The Present Fight Over Taxes

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.