The Present Fight Over Taxes

An effective, but messy short term solution was the guillotine. A less messy and very effective way to mitigate this disparity is to have a progressive income tax

Throughout history wealth has always accumulated in a small percentage of the population of any society whether that small group is in place because of religious beliefs (the pharaohs in ancient Egypt, Aztecs, Kings in more modern times), or dictators (by force through giving privileges to security forces, armies, etc.), or through tax and laws that favor the upper group. 

Wealth also naturally accumulates at the upper end of society as having money makes it easier to make more.  Examples are being able to snap up bargains
in stock and property during economic downturns, buying up smaller competitors,
using buying power to get advantages in purchasing, and others.  How many times during this downturn have you wished you had money to buy the bargains yourselves but were more concerned with paying the rent and food bills?

Having money also makes it easier to get laws in place that
favor the privileged group and to buy propaganda spots to promote these laws. A
good example of this is the law that lets Corporations and other groups spend
unlimited funds to influence elections (it works), the push to lower, or
totally eliminate inheritance taxes, and the lowering of taxes on capital gains.
Are you surprised that boards of directors, which are normally made up of other
wealthy people routinely give unearned and outrageous bonuses to CEOs. None of
these advantages are evil in themselves, but they have the cumulative effect of
increasing income disparity in society. Play Monopoly and you will quickly see how this works.

The upper groups are way outnumbered by everyone else so they need reasons for why they deserve so much more.  The pharaohs and the related ruling class
convinced the citizens of Egypt that they alone held the keys to access the Gods
and that without them everyone else would be out of luck (as far as access to
the Gods went). Kings used this same tactic. It’s no wonder that Kings were also the head and protector of the state church and supposedly anointed by God (this is still technically true in England).

In modern Egypt the Generals used the excuse that they were protecting the non-Muslim religious and secular groups from the more radical Muslim Brotherhood. But, it only worked so long. Unfortunately, the Muslim Brotherhood is using the present turmoil to enshrine their religious beliefs in the Egyptian constitution. Will this never end?

There were attempts throughout history to mitigate this disparity. Weighing a rotund ruler and giving away his weight in gold was one way. 
Boxing Day was another, but these hardly made a dent in the disparity. An effective, but messy short term solution was the guillotine. Soon however a new group took the old groups place. For example, Communism replaced one privileged group with another.  Every wonder how the present head of the communist party in China and all his family including his illiterate mother became millionaires?

A less messy and very effective way to mitigate this disparity is to have a progressive income tax with higher marginal rates on higher incomes. Before anyone goes apoplectic remember that “marginal rates” are only applied not on the total income, but on only a portion over a certain dollar amount. However,
in the past 20 years income disparity has increased in our country. Going back to the tax rates during the Clinton years (we had a government income surplus during those years) makes good sense on many fronts.

However, the privileged group is working hard this Christmas season to convince the rest of us that lowering taxes for them is in our interest. Do modern slogans like: freedom from government, lower taxes, less regulations, death taxes, job killing tax increases and death panels in government provided health care have a familiar ring? 

The current fight over tax rates is not just pointless partisan bickering, but a fight over whether the middle class in our country will prosper or wither. Don’t be fooled by all the posturing, our future is at stake.

This post is contributed by a community member. The views expressed in this blog are those of the author and do not necessarily reflect those of Patch Media Corporation. Everyone is welcome to submit a post to Patch. If you'd like to post a blog, go here to get started.

John Anderson December 06, 2012 at 12:54 AM
Another good post, John! "Who Stole the American Dream", a new book by Pulitzer Prize winner Hedrick Smith describes in readable detail how the great wealth transfer of the past 30 years occurred. (It was not from the working people to the poor.) Middle class income, in inflation adjusted dollars, has stagnated between 1975 and 2006. The adjusted annual income of the ultra-rich (the top .01 %) rose 600% in the same time period. And it has gotten worse since then. "We may have democracy, or we may have wealth concentrated in the hands of the few, but we can't have both." Louis Brandeis
dexterjibs December 06, 2012 at 07:15 AM
John, I don't think anyone is asking to lower taxes on the wealthiest. I think the big question is to let the Bush tax rates expire. This means, taxes go up on all of us. We don't have a revenue problem, John, we have a spending problem. And Obama has made it clear that he is not going to cut spending even if taxes are increased. Can you say Greece, Ireland, Spain and othe socialist countries.?
dexterjibs December 06, 2012 at 09:06 PM
Unemployment is back up to 8.3%. I wonder if Obama and the Democrats are finally going to take ownership of this economy, or is it still Bush' fault?
Bob McCoy December 08, 2012 at 06:20 AM
I've loaded a photo of a 1947 Tax Table. Let's pretend that it never existed, because the US economy expanded, there was investment in machine tools, and the US started its rise to the peak of its influence. High top marginal rates motivate successful businesses to reinvest, rather than give extremely high incomes to their top tier managers, as high compensation results in a pass-through to the government. A $1 million bonus essentially is a $900 thousand gift to the government. Instead, the $1 M can support 25 $40,000 jobs. The $210 M severance given in 2007 to the fired CEO of Home Depot could have hired a couple hundred $50,000 per year personnel for 20 year careers. With a 90% marginal bracket, HD would have chosen to open new stores, or hire people, or to give it to the government. Excess retained earnings taxes also encouraged investment, or return of capital to investors. But now we have a new reality based on a meme, and any observable relationships can be tossed because science, including the dismal science, is no better than an opinion without basis to about half the US population.
John Locatelli December 08, 2012 at 08:06 PM
Hi Dexter--- The Scandinavian countries are good examples of populations that are the healthiest, tallest and happiest people in the world. It’s not a bad idea to study other systems that apparently work. Europe has made the deadly mistake of concentrating on debt and spending reduction at a time where their economies need a shot in the arm, not a kick down the stairs.
John Locatelli December 08, 2012 at 08:27 PM
Hi Bob It's just the application of the "Golden Rule"-----"Them that has the gold makes the rules"------but to pull this off they have to convince (fool?) everyone else that what they propose is in everybody's interest (that seems to work).
dexterjibs December 09, 2012 at 05:30 AM
I don't think European countries are the example for government spending. Mazny European countries are on the verge of financial collapse because of their high debt (like the US) and high deficit (like the US) and a growing population of lazy takers and a diminishing population of hard working makers. The only reason the Scandanavian countries have resisted this trend is the amount of mileage between thenm and a growing number of low income immigrants. Look at our southern border and we are importing poverty from Mexico. At the same time, our home grown low income trash insist on the guv'mint and Obama providing them phones and monies. We have to put an end to it John and force these lazy arses to get a job.
dexterjibs December 09, 2012 at 05:32 AM
Name one country that has taxed and spent itself into prosperity?
John Anderson December 09, 2012 at 05:44 AM
Taxing and spending are not good or bad in themselves. It is how you do both that matters. You use "tax and spend" as politically loaded slogans rather than meaningful dialogue. The taxes and expenditures from the end of WWII to the mid-seventies, though not perfect, were at least more fair than today, led to unprecedented prosperity, and allowed that prosperity to be shared by most rather than concentrated among a narrowing few.
dexterjibs December 09, 2012 at 06:32 AM
John, to a certain extent I agree with you about taxing and spending are neither good nor bad in themselves. However, when you have taxing and spending together, it is no bueno ( a little Spanish lingo). When you have increased taxation with equivalent increased spending, a country will find itself in the sitauation we are in as well as Greece, Spain, Ireland, Italy and many othe socialist European countries. What we have is a President that does not want to spending in any way other than the national defense (military). This is going to be a complete failure of a policy and very disastrous to our country and the people that will pay for Obama's greed is our kids and grandkids. A country cannot tax and spend itself into prosperity.
dexterjibs December 09, 2012 at 06:36 AM
insert "cut" between "does not want to" and "spending". My bad.
John Anderson December 09, 2012 at 01:11 PM
You forgot to cut spending, Dexter. That is remarkable! I think your subconscious liberal is surfacing. : )
dexterjibs December 10, 2012 at 05:04 AM
Ha! Good one John. So you thin I may be a closet liberal? Well, stranger things have happened. If I do end up drinking the kool aid and becoming a liberal, rest comfortably cuz you know I will be a pit bull. I will go after evil capitalists that create jobs and pay 90% of the taxes in this country and I will go after low and middle income Republicans and tar brush them as racist tea-party types and women haters.


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