U.S. income gap widest on record – that’s what happens when we don’t Tax The Rich!
September 11, 2013 2 Comments
News stories have hit this week with titles like, “U.S. income gap widest on record.” The stories mention UC Berkeley economist Emmanuel Saez, and should point out a strong correlation he found during his research:
If you lower the income tax rates on the highest income brackets,
inequality of income is increased.
If you raise those rates, inequality is reduced.
A blog post with more information and graphs is here,
At the end of Eisenhower’s presidency in 1960, the rate on the highest tax brackets was 91%. As we know, the rich could still get richer even with those high tax rates, just not obscenely richer. Now the titanic Dems and Reps haggle over a top rate of 35% and 39.6%. Why wouldn’t CEOs start shifting more wages to their own pockets when they get to keep most of it? It’s too much temptation. When they only kept 9% of the highest portion, greed was not encouraged.
The 0.1% use their resources to keep us thinking all taxes hurt all of us. Not true.
In addition to increasing taxes on the super-rich, we can also reduce government spending, and lower taxes on the rest of us. Which government spending should we reduce first? Let’s start with the dumbest expense: high interest paid to Wall Street banks. When we vote people into office who are not sold out to big banks and other corporations, we can create publicly-owned banks that partner with local banks and credit unions, and provide good loans to students, home owners, and community businesses. And we can fund our own projects without high interest tacked on top. See blog http://laurawellssolutions.com/category/public-banking-state-bank/