The current debate over whether or not to extend the upper-income tax breaks is going nowhere. The two parties are talking themselves in circles. All the while the robber barons laugh, literally, all the way to the bank.
Friends, we've been duped.
The recent political debate has been all about deficit, debt, and taxes. The normally mundane issue of budgeting (just the word puts most to sleep) has been getting the dander up. Each side has staked out fairly predictable lines, given recent history.
Republicans, in this area, are a whole mess of contradiction. They're for balancing the budget, yet for extending ALL the tax breaks. Balancing the budget, and leaving taxes low will both benefit the economy, they say. Never mind the fact that some fairly credible evidence refutes either one of those ideas (Hoover?). They claim to want to balance the budget by eliminating waste in spending, and cutting social programs. It's a fiction. There is no way to turn the deficit into a surplus without raising revenue. They want little or no regulatory structure; they demand government get out of the way. Never mind the fact that such laissez-faire economics have been playing havoc with economies for centuries; and that in the current age such policies inevitably lead the taxpayer to be faced with the lesser-of-two evils choice to bail out an industry(ies), or let the whole thing come crashing down. There are some Republicans who think, in such situations, we should let the whole thing come crashing down.
I'm not sure what Democrats want. Where the Republicans have contradiction, the Democrats have their own inconsistencies. The class which could legitimately claim to represent the working class for most of the 20th century has surely lost some of there credibility on that issue; we can only claim to be party of the working class now by virtue of being better for the working class than the Republicans. Democrats are also for balancing the budget, they say- and they admit some revenue raising, e.g.: tax increases, will be needed along the way. They claim to want a stiffer regulatory culture than conservatives, and on that point I think they largely deliver. Unfortunately, Democrats also haven't found a principle they haven't been willing to compromise- living up to the classic charge the Democrats are spineless.
In the instant case, the following situation has developed. We can: let the Bush tax cuts expire entirely, extend them for the middle class but not the upper bracket, or we can extend if for everyone. Republicans are, predictably, for borrowing more money to give the wealthy more tax cuts. Democrats want those cuts to expire, but are willing to make just about any sort of compromise.
The robber barons are laughing like hell. They've played us all for fools, and like a small town kid in the big city, we've been had.
The top income tax, on those unmarried individuals making more than $250,000 is just shy of $80,000, plus 39.6% of all income in excess of $250,000.
Don't get me wrong, a quarter million dollars a year in income is good money. Even minus the eighty thousand, you're still bringing in well over a hundred thousand. The living is good. Especially compared to those further down the economic totem pole, whose situation is decidedly more precarious.
But should a well paid professional making several hundred thousand dollars a year pay the same tax rate as a Fortune 500 CEO who makes 10 or 20 times that?
So the moneyed class- the real moneyed class- can sit tight, knowing that they've hitched their interests to the upper half of the middle class, and that significant tax increases on the top brackets will be nigh impossible to create support for.
If we created more brackets at the top, might the debate be more productive? Might we at least be able to garner a more solid consensus that the exorbitantly wealthy should pay a higher tax on their income?
Thoughts?
P.S.
If you made it this far, and are interested in the politics of budgeting, which an esteemed professor of mine once called the most important thing a government does in any given year, check out the book Balancing Act: Washington's Troubled Path to a Balanced Budget by Geroge Hager, and Eric Pianin. It provides a pretty interesting look at the decade long process of balancing the budget in the 80's and 90's.