Follow the money further

[flamin lib]

A week or so ago I suggested we follow the money. http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x7428449 In that editorial I pointed out the income discrepancy between the middle incomes and the uber-rich. Has it always been this way and if not, what happened?

According to Congressional Budget Office this is what happened:



The effective tax rate* for those on the 50 yard line of the allegorical football field has remained more or less the same since 1960, +- 5%. At the same time top .1% saw their taxes fall by almost 30% and the top .001% had a tax reduction of more than 40%. Under the 1960 tax rates Bill Gates would have contributed $70 billion in tax revenues all by himself and he still would have $30 billion free and clear of all taxes.

Now, given that even back in the ‘60s the government was operating at a deficit what do you suppose that did to our budget and the social safety net? It doesn’t take a rocket scientist to see that as revenues from taxes fell and defense spending continued to increase there had to be massive borrowing from future generations, drastic cuts in all domestic spending or both.

Further, what happened to actual incomes during that time?



Although not shown on these charts the income for that family on the 50 yard line actually decreased by 2% (in 2004 dollars). For what it is worth, the 2004 numbers are almost identical to the tax rates and income discrepancy in 1929 just before the Great Depression.

A healthy middle class makes a healthy economy and a healthy nation. If we continue to rob from the poor to give to the rich and reward paper-shifting commodity speculation as more valuable than the sweat of labor’s brow I see little hope for true economic recovery.

*Effective tax rate is the culmination of progressive taxation on different levels of income minus any deductions. Under JFK, before he cut it to 50%, the highest marginal tax rate was 92% on monies earned over $5 million and the same rate applied to un-earned income.

http://www.cbpp.org/cms/?fa=view&id=634 Income discrepancy since 1960

[alberg]

1. K & R.