Declining Progressivity in US Taxes

You often hear the question--what has happened to this country?  Its a complex question with many culprits that have help whittle away the economic prosperity of working and middle class citizens in this county.  One change we've seen over the past three decades is our tax structure--its not exactly politically correct to talk about but its worth reflecting on recent history of it.

 

Linda Beale over at angry bear points out that we've seen Declining Progressivity in US Taxes :

 looking at income and taxes over the period from 1960 to 2004 is revealing. While our system remains progressive to some extent, the progressivity has declined significantly. This is primarily, they say, because of the cuts in the corporate tax and the estate tax--taxes that impact the very wealthiest more than others because of their high ownership of financial assets. Our concept of distributive justice has always demanded that we should determine the tax burden based on individuals' relative abilities to pay--that means that those with lots more should pay proportionately more of their income, since those with very little need all of their income just to meet daily needs, and those with considerable wealth won't even notice whether they have another few dollars or not.

The decades since Reagan took office have taken a huge toll on that sense of shared commitment. Fueled by a religious-like belief in the mathematically elegant but unrealistic assumptions of the "free market" economists from the Chicago School (see Yves Smith's book, Econned, for a good take-down of the freshwater economists), the GOP in Congress passed huge tax cuts for the wealthy accompanied by increasingly heavy payroll taxes for others at the same time that spending continued apace--in fact, Reagan, Bush1 and Bush2 all greatly increased the military budgets and the Bushes embarked on wars of choice that imposed significant budgetary demands. The wealthy have fought for laws that favor them--deregulation, zero capital gains taxation, lower corporate taxes, the ability to offshore businesses and assets freely, privatization of social security and other programs (that would put more dollars under direct control of investment bankers and insurers), and lowering of individual tax rates and provisions that phased out deductions for the wealthy (like the phase out of the itemized deduction, which was repealed under Bush, etc.).

 She points us to a recent paper that I have yet to read that you might want to check out: How Progressive is the U.S. Federal Tax? A Historical and International Perspective.

 

I think this is one of many contributing factors to why working and middle class families are feeling the squeeze---we've seen a structural change in how we are trying to fund (or not fund) government. 

 

Next time someone asks you what is going on in this country feel free to point them to the Republican give aways to the rich over the past three decades as one of the culprits...

 

Posted via email from Jim Nichols for GA State House