The dismantling of the middle class

or
"How Bush Republican policies, in sum, push millions of middle class to near poverty, entrench the rich and very rich and kill any semblence of a meritocracy in the U.S."

Bear with me, its a long haul, perhaps I'm wrong, but it's all been coming together...

Today the Christian Science Monitor published an article that shows that the tax system, though not overtly a flat tax, has been flattened under the Bush administration and the Republican-controlled government:

Chalk up President Bush as not just a tax cutter but also a tax flattener. Under Mr. Bush and a Republican Congress, big tax cuts since 2001 have given major tax reductions to those wealthy individuals presumed, up to now, to be able to afford paying a bigger chunk of their income in taxes. By one measure of the federal, state, and local tax burden, just 3.4 percentage points separate the effective tax rate paid by the top 1 percent of earners from the other 99 percent of American households.

In the past, as the article states, since 1913, our nation's tax system has assumed that the wealthier one was, the more taxes could the not only afford to pay, but that also the more one would

owe something extra to a government that protects their greater wealth, and to a society that has helped them prosper.

Though there are of course conservative arguments for a flatter tax, even a flat tax which;

...leaves more money of the well-to-do untaxed, and thus available for the investment that creates jobs and prosperity. Eventually, a truly flat tax system could be simpler...

and effective tax rates for all income groups have lowered somewhat, as the charts show in the article the largest reduction by far (in percentage points and proportions) has been for the very wealthy. With tax cuts favoring the wealthy and a ballooning deficit even without an unjust war costing hundreds of billions of dollars, a larger share of the tax burden will eventually have to fall on the middle class. That or (and?) governmental services (of which the biggest consumer is the middle class), will by necessity have to be cut drastically (but we are seeing that already, aren't we?). More likely it will be both.

In a time when the deficit balloons, when we will have to raise taxes,  cut services, or more likely both, we are creating a tax system and structure that favors the wealthy and disfavors the middle class.

but there is more, much more.

We have recently learned (or relearned, I'm sure we knew it all along), that the wealthy not only are paying smaller and smaller percentages in taxes, but the IRS scrutinizes them to a much less degree than wage earners

What few of us realize is that the United States has two income tax systems, separate and unequal.

One system is for wage earners. Congress requires that your employer report your pay so Internal Revenue Service computers can check up on your tax return. Banks report interest. Brokerages report dividends. You must provide a Social Security number for each child you claim as a dependent. Congress does not trust you.

The other system is for business owners, landlords and investors. Congress does not require such independent reporting, saying that would be a burden.

Oh, it gets worse.

With the vote today in the House on a bankruptcy bill (the House Republicans, like their Senate counterparts, rejecting all amendments that would soften the blow) that will surely pass, a bankruptcy bill that will force most of the million middle class families that go bankrupt every year in Chapter 7 (debts forgiven) into Chapter 13 (debts must be payed).

Considering that over a third of bankruptcies today are due to health costs, health costs are rising at even greater rates (10 years ago 8% of income for a average family of four was health cost/insurance related, today its approaching 20%, in 10 years at current rates it will be over 50%), companies are cutting back on health insurance for workers.. etc etc... (and I've said it all before).... we are in for greater and greater numbers of middle class families going into long-term or life-long dehibilitating debt and poverty.

Oh but wait.. there's more.

So, the Republicans (and some clueless Democrats) are setting up a system where the tax burden will fall more and more on wage-earners, while those of us who are asset owners (and I include my family in that latter category, more on that later) share an ever shrinking tax burden.

AND

We have a system where health care costs not only are spiraling out of control and hitting the wage-earning middle class harder and hard, but now if they hit too hard (and they will, with greater frequency and in greater amounts), they will have no recourse thanks to the bankruptcy bill about to pass.

NOW...

to solidify and entrench the growing divide, the Republicans are about to repeal the estate tax so that we might not only send more people out of the middle class and into permanent debt and/or poverty, but now we can now truly create an old fashioned 'landed gentry'.

Say so long to the dream of meritocracy and say hello to immobile classes.

watching all this unfold in the last half decade, I am of two minds. Part of me, the selfish and protective father part, hopes that our family can build on our position to propel ourselves into the lucky 5% that owns income-generating, untaxed wealth, safe from the ravages of health costs, rising taxes and economic depressions. We are the lucky ones. We have parents who have substantial assets, 90% of our income comes from investment income and capital gains. We are lucky. We are not wage earners. We might end up in the top 5%, if we are not already. Part of me, the enlightened part, realizes that even if that happened, I wouldn't wish the alternative on the other 95% and its not good for all of us... societies so divided between rich and poor.. societies with shrinking middle classes, are societies ripe for decay, rebellion or worse.

and I'm also starting to realize that when Bush speaks of an "Ownership Society", what he is really saying is a society that is owned by the few.

oh wait, and you thought I was done... want to destroy the middle class and hammer the last nail in the coffin of meritocracy?

then get rid of affirmative action (so we can all start from the same gate) see Barry Deutsch's cartoon to see what i speak of.

then cut  the number of poor and middle class who can receive Pell grants and cut Perkins loans all the while university education costs are skyrocketing. There goes equal opportunity by way of education.

oh.. it might help that gas prices rise while we do little to find or use alternative energy sources.

and on and on.

I've got some stock investments to manage...