How to Fix 30 Years of Redistribution: Tax the Rich
Then they took a second piece (7% more).
Then they took a third piece (7% more).
That's over a trillion dollars a year of after-tax income that would be going to the other 99% if it weren't for 30 years of tax cuts and deregulation.
If the median household income had kept pace with the economy since 1970, it would now be nearly $92,000, not $50,000.
How do wealthy Americans respond to this? They argue that the top earners pay most of the income tax. But federal income tax is only a small part of the burden on the middle class. Based on data from the Institute on Taxation and Economic Policy, the total of all state and local taxes, social security taxes, and excise taxes (gasoline, alcohol, tobacco) consumes 21% of the annual incomes of the poorest half of America. For the richest 1% of Americans, the same taxes consume 7% of their incomes. Furthermore, the richest people pay most of the federal income taxes because they've made ALMOST ALL the new income over the past 30 years. As productivity has risen 80%, average overall wages have remained flat.
Wealthy people also claim that opportunity exists for everyone, if only they work hard. But an American born in 1970 in the bottom economic quintile had only a 17% chance of making it into the top two quintiles. Data shows that much of Europe has more economic mobility than the United States.
Wealthy people also claim that they've earned whatever they have. But they've made their fortunes with considerable help from society. Government-funded research, infrastructure growth, national security, and property laws have largely benefited rich individuals and corporations. DARPA (the Internet), NIH (medicine), and NSF and NASA (science) have laid a half-century foundation for profit-seeking corporations.
At the time of the American Revolution, Thomas Paine noted that everything "beyond what a man's own hands produce" came to him from society, and therefore "he owes on every principle of justice, of gratitude, and of civilization, a part of that accumulation back again to society from whence the whole came."
Over a hundred years ago, Teddy Roosevelt, facing a plague of inequality not unlike today, stressed that "Great corporations exist only because they are created and safeguarded by [democratic] institutions; and it is therefore our right and our duty to see that they work in harmony with these institutions."
Elizabeth Warren recently said "There is nobody in this country who got rich on his own. Nobody."
Even GE's Jeffrey Immelt concurred, saying that "government spending...prepares the way for new industries that thrive for generations."
The 1% need to take responsibility for their 30 years of good fortune. A progressive federal income tax is a good start.
"Those who stand for nothing fall for anything"