One Graph Says it All

I don’t understand why all Democrats aren’t running around with this chart on a T-shirt


Probably among the most boring issues on Earth is tax policy. Yet it is also an issue mostly hotly contested…especially in America. So that might explain why so many people (myself included) will rely on others to explain tax policy to us. We really don’t have what it takes to parse through the bureaucratic arcana that defines this important matter. So we listen to the “experts” or, in many cases, the pundits pre-approved by our ideological bent to inform our thinking on tax policy. However, if there is one way in which government directly impacts our everyday lives, it’s through taxation. It is, therefore, paramount that we understand these crucial themes.

Currently, two tax plans are being proposed by our political parties, shrouded in the usual spin. The Democrats are holding on to a presumed hostility toward the wealthy as a result of the 2008 meltdown. They suggest that the Bush tax cuts should be extended for the middle class, but to extend them for the wealthy would add too much to the deficit. Republicans admonish that during a recession nobody’s taxes should be raised, invoking our basic sense of fairness. After all, why should rich people be “punished” just because they are rich. The solution is to extend the Bush Tax Cuts universally.

At left is a very helpful chart from the Washington Post. As all great graphics do, it tells the tale of two tax cuts in one awe inspiring visual. As you can see, the Democratic proposal includes tax cuts for all tax brackets. I’m not sure why Democrats are not emphasizing the fact that their plan does, in fact, cut taxes for the wealthy. It just does not favor the wealthy. Indeed, one would suggest that Bill Gates falls under the $1 million plus category, and of what use is just over $6000 to him. Regardless, the tax cuts are universal.

As for the Republican plan, however, it is easy to identify their base. Republicans are offering a fraction of the top 1% (top 1% earners are those making $330,000 or more) of households a tax cut that is three times higher than all other income levels combined. This would go to folks who have largely not been hurt by the current recession. The group receiving the largest windfall would be those same people who have already experienced over 250% increase in after tax income from 1976-2006, according to the Working Group on Extreme Inequality. Many of the people receiving this huge tax break are among those who also benefited directly from huge tax payer bailouts! Why this is not a centerpiece of Democratic paradigms in this matter I cannot imagine.

Of course, the argument could be made that the top 1% bring in 23% of the income yet pay 38% of income taxes. So why should the top tier be burdened disproportionately. The answer is simple. They also benefit disproportionately. The group receiving the largest windfall from the Republican plan would be those same people who have already experienced over 250% increase in after tax income from 1976-2006, according to the Working Group on Extreme Inequality. This is true despite what conservatives identify as unfair taxation. The top 1% has been largely sheltered from the effects of the recession because of government policies that favor the wealthy. In every other economic arena, those who receive more services should pay more for those services.

For instance, as a tax payer, a percentage of my money may be used to subsidize the construction of an airport. Now I might actually use that airport once, maybe even twice in my life, and I’ll still have to pay for tickets, a cost that is a higher percentage of my income to fly coach, than the tickets paid for by the wealthy to travel first class. The wealthy are more likely to use the airports more often, and even land their own planes. They will use the airports for business shipping and travel as well as entertainment and vacation, making their own businesses more lucrative. This is true for all infrastructure projects. The wealthy benefit more. Add on top of that free trade policies that allow corporations to outsource jobs and increase profits for those at the very top while actually costing working people jobs and wages. Then there’s the vast amounts of corporate welfare which, according to the CATO institute, amounts to almost $100 billion a year. That’s tax money that is going right back to the wealthy corporatocracy.

With corporate profits reaching record highs while employment continues to sag and wages stagnate it is obvious that there is no net benefit for the nation as a whole to guarantee more money for the wealthy. In fact, one could suggest that providing tax cuts to the wealthiest Americans actually rewards them for shipping jobs overseas, refusing to hire Americans and allowing our schools, resources and infrastructure to languish.

The next absurd paradigm associated with this tax debate is that despite record profits, big businesses are scared to hire Americans because of uncertainty about the coming tax structure. What uncertainty? As it stands right now the worst case scenario for the wealthiest Americans and their corporate entities is a return to the tax structure of the Clinton administration. Remember that one, when unemployment was at record lows, creating over 20 million jobs and business was booming?

The bottom line is that the wealthiest Americans have been buttering their bread at the expense of the public uncontrolled for ten years (if not thirty) and they just don’t want to stop. It has nothing to do with deficits. It has nothing to do with fiscal responsibility. It has nothing to do with any mythical benefits of tax cuts. It has to do with the wealthy wanting to perpetuate their ruinous ride on the gravy train.




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