Source:The New Democrat
What Michael Tomasky failed to mention here ( and perhaps intentionally ) is that back in the 1950s and 70s when we had high tax rates of 70 and 91%, no one especially the rich were actually paying that much in taxes, because of all the loopholes, as well as the wealthy investing money oversees to avoid taxation. Hell, if I was making 10 million dollars or more a year or anywhere near that, I would be doing the same thing. Along with making large contributions to charity, to avoid the taxes, but also to help people who need it that I can afford to help. The reason why these people weren’t paying such high tax rates, is because of all the loopholes that were in the tax code in the 1950s, 60s, and 70s..
In 1986 thanks to the tax reform act of that year that was passed out of a divided Congress with a Democratic House and Republican Senate that worked with President Ronald Reagan and his Administration to pass, taxes were lower across the board and loopholes were closed. So people were paying lower tax rates, but weren’t getting as much money back in credits and loopholes. That’s not what freshman Representative Alexandria Ocasio Cortez is talking about here and what Michael Tomasky is talking about here either. They would go in the opposite direction and raise the two top tax rates to 60 and 70% with no new loopholes.
So in theory the IRS would be getting a lot more money in new tax revenue from the wealthy, but that’s assuming the very rich have brain freezes and forget that they can just invest a lot of more money oversees or just go north of the border to Canada and spend and invest their money there. The first 9 million or so of their earnings every year to get Uncle Sam out of their wallets and bank accounts. Which would leave Uncle Sam with a big hole, because of course none of this so-called new revenue that he would be charging his wealthy nephews and nieces would be used to pay down his huge debts and deficits, but instead invested in new Federal programs, or new investments in current programs. Leaving Uncle Sam and his nephews and nieces a bigger national debt and deficit to pay off. Which would be paid off in new interest payments on the debt, or in higher inflation.
The problem with Socialists and socialism in general ( even if Socialists want to call themselves democratic or not ) is that they always have the same old solution to every problem that they see and what they call income inequality is a perfect example of that. Their solution to every problem that they see is always what they call new revenue. ( Washington speak for tax increases ) They see that the wealthy which are probably 10% of the population at this point has all this money and then you have roughly 1-5 Americans who live in poverty and if you look at parts of rural America 2nd or 3rd world poverty, as well as in some inner cities. And then you 1-2 Americans or so that are technically middle class and aren’t eligible for public assistance, but only make enough money to cover their current bills, if they’re healthy and aren’t able to save or invest any of their income and are a paycheck away from being on public assistance themselves. So their prescription to this economic disease to to tax the wealthy more and give that money to Uncle Sam to take care of this nephews and nieces that are struggling.
The problem with American capitalism has always been that we’ve always been a country where maybe 1-10 Americans are doing very well economically, who make a lot of money to the point that they can afford to invest and save a lot and then you have about 1-5 Americans who live in deep poverty, who are undereducated and even if they’re working are dependent on public assistance and private charity just to survive in life. And you have this large middle class which generally is a good thing in any country to have a large middle class, but where maybe 1-2 of those Americans might only be middle class because they make too much money to be eligible for public assistance, but can’t afford to invest and save and struggle just to pay their bills.
The problem with American capitalism has never been that we have too many rich people, but that we have too much poverty and too many working class people who struggle just to get by. The problem with American capitalism is that we’ve never had enough rich people, or economically successful people even if they’re aren’t millionaires as far as their annual income, but have a good deal of money in savings and even have investments. And if you’re someone who believes that the income gap ( as I call it ) is a big problem in America as I do as a Liberal, you should be thinking about how to empower people on the low-end of the economical scale to make more money. To have better jobs so they’re no longer struggling just to pay their bills or live in poverty, but instead are making a good income that comes with benefits and allows them to invest and save. Instead going to play 1 ( and perhaps the only play in the socialist playbook ) of always trying to take from the rich to take care of people who are struggling.