Browsing Category: "taxes"
As Congress begins to turn towards 2010 and the tax issues that accompany it, I have a short opinion piece on why I believe that the highest earning Americans should face higher taxes:
The economy is still in dire straits and 2010 is around the corner marking time for the debate over income taxes to be rejuvenated. In the 1940s the highest marginal tax bracket on those making over 5 million dollars (75 million 2009 dollars) was over 90%. Today, after a wave of fiscal conservatism, the highest bracket applies to those making over 373,000 dollars a year and is at 35%. . The question today is what must be done with taxes to reinvigorate spending, lessen the deficit, and increase GDP. The answer lies in higher taxes for the richest Americans.
The moral arguments dealing with economic inequity are commonplace in today’s world so I’d like to focus on the economic benefits of higher taxes on the rich.
With all the hype about tax breaks for the middle class and tax increases on high income families in order to fix our deficit and benefit our economy we decided to take an indepth look at the distinct correlation between different incomes’ taxes and our economic prospects in general. Using information from the Congressional Budget Office and the Tax Foundation we were able to compile the federal tax rates for all five income quintiles as well as the top one percent of families in particular from 1979 to 2008. At the same time, we looked at the nation’s real GDP growth since 1979 and came up with some striking similarities and differences. First lets look at the chart of how the federal tax rate has changed since 1979:
The most evident trendlines are the ones depicted above as well as something of an inverse with the very lowest quintile in which the tax rates increased first then have decreased since the mid 80’s. The greatest increases for the highest income quintile and the top 1% occured in the 90’s during the Clinton Era. Now lets examine the graph of real GDP growth in the same time period. While there is clearly much more volatility and random noise, there is once again a distinguishing trendline. Graph Follows after the Break:
Everyone is saying that the era of Government deregulation is over, but we believe rather that it should be called as it is, a start of an era of government de-deregulation. Whats the difference? Well the difference is that you could institute deregulation or regulation in just one day but to reverse three decades of a lack of government oversight and all the programs accompanied, well that takes years. The difference is that the start of an era indicates a process, one that takes time for that matter, whereas this concept of an immediate end to deregulation is impractical. The nonpareil scope of the free market deregulation that has taken place since Reagan is huge and is not something solved by a simple executive order. Lets take a moment to look at some of the more evident examples of this deregulation and move toward pure free market capitalism:
1. NAFTA: The North American free trade organization was a quintessential free market move that has shown that global capitalism deprives the US of jobs and eventually comes to haunt us.
2. A myriad of Tax Breaks: From Reagan’s many tax reciepts to Bush 43’s infamous tax cuts, the proponents have claimed that the short term benefits are incredible but to this day I fail to see the long term benefit outside of the expansion of a 10 trillion dollar deficit.
3. The Banking Deregulation: Banks have been giving righ risk loans with this belief that somehow people with little money will be able to pay for an expensive house. This has caused crises from the credit crunch to the foreclosure problem.
Barack Obama has said “Our free market was never meant to be a free license to take whatever you can get, however you can get it.” But however much he tries, this is not going to be a crisis that wil be solved and ended in just a day, it will take an era… as we like to call it an Era of De-Deregulation.
A week from this Tuesday the nation has a very important election as we search for a new leader to better guide this nation in all aspects. Right now, the most important thing on everyone’s mind is the economy so we take a look at economic plans from both candidates and later today we will have a poll up so you can tell us who you think is best for our economy. Barack Obama, the democratic candidate, has a tax plan to give tax relief to 95% of Americans. He will however raise taxes on 5% of Americans, those earning more than $250,000 a year. This tax help to the middle class will bring much needed relief to many families and will free up money to re-ignite consumer spending. John McCain, the republican candidate, also has a slight tax relief plan for the middle class. This does not compare to the relief Obama offers however and McCain also supports giving more tax breaks to the wealthy and to big oil corporations. There is also the difference of health care between the two candidates. These plans are also very different and to see which one American’s prefer just look at all the major national polls coming out. We will have our own poll up soon to ask you which candidate is best for the economy, not necessarily the country, and we would like you to cast your vote and get your opinion heard.If you want more in depth exclusive articles like this only available to subscribers for FREE, simply enter your email to the right or click here. All subscribers will also get an exclusive article on election day explaining the economic repercussions sector by sector of Obama or McCain’s presidency. Enjoy!
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