagan, and even higher than it was during Cllinton's term, because the top 1% now has fewer deductions than it did during the Clinton years.  (More deductions phase out.)  And that EFFECTIVE rate will start at AGI $400,000 and $450,000.  Compare that to your proposal for a LOWER effective rate ("return to the 70% marginal rate" which necessarily includes the tax structure to which that applied) beginning at AGI $1 million, as you propose.  

    •  I'm not particularly "up on tax reform," but from (3+ / 0-)
      Recommended by:
      JayRaye, Mr Robert, LinSea

      what I've read, it sort of seems like this entire "raising the taxes on the wealthy" scenario, is sort of a moot point.  [Because is will pertain to 2013 only, if the PtB succeed in overhauling the entire US federal tax code.]

      My understanding is that the Administration and the Republicans are in agreement with putting through a major tax overhaul this year, per Bowles-Simpson's proposal, The Moment Of Truth.  The entire point of their tax reform proposal is to lower taxes on the wealthy and corporations, by "broadening the base."   Translation:  raising taxes on lower and middle income folks.

      Certainly, most of the tax exemptions that are "being eyed" generally benefit the working and middle classes, the most.  This is especially true of the tax exemption that shields the employer's contribution to an employee's health care premium, from being considered a part of an employee's "taxable income."

      So, while I was glad that there is a modest tax increase for the wealthy (in 2013), I have a hard time considering this achievement to be one that is very significant.

      It would be, IF the Administration does not go along with the tax overhaul.  But, that seems unlikely.


      “If a dog won’t come to you after having looked you in the face, you should go home and examine your conscience.” -- Woodrow Wilson

      by musiccitymollie on Mon Jan 07, 2013 at 11:42:06 AM PST

      [ Parent ]

  •  We will always have inequality (2+ / 0-)
    Recommended by:
    JayRaye, hnichols

    but maybe not as much as we have now. Bring back the 70% rates and we might actually do something about our deficit.  Just imagine if you could not earn more than the President of the United States which is a job that some might argue is the most important in the country. Of course, sports stars and movie stars would be quite indignant but just think of the executives who have enormous salaries and benefits. Wont happen but then we could have some equality.

  •  cigale - Long term capital gains were NOT (0+ / 0-)

    taxed at the same rate as earned income when Reagan took office. At that time they were taxed at HALF your top marginal rate. The only time in US history when long term capital gains tax rates and the top earned income tax rates were the same was for those few years AT THE END of Reagan's term when the top rate was 28%.

    Every country in the G20 taxes long term capital gains at a lower rate than earned income. Some of the rates are higher than the US, but many are a lot lower.

    "let's talk about that"

    by VClib on Mon Jan 07, 2013 at 05:32:23 PM PST

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