Taxes don't matter, but deficits do?

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Threshold excerpt Taxes don't matter, but deficits do?

"From Reagan to today -- as taxes were cut (and the balance was borrowed) -- workers' before-tax wages steadily decreased (with the exception of a few years during the Clinton administration, when taxes were raised to balance the budget and we also saw workers' before-tax incomes go up.)

But while the take-home pay of workers ultimately hasn't been much influenced by taxes, the take-home pay of millionaires and billionaires has been hugely influenced. From Franklin D. Roosevelt to John Kennedy's presidency, people earning over $3.2 million per year paid 91 percent in income taxes on every dollar after the first $3.2 million. The result was that this thirty-year period of American history saw virtually no "dynastic" wealth emerge.

For example, after George W. Bush rolled back the modest income tax increase of the Clinton years, and cut more than half the maximum income tax paid by people who "earn" their incomes by sitting around the pool waiting for the dividend or capital gains check to arrive in the mail (that tax rate, set in 2002, is still at the Bush maximum of 15 percent as of 2008), the September 20, 2005, issue of Forbes magazine noted that the combined worth of the Forbes 400 richest Americans went from $221 billion (combined) to more than $1.13 trillion. Just from 2002 to 2005 -- the first three years of the Bush tax cuts, the number of millionaires in America went up 62 percent.

At the same time, median household income remained unchanged, at around $44,000. Tax cuts to this income level of people were insignificant --- a hundred dollars a year or so -- but tax cuts to the wealthiest were huge.

And as the rich got richer, the income-starved corporations paying them had to cut wages to their poorest workers (the average publicly traded corporation pays out about 10 percent of its total earnings compensating just its top five executives -- not 5 percent, but five people!) At the same time, tax revenue-starved governments have to slash antipoverty, unemployment, housing, transportation, and educational programs. The result is that in the first three years of the Bush tax cuts, the number of Americans who had to get food stamps just to feed their families jumped 49 percent, to more than 25.7 million people."

Threshold excerpt Taxes don't matter, but deficits do?

Excerpt from hardback edition of Thom' book "Threshold: The Crisis of Western Culture"

The paperback version, "Threshold: The Progressive Plan to Pull America Back from the Brink", is now out.

SueN's picture
Jul. 31, 2007 3:01 pm


SueN, You make an excellent point. I want to share this on Facebook. Thank you for thee research you did and the fine writing.

dfedack's picture
Aug. 10, 2015 10:25 am

Trump - Dumb Luck or A Master Manipulator?

Thom plus logo Either it's an act of a master manipulator, or he has the best luck there is. Donald Trump wanted the Fed to lower interest rates, knowing that that would provide a solid and multi-year boost to the economy. But when Trump came into office, rates were already low and the Fed was not inclined to help.
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