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By jdb, November 11, 2010

Slate has a very good series of articles about income inequality and the fate of the middle class in America:

http://www.slate.com/id/2267157/

I think they are leaving out something very important.

American top marginal tax rate:

Even though that paints an incomplete picture of tax burden, the correlation between the tax rate and the ‘great divergence’ of classes in the US is hard to miss.

Then there is this one – American tax rates since 1960, showing an increase in taxes on the middle class and a drastic decrease in taxes for the wealthy:

Basically, either intentionally or by accident the middle class was engineered out of existence.

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By jdb, March 23, 2009

http://www.nytimes.com/2009/03/21/washington/21deficit.html?partner=rss&emc=rss

The thing is, neither the administration nor the congress factor in a tax hike. We need an income tax hike, most importantly to pay for all the stuff we want the government to do for us, but also for one unspoken reason – to be fair.

I’m not talking the minor readjustment promised by Obama – a return to Clintonian tax levels. I mean a return to fairness. Long ago, in the dim and distant 20th century, there used to be tax brackets especially for the very rich – now the guy with billions pays the same rate as the suit with a mortgage and a leased BMW in Santa Monica. Not that the guy in Santa Monica should pay less necessarily, just that hereditary wealth is getting off pretty easy for the amount of power they enjoy.

Basically, it all comes down to numbers.

When the income tax was first implemented, lower income people hardly payed any taxes at all. The low bracket was one percent, for everyone that made less $20,000 a year – that’s over 400,000 a year in today’s dollars! The income tax was ONLY for the very rich. The aristocrats, and those who lived like kings – who made over half a million dollars, that’s  ten million in todays money – payed SEVEN TIMES as much as those who only lived like princes.

In the depression era and WWII, everyone was asked to chip in to help their country, but even as taxes for the working man were raised, there was a tax bracket for the ridiculously wealthy – during the depression, if you made over 5 million a year, which is 75 million in today’s dollars, you payed eighty percent – sixteen times as much as the common man! The fabuluously wealthy had so much more, and they were willing to carry more of the burden.

Today, the lowest tax bracket is ten percent – unless you make more than $17,000 (nine dollars an hour, forty hours a week), then it jumps to fifteen percent, which is where the greatest number of the people in the US are. The very rich, the billionaires, the people with their own private jets, their own islands, pay a little more than double that, after exemptions. Really? How is that fair, in any way? Shouldn’t there be a special bracket just for them?

Tax data  I used: http://www.taxfoundation.org/taxdata/show/151.html