Public Forum

We hear that companies are sitting on record amounts of cash. It's hard to make the argument that corporate taxes are too high, or that they're stifling the economy. They'll tell you that they're not investing it or hiring people not because of taxes, but because there's no indication of recovery in demand. And while profits have climbed (unlike other periods of high profit), wages have stagnated (Economix, 6/30). The same report points out that wage income fell below 50% of GDP for the first time ever...!!!... As to the "half" who don't pay taxes, the IRS figures which Econ101 points to show that the lowest 50% collectively accounted for only 12.3% of the income (2007). That's right -half the working population of the country together account for less than 1/8 the income....!!!... The third quarter - 50th to 75th percentile in income - accounted for 19% of the income. The top 25% accounted for over 2/3 of the income (68.7%), the top 5% for more than 1/3 (37.4%), the top 1% for 21.2% (it was only 8.3% when Reagan took office). So there's no resurgence in consumption because the middle class is impoverished; in fact, they'd been borrowing to support consumption, and now have debt to deal with in addition to low purchasing power and stagnant wages. Bartlett's comparison of the 2001 budget assumptions and what actually happened (Economix, 7/26) shows that the Bush Tax Cuts cost $2.9 trillion in lost revenue and $3.5 trillion from the growth which was supposed to result, but didn't. Oddly enough, $6 trillion is almost exactly the increase in the national debt during Dubya's tenure. While Democrats are labeled as "tax and spend" party, the truth is it is under Republican Presidents that 85% or our national debt had come into existence. Over the last two decades the average wage of middle class workers have actually gone down, inflation adjusted, yet the top 1% has gone from 8% of all income at the start of Reagans administration to as high as 25% before the collapse. During that same period, the same top 1% doubled the amount of total wealth they control. The top 5% now control over 83% of all US wealth and that percentage is growing exponentialy. The GOP likes to point out that the wealthiest 10% pay two-thirds of all taxes. Giving they own 83 percent of all assets and the majority of the income, this number seems actually surprisingly low ! In the 70's, CEOs of publicly traded companies made around 38 times the average worker. That number now runs just under 400 times. How did this happen? Let's take a look. Republican pundits have claimed for years that federal income tax doubled under Reagan, but when you look at the historic revenue charts you see a different story. Receipts did increase in the first three years of Reagan but what was the source of that increase? If we look at the division of sources we can see. Reagan cut Capital gains rates significantly below "wage" rates. The wealthiest, seeing what may be a window of opportunity, took gains on long held assets fearing that lower rate may be taken away. After 3 years, the Capital Gains "wad had been shot" and federal receipts dropped significantly. Thats when Reagan RAISED taxes the first time in his tenure. This was compounded by the fact that the federal defecit was exploding. Interestingly, when you take tax receipts, subtracting the increasing defecits, one finds the country actually did better under Carter than Reagan. Reagans Capital Gains cut did spur an economic recover, but after the last big chunk of those gains were "realized", we eventual slide back into a recession under George Sr. Unfortunately, our defecit had increased significantly! The problem is it didn't take long for the wealthy to realize the huge loophole they had been given with the restructuring of the tax code. Why claim wage income that can be taxed in the 30% range, when you have a capital gains rate of only 15%? The wealthiest soon shifted their tax structures to be paid in instruments that could be taken as capital gains instead of income. That's why today, people like Mitt Romney can make millions but only pay 15 percent! Another fact often forgoten by Republicans is that when you take ALL taxes together (income, real estate, gas etc) the richest, as a percent of income actually pay about 2% less than the middle class! Not very progressive. What happened next would take a book to explain so we'll condense it. 1) While the disparity of income and wealth exploded. in the late 90's, early 2000 's our economy based on consumerism, was funded mostly by consumer debt and home equity, spured on by the Republican idea to keep interest rates low 2) housing bubble burst , causing risky banking instruments to collapse ....Walla..trillions wiped out over night. 3) Europe has same crises 4) Trillions in expense from two wars 5) Interest from trillions in Bushes tax cuts that went most to the top 1% Analysis: It's all Obamas fault!

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