Redistribution of America’s Income – More for The Mega Rich or the Common Wealth?

In American, personal wealth will be redistributed one of two ways: taxation and accountability, or the lack thereof. Will redistribution recreate a wealthy aristocracy this nation rebelled against long ago, or will it provide for the common good and give all citizens an equal chance at creating their own wealth?

America’s wealth redistribution will either benefit all of us or a select few at the expense of all of us. America’s wealth redistribution will either raise all boats or only those that can be well maintained. America’s wealth redistribution will either enrich the common good or engorge the well off. America’s wealth redistribution will either create and maintain a foundation for our democracy and our infrastructure, or let both crumble for the sake of self-interest. America’s wealth redistribution will either protect citizens and their shared resources from abuse or empower the abusers as they ravage the shared resources and protect their ‘individual’ gains. America’s wealth redistribution will either empower all citizens to become wealthy or empower a few to control most of the nation’s wealth. America’s wealth redistribution will either provide for a broad based common wealth, which gives all citizens a equal chance for success and building personal wealth, or will concentrate wealth and power in a very wealthy aristocracy.

For the last 60 years, our tax laws have favored the very wealthy at the expense of other Americans not like them. The tax cuts for the wealthy are highlighted by the chart below which shows the drop in the highest tax rate between 1945 and 2008.

 

60 Years of Tax Cuts for the Rich
Top marginal US income tax rates since 1920

 

As detailed in another posting, the impact of the above tax cuts has given 16 percent of American families, those who make over $105,000, a 361 percent greater tax cut than the other 84 percent of American families. America’s growing, but young, plutocracy is becoming wealthier and more powerful.

To these tax cuts, add the surreptitious use of privateering. Privateering takes a portion of the remaining tax revenues and diverts it to companies like Blackwater and other sole-source defense contractors, or to ‘too-big-to-fail’ banks. And so the wealthy CEOs get richer still and more powerful.

This redistribution of the nation’s wealth to the wealthy is also shown by the chart below. It shows how family income distribution has changed from 1945 (blue) to 1970 (green) to 2008 (yellow). (All incomes were adjusted to 2008 dollars.)

 

Through Tax Reduction The Nation’s Income Goes to the Rich
income_distribution
(Data for this chart were obtained from the Census Bureau: 1945, 1970 to 2008.)

 

In 1945, while all citizens were helping to fund their share of the common wealth, only 6.6 percent of the nation’s income wealth was distributed to those making more than $75,000. (In 1945, taxation was based on funding the common wealth to protect and empower all citizens. This progressive taxation also took into account the effects of systemic causation. This progressive taxation was exemplified by the tax rates during WWII, which included up to 32 brackets and rates that ranged from 10 percent to 94 percent.)

By 1970, after the highest tax rate was dropped by more than 30 percent, that same group tripled their share of the nation’s income to 18.3 percent. By 2008, even more favorable tax cuts allowed the wealthy to keep even more of their income. Now they capture 32.4 percent of the nation’s income wealth – about a five fold increase from 1945.

Of course, while this transfer of wealth to the rich was happening, the funding of our common wealth was reduced just as dramatically. Now a college education is becoming affordable for only the very rich and grades K-12 are underfunded and failing in more and more public school districts as tax cuts rule. Now citizens die from food poisoning and inadequately tested drugs due to lack of independent inspectors which are paid with falling tax revenues. Now our nation and state infrastructures are literally falling down or being overwhelmed by nature and citizens die as a direct result of tax cuts. Now we have to borrow from other nations to pay our war bills and bank CEO’s bonuses. Now we have corporations that build facilities that electrocute our troops so they can maximize their profit. Now we have a health insurance system that lets 45,000 Americans die to maximize CEO bonuses.

As the wealthy have become disproportionately wealthier and more powerful, what has happened to accountability for the nation’s wealth between 1945 and 2008? In 1945, with highest tax rates at 94 percent, all families were proportionately funding our common wealth – our elected officials were accountable to the voters for our common wealth and used it to protect and empower all citizens. In 2008, with the highest tax rate at 39 percent, mega rich individuals, who have gained the most from the nation’s common wealth, became accountable – to themselves and to shareholders.

This difference in the distribution of wealth and whose accountability for the redistribution is explained by the strict father family model of conservatives without conscience (CWC) and the nurturant family model of progressives. As stated by George Lakoff in Making Accountability Accountable ” To progressives, it [accountability] means social as well as personal responsibility — responsibility for both oneself and everyone else who could be harmed by one’s failure. To conservatives, it means individual responsibility only.”

In other words, for CWCs, the individual is solely accountable for their wealth and they have no responsibility for other Americans not like them. Nor do they believe that other factors have an impact on their wealth. They believe they are in control. For progressives, the individual and various systemic factors like the family you were born into and the availability of a good education, contribute to an individuals wealth. Progressives also believe we are all accountable for our effects on others. They that hold our elected officials are accountable for America’s common wealth and will not support those officials that show favoritism with our common wealth.

As political power has shifted from progressive elected officials to CWCs, funding for the common wealth was reduced significantly by substantial tax cuts for the plutocrats. The result has been a slow drift toward “you’re on your own” society where most citizens suffer more abuse and find it more and more difficult to get ahead. Increasing taxes on the mega rich is the only way to defund the rising plutocracy and re-fund the common wealth This in turn will provide for the protection and empowerment of all citizens to create their own wealth based on their abilities, better K-12 basic education, equal access to higher education, protecting our common resources like land, air and water, an infrastructure that enables equal, and safe access to the nations common wealth.

In summary, America’s common wealth has been hit by a triple whammy: tax cuts for the rich far larger that can be considered fair, tax refunds to the rich via privateering, and by a shift of household income into the excessively reduced upper tax brackets. In addition, accountability for the nation’s common wealth has been transferred from our elected representatives and handed over to rich individuals mostly accountable to themselves and corporate CEOs who are only accountable to shareholders. The ultimate effect of all this transfer of income and accountability is that our government is less able to protect and empower its citizens.

It’s time we all realize that privateering and tax cuts favoring the very wealthy are not what America needs. Just look at where they have gotten us – The Great Recession, a growing plutocracy, consumer debt at 100 percent of GDP, banks too big to fail, and ultimately the deaths of fellow citizens.

 

The L-Curve: Income Distribution of the U.S.
Who Reaaly Benefits from Tax Cuts

 

 

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About Andy Hailey

Vietnam Vet, UT El Paso Grad, Retired Aerospace Engineer, former union rep, 60's Republican now progressive, web admin, blogger.

3 Responses to Redistribution of America’s Income – More for The Mega Rich or the Common Wealth?

  1. Johnathan mann says:

    If we had a graph of all the great American benchmarks (like education, manufacturing, technology, infrastructure, infant mortality, cost of health care, middle class income and buying power, taxes, financial regulations and the distribution of wealth) since WW2, it would be easier to see how the country has disintegrated since Ronald Reagan and how it parallels tax cuts and deregulation. With this, we might be able to convince people about how destructive the conservative ideology is. We have to try to “stop the insanity” of conservative ideology before our country, its government and its people are destroyed.

    Thanks for this site, I wish I could help! 706 571 9220

    • Andy Hailey says:

      I would like a similar graph for the state of Texas, where RWA rule has been going on longer. Republicorp is winning with a well established communication system while dems/progressives just deny the RWA talking points and say nothing about progressive values and ideals.

  2. Pingback: The WAWG Blog Blog Archive » The Poor, Poor, Mega Rich – They Are Just So Over Taxed