Income Taxes: The Hedge Against Extreme Poverty and Wealth

For many decades, the income tax has been used by many governments across the world to maintain a balance in the levels of income allocation among it's citizens.  After World War II, President Franklin D. Roosevelt instituted what was regarded as a progressive income tax system which levied very high taxes on what the government considers high levels of income.  The idea of the income tax was to ensure that the government would have sufficient money to invest in society as a whole while also ensuring that individuals did not gain huge amounts of influence as to topple the system of government which is by and for the people.  In the 1950s, the top marginal tax rate peaked at 91%, but we also steady, continuous economic growth which persisted mostly above 3% for over 40 years.  It wasn't until the early 1980s that such growth started to wane and unstable levels of growth and contraction became the new norm.

With the flattening of the income tax and the loopholes that have been injected into it, the wealthy now pay rates as low as zero, as high as only 35% at most.  Also consider, that with the redefinition of certain types of incomes making the tax rate for personal incomes significantly lower than the current 35% threshold which was created during the Bush Administration.  Capital Gains, investments, and interest are taxed at a meager 15% meaning that the wealthy don't pay what they otherwise would pay.  This income type is the exception rather than the rule.  Only the top 1% gain their income by this manner, meaning that no working class person will see tax rates this low ever.  And while the wealthy may pay more monetarily...proportionally they pay significantly less.  The results have caused a severe concentration of wealth at the top and for the first time in 50 years, the middle class is shrinking quickly.  Wages, disposable income, savings, and investments of the middle class have been wiped out entirely, leaving the next three generations in a position of having to figure out how they will retire when they hit 60 years old.  It also puts them in a position of trying to figure how to provide for a college education for their children, to buy a house, to start a family, and leaving an entire generation of citizens with no means of secure self-sufficiency for the foreseeable future.  A public opinion study done by the Pew Research Center shows that Americans are still very unsure about their job security and worry about whether they'll be employed the next month or not.  Such insecurity has weakened the bargaining power of the American Worker, and has also resulted in a down-ward pressure on wages across most unskilled to moderate-skill industries.  The downward pressure of incomes has also resulted in the middle class being dropped out of tax brackets that they would have been in had their incomes continued to grow at a steady rate.  The free trade agreements, deregulation, and overall decreases in wages have also all resulted in many American households no longer paying taxes.  During the Reagan Administration, the argument about broadening the tax base was made as a justification for lowering taxes.  That reduction resulted in the wealthy exerting an undue amount of influence in congress, touting proposals that work to undermine the political influence of the middle class and the poor.

So what's the solution to all this grim news?  The solution is to return us to policies and legal frameworks which protected the middle class of the Post-War era.  The pro-union, populist, and pro-worker agenda which brought about the greatest expansion in US History, and created a middle class that had never existed in the history of our nation.  The wealthy weren't super wealthy and the poor weren't super poor.  Everyone was pretty flat with minor differences in income levels.  That balance made sure that the populace was involved in politics.  The higher rates alongside with pro-wage tax deductions for businesses keep money circulating throughout the economy, maintaining a purchase-powerhouse of a middle class, and a friendly investment environment.

Fight the good fight.