President Obama preaches that he wants the rich to pay their fair share of taxes, while Republicans counter that he wants to “soak the rich,” arguing that the president is engaging in class warfare. Two very different sides to the same argument, but which side is more rational and candid in this debate? As always, one need only look at the facts to determine which party is telling the truth.
During the past three decades, the only income bracket that has done exceedingly well as far as inflation adjusted income and income tax paid as a percentage of their income are the wealthy elite. During this time span, income for the middle class has risen a trifling twenty percent, while income for the most affluent Americans has risen nearly five hundred percent. On the other side of the coin, upper level income tax rates are at historical lows. Currently at thirty-five percent, the top rate was as high as ninety-four percent during the war years of 1944 and 1945. During the 1950s and early ‘60s, the top rate was ninety-one percent until President Kennedy lowered it to seventy-seven percent. No significant changes were made until President Reagan lowered it to fifty percent, and then lowered it again twice more down to twenty-eight percent. The first President Bush increased it back to thirty-one percent and then President Clinton increased it further to thirty-nine point six percent. The second President Bush lowered the rate twice, lowering it to its present rate of thirty-five percent.
One thing to remember is that these rates are not actual rates paid in that income is adjusted by numerous deductions so that actual rates are much lower. This is why Warren Buffett pays a much lower percentage of income tax than that of his secretary. The number of pages to the Federal Tax Rules is nearly fifty-five thousand, which includes the tax code, tax regulations and IRS rulings. The tax code alone is nearly seventeen thousand pages long. Yet only one page is needed for the tax code, that being a breakdown of tax rates per various income levels. All these other pages document ways for rich people and corporations to avoid paying their fair share of income tax. Billions of dollars are being made by Wall Street barons and titans who are currently taxed at fifteen percent because their profits are presently calculated as capital gains and not properly as income.
Another thing to remember is that Republicans are always lamenting that raising the tax rates are, in their words, job killers. Yet when President Clinton did so, the economy roared, resulting in budget surpluses, a decrease in the national debt and nearly twenty-three million jobs created, the largest number of jobs created by any president. During the second Bush presidency, there were only a little more than one million jobs created, the smallest number of jobs created by any president who served at least one full term.
Republican politicians like to espouse that U.S. corporations are taking their high paying manufacturing jobs overseas because of the high rate of income tax imposed on them. This again, appears based little on fact but propaganda. The corporate tax rate is as low as fifteen percent for taxable income less than $50,000, is twenty-five percent for taxable income between $50,000 and $75,000 and fluctuates between thirty-four and thirty-nine percent for taxable income up to $18,333,333, after which the rate is currently at thirty-five percent. However, once again if you look at the facts, many of this nation’s largest corporations pay little if any income tax, including GE, Goldman Sachs, Exxon-Mobil, Bank of America, Wells Fargo, Chevron, Boeing, BP, Citigroup, Massey Energy, Shell, Valero Energy or Fox News. Corporate tax revenue is also at historic low levels when compared to the Gross Domestic Product, which is the key economic indicator representing the total market value of all goods and services produced in this country.
Class warfare? You betcha, and it is being waged against the ever-decreasing middle class and working poor by this country’s wealthy elite.
Steven H. Spring