2 new studies prove conservative policies are destroying the middle class

Class War – n. the only war George W. Bush ever won

5-30-13tax1Why are only the rich getting richer? Why — as Maryland’s governor Martin O’Malley asks — hasn’t the middle class had a raise in 13 years? Why are corporate profits at an all-time high but wages at an all-time low as a share of GDP?

We can blame globalization and rapid development of information technology. But two new studies confirm what you’ve probably already knew: Conservative policies are rapidly shrinking the middle class and engineering a massive transfer of wealth the richest Americans.

A new study “The Top 1 Percent in International and Historical Perspective“, confirms a thesis that tax expert and Pulitzer Prize-winning journalist David Cay Johnston has been advancing since 2003, “Under current government rules, an ever-greater share of economic resources must flow to the top over time because those rules subtly redistribute upwards.”

This is why the rich have gotten richer in Japan, France and Germany but nowhere close to as rich as the wealthy in America and Britain. While union-busting definitely fuels growing inequality in the U.S., the study finds that tax cuts for the rich — the hallmark issue of our Republican Party — is most responsible for this growing inequality.

Though the GOP sells these cuts on the promise that they will grow the economy, the study finds that the rich benefit but the economy does not: “Countries that made large cuts in top tax rates, such as the United Kingdom or the United States, have not grown significantly faster than countries that did not, such as Germany or Denmark.”

And while Republicans love to tout how Reagan used deficits to outspend the Soviets and possibly hasten the end of the Cold War, they refuse to note that the most lasting impact of the Gipper’s policies is a huge distortion of our economy in favor of the rich. This is a distortion only made worse by George W. Bush’s tax cuts which were such failures you can’t even find economists willing to defend them.

Johnston explains:

In 1981 the top 1 percent had 10 percent of all reported income, but by 1999 they were at 20 percent. That share has risen and fallen with the economy since, but the 12-year average shows the top 1 percent enjoying a fifth of all income since 2000.

Ending the Bush tax breaks on income over $400,000 and raising the inheritance tax slightly will slightly improve this trend. But the lasting impact of the Reagan and Bush economic plans is still intact, the Century Foundation’s Benjamin Landy points out in an examination of new report from the Congressional Budget Office:

Of the $900 billion that taxpayers can expect to save in 2013 through the 10 largest tax credits and deductions, more than half will go to the richest 20 percent… Nearly one fifth of the $900 billion will go to the richest 1 percent, who benefit disproportionately from the deduction for charitable giving and the preferential tax treatment for capital gains and dividends.

While Republicans argue that we cannot afford Social Security, Medicare, food stamps for the poor or student loans subsidized at the same low rate banks, they never point out that our deficit would be just about gone if we eliminated the tax breaks that go to the top 20 percent.

Conservative arguments generally come back to asserting that taxes are basically confiscation and the rich deserve to keep what they earn/inherit/swindle. As if the rich don’t get huge benefits from a country that can afford “provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity.”

They may not realize it now, but the richest don’t want to live in a country of over 300 million without a middle class — it makes being rich a lot less fun when you’re constantly worried about having to defend your massive assets and family, for real.

But that’s exactly the kind of country they’re creating.

[Graph by the Center for Budget and Policy Priorities.]
  • John Kessler

    This is a good story but I wish the author would have made use of a proof reader. Typos lower the credibility of too many good stories and I spotted several in this one, like referring to “the England.”

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  • Daniel Lambert

    ~~~~~~~~~NOW HIRING PART-TIME~~~~~~~~
    Shift:{Noon to Suppertime Seven Days a Week}
    or {Midnight to Lunchtime Three Days a Week}
    *New Republican strategy to create jobs that mess with the American Dream.

  • Edward C

    Oddly enough they seem to blame the 2013 tax cuts – which George Bush did not put into place. Your chart above shows the expected 2013 numbers. In fact the 2013 cuts eliminated the cuts for the top 1%. As far as the deductions allowed go – those go back much further than the Bushes and have prevailed throughout Democrat and Republican administrations and Congresses.

    In fact if you scroll half-way down the page of this link to the Social Security Administration (Table 2.A3): you will see in 1990 when Bush Sr. passed a law doubling the income cap on Medicare Taxes. that means the higher income people would have paid more. Sure enough in his 1992 re-election campaign Clinton burned him on this and his pledge of “No new taxes”. You can also see from the same table that in 1993 the Democratically controlled House and Senate – passed a law signed off by President Clinton the repealed the extra medicare tax on higher income earners. http://www.ssa.gov/policy/docs/statcomps/supplement/2010/2a1-2a7.html#table2.a4

    • LOLGOP

      You’re noting why I decided to call them “conservative” policies not Republican, though they’re the lifeblood of this GOP. There’s room to blame some Democrats if that’s your goal. But these conservative policies are the lifeblood of the GOP.

      The numbers also get better in 2014, entirely thanks to Democratic policies.

  • http://www.facebook.com/profile.php?id=1492380477 Joris Heise

    Born in Ferndale, growing up in Southfield (when it was Southfield Township), and a teacher–I view with immense sadness, the lunacy, greed, and oppressive actions of its elected officials. How did real Republicans let the Extremists become the state-destroying powers-that-be?

  • Chad

    This whole page is complete liberal bullshit. If you really want to fix things, you need to phase out all entitlements even including social security, welfare, food stamps… and what ever else people get for nothing. The only real poverty in this country is the result of government giving hand-outs at the expense of others. The government, mostly the feds, need to step completely out of everything, and focus on military, and leave the rest to the states to handle. I would also suggest to get rid of the stupid laws, regulations, and taxes that bring down everyone, and really only help people who put stupid things like this on the internet that has nothing else to do but attack people’s success, and most likely reply to this stupid post I’m putting up. Why not just have a flat sales tax…. no one can cheat that form of tax when compared to other forms. Point is, there’s a lot to take into consideration besides what the liberals like this.

    • Keir Mclean Brown

      chad your another cliche spouting right wing lunatic. the corporate welfare dwarfs all social welfare combined about a million to 1.. your just spouting the old Reagan dogma from the 80’s that most knuckleheads soaked up with their milk and cookies, that some poor black people on the streets are wroughting the system with some food stamps.. whilst every second we speak oil companies get 7000$ of your tax dollars in offsets. wake up and smell the bullshit. Not to mention that these greedy bastards allowed the bankers to corrupt the entire global economy out of their sheer theft. then got bailed out a trillion dollars remember? or do you have the selective fox news memory?

    • http://eclectablog.com Eclectablog

      So entertaining. Tell a retiree that has paid into Social Security their entire life that they are “getting it for nothing”. Tell the single mom who got back on her feet, got a college education and went on to be a productive member of society thanks to a helping hand up through welfare and food stamps that it was a wasted investment.

      Thank Goddess that the small-minded “I got mine so fuck you” attitude you display is mostly rejected by Americans who see themselves as part of union, a community that helps each other, cares about their neighbors and wants every man, woman and child to succeed. Your comments are anti-American to the nth degree. I pity you.

      • EvaV

        Everything politicians and the media tell you about Medicare being free is a lie. They don’t said anything about the monthly premium or substantial deductable that has to be met before co-pays kick in. The drug plan (Part D) is an extra monthly premium with another deductable to be met. Since dental, vision and hearing are not covered by Medicare, an extra monthly premium for Medicare plus (optional) is paid. There is no free lunch here.

  • Keir Mclean Brown

    chad your another cliche spouting right wing lunatic. the corporate welfare dwarfs all social welfare combined about a million to 1.. your just spouting the old Reagan dogma from the 80’s that most knuckleheads soaked up with their milk and cookies, that some poor black people on the streets are wroughting the system with some food stamps.. whilst every second we speak oil companies get 7000$ of your tax dollars in offsets. wake up and smell the bullshit.

  • Brady Shackelford

    I hereby propose the following Amendment to the United States Constitution: Federal taxes on corporate income, individual income, interest income, capital gains, gifts, and sales shall be applied equally, with no allowances, credits, deductions, exemptions or exclusions, and shall not exceed five percent. Dividends and estates shall not be taxed.

    I propose this Amendment because it will turbocharge the economy while equalizing the tax code. There can never be equality in this country as long as the government taxes its citizens unequally or gives tax breaks that not everyone can use. For example, the mortgage interest deduction is unfair to people who rent while the child tax credit is unfair to people who don’t have any children. I made dividends un-taxable because corporations pay out dividends after taxes, which means that, when the government taxes the receipt of dividends, it is twice taxing the income that created those dividends. This is wrong! I made estates un-taxable because the only fair alternative is to tax every estate, and since liberals will scream bloody murder about taxing the estates of the poor, I just made every estate un-taxable. The bottom line is this: The U.S. Government taxes its citizens unfairly, unjustly and unequally, and the only way to end this unfair, unjust, and unequal taxation is with a constitutional amendment that bans it. Either tax everyone the same or tax no one!!

    • potomacoracle

      Has it ever occurred to you that a nation sovereign in its own currency never needs revenue per se to spend? These governments, U.S., Canada, Britain, China, Japan, Australia, Saudi Arabia and many, many more should only tax to manage inflation and force acceptance of their otherwise worthless paper currencies. Since they issue non-convertible, fiat currency in a flexible exchange rate world, there is no constraint other than inflation, on issuing as much fiat currency as they need to serve public purpose. Of course they will need an appropriation, and there’s the rub.

      Taxation as implemented today is confiscation. There is no serious threat of money inflation…commodity inflation, yes.

      What the average Liberal, Progressive, and Conservative forgets is that we are no longer bound by the principles abandoned 42 years ago by Nixon’s default on gold convertibility.

      However, this nation behaves as if gold standard principles were still required to guide monetary and fiscal policy and their daily operations. Therein, lies the reason for the huge rush by the rich to eliminate their taxes. They’ve purchased the Congress to rewrite the Code to suit their objectives. The rich know the government doesn’t use tax collection to fund anything. Why would it when it issues fiat currency at will?

      The minions, we the people, are being “Punked” by our leaders who lie to us by telling us “We’re running out of money”. That we have to balance our national budget, raise taxes to pay for health care, reduce spending to avoid national bankruptcy.

      None of those events can happen when a government understands its own monetary sovereignty. We no longer balance our Federal budget to preserve the value of the dollar vis a vis gold. We have operated with Federal budget deficits for most of our nation’s history. We do so because it’s the fundamental procedure through which we as a nation create net national savings. Our national deficit is equal, to the penny, to net financial assets in the non-public sector. The Federal Deficit Clock has an equal called the National Savings Clock. But don’t tell Pete Peterson, he failed National Income Accounting 101. Which explains why he’s a deficit terrorist.

      History tells us that each of the six times we’ve eliminated net national savings in the non-public sector, depression immediately followed. This means,National budget surpluses are created by excessive taxation of the non-public sector’s net savings, therefore, that sector must go into deficit.

      Conclusion, taxation as a policy tool should only be used to manage inflation when the currency of issue must be used to pay taxes. Any other justification is distorts income, savings and investment choices within the society.

      A perfect example is the payroll tax.

      The most regressive, distortion of tax policy ever devised. It pays for nothing but allows a dysfunctional taxing system to subsidize the rich over the past 43 years.

      WAKE UP AMERICA

  • Zach Purnell

    You need to learn economics to understand how income classes work.

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