Don’t get me wrong — some of my best friends are rich. I’m not doing too badly myself. But the time has come, my friends, to pony up.
The rich used to pay a lot more in taxes during other flush periods in our nation’s history, like the 1950s and the 1990s. The top federal rate was 91 percent during the “Happy Days” of the Eisenhower administration; now it’s 43 percent. And of course, there are legal wiles— sometimes called loopholes, as well as fraud— of reducing one’s contribution.
Just ask our current POTUS about those. For most of the years between 1985 and 1994 this purportedly wealthy American paid no federal income tax. He calls not paying taxes “smart.”
Successive Republican presidents have come rushing to the aid of the already all-set set. Reagan cut taxes on the uber-rich. George W. Bush slashed some more as he prepared to usher in the Great Recession. The current occupant of the White House has proven even more generous to fat cats like himself, who were already doing swimmingly after an economic recovery that was well underway during the previous administration.
Tax cuts are advertised as “paying for themselves” and stimulating the business activity. The most recent giveaways, indeed, have the economy on a sugar high. How long it will last is unclear and there are signs that GDP is in for a bumpy ride, with manufacturing and consumer confidence waning.
What tax breaks rarely if ever have done is pay for themselves. The latest effort at stimulating the disposable income of the obscenely wealthy —Trump’s $1.5 trillion tax cut package— also has dramatically stimulated the nation’s burgeoning debt.
Even while the economy has been expanding, revenues in the first fiscal year affected by these cuts fell 2.7 percent, or $83 billion dollars. The current administration is outpacing all of its predecessors in expanding our collective credit card balance.
It added nearly a trillion dollars this year and an anticipated trillion-plus dollars in the coming year. You and I, and our descendants, currently are on the hook for $22 trillion overall, some 10 percent of that thanks to the king of debt now in the White House. We have entrusted our national finances to a man who bankrupted casinos.
Here’s what $22 trillion looks like graphically: 22 followed by 12 zeros: $22,000,000,000,000. Kind of makes a person dizzy just looking at it.
To be fair, some of the recent and past cuts went to regular folks, not a lot, but some. Otherwise, there would likely be a revolution. Rich people and their enablers in Washington aren’t stupid.
A study by two economists summarized in Forbes Magazine in June found that the richest one percent of Americans received nearly one tenth of the Trump tax cut. The wealthiest 20 percent got more than half of the overall reduction. The lowest fifth of American society got just 3.3 percent back.
One of the study’s authors pointed out that the poor weren’t paying a whole lot, if any taxes, to begin with, so that somehow makes the Trump largess more progressive than it appears at first glance.
But consider this: if you make $75,000 a year. you are paying nearly one fifth of that (19.7 percent) to Uncle Sam. The top one percent of Americans, whose income approaches half a million dollars per year, pay an effective rate of just 24.7 percent, according to Americans for Tax Fairness.
In fact, the plutocrat Warren Buffet confessed several years ago that he likely paid a lower tax rate than his secretary, through the magic of corporate deductions and the magnate-friendly long-term capital gains rate.
What makes America’s tax phobia even more concerning is not simply our burgeoning national debt—but additionally, we have things we have to pay for, from roads and bridges in desperate need of repair, to ways of mitigate Global Warming.
No one likes to pay taxes. But do we want to bequeath a crumbling nation and an endangered planet to our children and grandchildren? Is a low tax rate the highest value that American society can aspire to?
Can Warren Buffet and our scofflaw in the Oval Office afford to pay more?
David Holahan is a freelance writer from East Haddam.