Dear America,
Recently, there has been a burgeoning understanding of and interest in the disparity between rich Americans and the rest of us as to how much we earn and how much we have. Over the past six years of the recovery from the economic crisis that our financial institutions put us in it has become increasingly apparent that the top 10% of our economic community, and the top 1% in particular, have nowhere near the exposure to financial adversity that the rest of us do. While they have much more to lose than we do, losing it makes very little difference in their lives because no matter how much disappears due to imprudence or greed, there is plenty left to support their sybaritic lifestyles. As to the rest of us, it only takes mild adversity before we begin to feel it in fundamental ways...the homes we live in, the food we eat and where our children go to school, for example. Still, the political trend in this country is toward Republican leadership, and that puzzles me to some extent. I realize that for the most part that is a function of rubrics rather than specifics. By that I mean that Republicans paint themselves as "values" politicians, and for the most part, voters don't need to know much more. Republicans oppose same-sex marriage, and those who vote for them probably never ask themselves why they care who else gets married. They oppose "Obamacare" on the grounds that it is somehow an impingement on fundamental, constitutional rights, but voters never seem to ask themselves whether that is indeed so...much less whether there aren't many ways, such as taxation, public safety, public education and other kinds of mandatory insurance in which we all allow our rights to be circumscribed in the name of the common good. But most relevant among Republican tropes is "trickle-down economics," which is a euphemism for the paternalistic notion that if we just defer to the rich and support their accretion of the wealth of our nation, they will take care of us by giving us minimum wage jobs and insurance that will still allow us to be bankrupted if we get sick often enough or really badly. They will give us charter schools for the select few and the kind of income that keeps them rich--unearned capital gains and the earnings of the corporations in which they own stock--will be taxed at a lower rate than the hard earned wages of the working poor and the lion's share of the middle class. Even though we are the majority, and even though they have someone else's interests at heart, Republicans continue to prosper politically, and in that vein, a new issue is arising as state budgets, under the austere aegis of the Republican polity, begin to look for revenues that can help to dissolve the state budget deficits that have begin to pop up all over the nation.
For purposes of this discussion there are two kinds of taxes: income and sales. Income taxes, as you all know, are assessed on a graduated basis according to income level...from each according to his ability to pay, more or less. Sales tax however is set at one rate. Everyone pays it on food, clothing and services at that one rate. So if you spend 20% of your income on food, that expenditure gets taxed when you make it at the rate of the sales tax in your state. That translates to a tax of 1.2% of your income if the sales tax is 6%. The corollary is that if food expense is one tenth of a percent of your total income, your tax is .06% of your total income...a much more affordable assessment that favors people more as they make more...more from each who has less ability to pay. Here in Connecticut, the governor is proposing a cut in the sales tax. It is quite modest, but to those who make the least it is the most significant. In Maine however, and in South Carolina and Ohio as well as other states too, that strategy--taxing those with the least more and keeping taxes on those with the most low--the policy of favoring increases in sales tax for the purpose of closing budget gaps is the chosen path. The rationale is that keeping income taxes low facilitates business, and therefore job, growth. But it is still the fact that American business is sitting on a pile of cash totaling something between $2 trillion and $3 trillion while it ships jobs abroad and our federal congress does nothing about tax policy to deter it. And as to taxation of the investing class, how can anyone subscribe to the notion that people with lots of money need to be encouraged to invest their money and make it grow, and I think everyone can see that. Yet as a people, we continue to vote for people who promote the notion that the rich deserve to be rich, and without them the rest of us would be even less well-off than we are...that we need them more than they need us.
I'm raising this issue because even though it has been raised many times before, it never seems to be taken into account by the people who matter most on this account: those who have the least, and thus pay their taxes with muscle and bone instead of fat. I always say that on election day the majority in America get exactly what they deserve. The problem is that those of us in the minority also get it, and as to the rise of the middle class, as a general rule that's more often a shaft than an elevator.
Your friend,
Mike
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